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The parent company DLPT has asked the subsidiary Daniel it subsidiary to guarantee a loan for Benita. Benita has defaulted in the repayment of the loan due to bad business. The security provided by Daniel is sporting plan. Daniel is in a good will Business and contributed 40% Benita used to contribute 30% of revenue. As a result of the non-payments of the loan by Benita, Daniel has made the payments on her behalf, and has created a receivable in his records from Benita at year ended. Benita only knew about the three (3) months payment made by Daniel at the end of the third(3) month and has refuse to pay the payable in her own account and has insisted that this will be taken care of at the group level. This has been impacted Daniel and has stop in repaying the loan. The creditor has decided to call the entire loan and has taken legal actions to empower the bottling plant, which has given by the court ruling to recapitalize this subsidiary (Daniel)
Access the implication in respect to: Daniel (subsidiary), Benita and Parent companyWelcome to my forum!
I am sorry, though, I do not recognise this as an ACCA question and you do not say what is your query.
I am sorry – but it is not within my remit of answering technical questions pertaining to the ACCA qualification.
The question you pose is not complete in the way an ACCA question would make clear the requirement – e.g. to evaluate (assess) the ethical/practical/accounting (or something else specified) implications of a given scenario.
Your scenario may undoubtedly has some ethical implications – but it must have legal implications too – which would never be examined in an AAA exam (because the exams have to be quite neutral where legislation is concerned (except, for example, in the case of insolvency in the UK-variant AAA exam).
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