1.Company X is a liquor manufacturer and has traded for a number of years. The company produces a wide variety of liquor and employs a workforce of machine operators, testers, and other operational, marketing and administrative staff. It owns and operates a factory, warehouse and machinery and holds raw material inventory and finished products On 1st January 2011, Company Y pays USD 80 million to acquire 100% of the ordinary voting shares of Company X. No other type of shares has been issued by Company X. On the same day, the four main executive directors of Company X take on the same roles in Company Y.

Comment on given transaction whether it is a business acquisition or asset acquisition?

2.Company D is a development stage entity that has not started revenue-generating operations. The workforce consists mainly of research engineers who are developing a new technology that has a pending patent application. Negotiations to license this technology to a number of customers are at an advanced stage. Company D requires additional funding to complete development work and commence planned commercial production.

The value of the identifiable net assets in Company D is 750 million. Company A pays600 million in exchange for 60% of the equity of Company D (a controlling interest).

3. Enterprise Ltd. Has 2 divisions Laptops and Mobiles. Division Laptops has been making constant profits while division Mobiles has been invariably suffering losses.

On 31st March, 2012, the division - wise draft extract of the Balance Sheet was:

( in crores)

LaptopsMobilesTotal

Fixed assets cost250500750

Depreciation225500(625)

Net Assets(A)25100125

Current assets:200500700

Less Current liabilities(2(400)(425)

(B)175100275

Total (A+B)200200400

Financed by:

Loan Funds-300300