Question
34. AstraZeneca PLC is a biopharmaceutical company headquartered in London, United Kingdom. In AstraZeneca's December 31, 2014 Form 20-F filed with the United States Securities
34. AstraZeneca PLC is a biopharmaceutical company headquartered in London, United Kingdom. In AstraZeneca's December 31, 2014 Form 20-F filed with the United States Securities and Exchange Commission, the Company described the following joint venture arrangement:
On 30 April 2014, AstraZeneca entered into a joint venture agreement with Samsung Biologics Co. Ltd, to develop a biosimilar using the combined capabilities of the two parties. The agreement resulted in the formation of a joint venture entity based in the UK, Archigen Biotech Limited, with a branch in South Korea. AstraZeneca contributed $70m in cash to the joint venture entity and has a 50% interest in the joint venture. The investment is measured using the equity method. A summarized Statement of Financial Position for Archigen Biotech Limited is set out below:
(in millions) | 31 December 2014 |
Noncurrent assets | $76 |
Current assets | 58 |
Current liabilities | (6) |
Net assets | 128 |
Share capital | 140 |
Retained earnings | (12) |
Total equity | $128 |
AstraZeneca reported that its equity investment in Archigen Biotech Limited was equal to $64 million before currency translation adjustments.
a. Confirm that the Equity Investment on AstraZeneca's balance sheet is the correct balance.
b. AstraZeneca's investment balance on December 31, 2014 is less than its initial investment on April 30, 2014. What is the most likely cause of the decrease? How do you know?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started