Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Brookes Sdn. Bhd. (the Company) is a car manufacturer in Shah Alam. It also provides hire purchase of equipment to some of its customers. The

image text in transcribed

Brookes Sdn. Bhd. ("the Company) is a car manufacturer in Shah Alam. It also provides hire purchase of equipment to some of its customers. The Company consists of James, the director of the Company, holding 40% shares of the Company, Mary, the wife of James who is also the director and shareholder of the Company with 30 % shareholding and Mann, the shareholder of the Company with 30% in ratio. The Company owns 2 pieces of land with 3-storey buildings erected thereon identified as No. 2 & No. 4 Jalan Car, 50000 Shah Alam, Selangor. The property identified as No. 2 is charged to HSBC (M) Berhad ("the Bank) for a loan of RM 5,000,000.00 whereas the property identified as No. 4 is free from charges. In March 2020, the Bank extended RM 100,000.00 finance to the Company and took a charge under which the Company purported to charge the benefit of certain hire purchase agreements in favour of the Bank In April 2020. James came to be aware that the accounting and other records do not sufficiently explain the transactions and financial position of the Company, however, he did not draw to the attention of the Company in its general meeting. In September 2020, the Company was facing a significant deficit in their account, and the Company signed a sale and purchase agreement with Joe, James's eldest son and sold the property identified as No. 4 at a price which was significantly below the market price. The transaction was later ratified at a shareholders meeting. In December 2020, the Company went into liquidation. You are one of the directors in the Company, what kind of assets do you think is the best option for the creation of a charge as a collateral other than the hire purchase agreement? (10 marks) Brookes Sdn. Bhd. ("the Company) is a car manufacturer in Shah Alam. It also provides hire purchase of equipment to some of its customers. The Company consists of James, the director of the Company, holding 40% shares of the Company, Mary, the wife of James who is also the director and shareholder of the Company with 30 % shareholding and Mann, the shareholder of the Company with 30% in ratio. The Company owns 2 pieces of land with 3-storey buildings erected thereon identified as No. 2 & No. 4 Jalan Car, 50000 Shah Alam, Selangor. The property identified as No. 2 is charged to HSBC (M) Berhad ("the Bank) for a loan of RM 5,000,000.00 whereas the property identified as No. 4 is free from charges. In March 2020, the Bank extended RM 100,000.00 finance to the Company and took a charge under which the Company purported to charge the benefit of certain hire purchase agreements in favour of the Bank In April 2020. James came to be aware that the accounting and other records do not sufficiently explain the transactions and financial position of the Company, however, he did not draw to the attention of the Company in its general meeting. In September 2020, the Company was facing a significant deficit in their account, and the Company signed a sale and purchase agreement with Joe, James's eldest son and sold the property identified as No. 4 at a price which was significantly below the market price. The transaction was later ratified at a shareholders meeting. In December 2020, the Company went into liquidation. You are one of the directors in the Company, what kind of assets do you think is the best option for the creation of a charge as a collateral other than the hire purchase agreement? (10 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting A Decision Making Approach

Authors: Thomas E. King, Valdean C. Lembke, John H. Smith

2nd Edition

0471328235, 978-0471328230

More Books

Students also viewed these Accounting questions

Question

Discuss the five steps that can be used to conduct a task analysis

Answered: 1 week ago

Question

Discuss the purpose and advantages of conducting a needs assessment

Answered: 1 week ago