Financial statements should be prepared in accordance with IFRS.

Need Income Statement, balance sheet, Equity Change

The company got off to a rather inauspicious start with slow sales during its first year. During the second year of business, the partners invested very heavily in online advertising to increase traffic on their website. Michael also felt that another way to differentiate themselves was to offer the option of same day shipping in Toronto, Montreal and Vancouver for purchases made before 2PM. To achieve this, they invested in 50 delivery vehicles spread between the three cities and hired 50 new drivers. A new advertising campaign proclaimed, Order it this morning and Boom its there! To offset these costs, the company also outsourced its delivery services in those three markets to other companies at a competitive price compared to other couriers. In order to finance this new initiative, as well as their increased advertising expense, the partners increased their total investment in the company to $7 million, which they obtained by mortgaging their homes, emptying their savings, maxing out their credit cards, and getting personal loans from their parents.

To control their costs, the partners worked out of a small office building in Mississauga and maintained a very small staff. In addition, they rented warehouse space in Toronto, Montreal and Vancouver and maintained their inventory in all three locations to supply their product quickly to local customers. The bulk of their staff was employed at the warehouses, picking product, preparing it for shipping, and managing incoming inventory. The office staff consisted primarily of IT experts managing the companys web presence, as well as a bookkeeper, two people in the marketing staff, and an office manager. The company relied on external advisors for many of its functions such as human resource management, legal advice, and accounting. Michael and Stephen worked very long hours and directly managed virtually every aspect of the company.

Fiscal 2019 proved to be a turning point during which the company earned a small profit. Sales increased significantly driven in part by the addition of the same-day delivery service and the increased marketing presence. Michael hired a new VP of marketing in 2019 and invested even more in building their online presence. The biggest issue facing the company was the cost of providing same-day delivery service. Unfortunately, revenue from outsourcing their courier service was not as large as anticipated and the cost of providing the service was a drain on the companys finances.

As fiscal 2020 started, the companys sales continued to increase but the delivery service was still operating at a loss. Michael and Stephen began to discuss the possibility of selling the vehicles and using third party delivery companies in lieu of their own courriers. Stephen was introduced to the owners of Zipp Courier Service, a relatively new courier service that delivered packages for several online retailers similar to Boom. Stephen asked Zipp if they could provide the same level of service as Boom currently offered clients. The owners of Zipp suggested that they would need additional capital to expand to meet Boom current delivery targets. Stephen and Michael then suggested that they would invest in Zipp to provide it with the capital required provided that Zipp guaranteed to deliver its products within the current Boom targets. In addition, Boom would also use Zipp for its regular (non-express) deliveries in all other markets across Canada. At the same time, Boom would divest of its delivery service and focus exclusively on its online sales business.

Michael and Stephen agreed to purchase 20% the shares of Zipp for $17,825,000. The transaction was completed on January 31, 2021. At the same time, they formally decided to exit from their delivery business. They would sell the vehicles they owned and eliminate all delivery costs associated with their courier business. In order to pay for the shares of Zipp, Michael and Stephen raised $5,000,000 by selling shares of Boom to some private investors, and by taking out a new loan from the bank (appropriately called Bank Loan on the balance sheet).