Read through the case. Explains the various international accounting issues confronted by Fabrizia Spirits (aim for 4 - 5 issues) .

Fabrizia Spirits Case Study

Fabrizia Spirits is an Italian limoncello producer headquartered in Milan. The company, founded by a pair of brothers in 1652, is publicly traded with shares listed on the Borsa Italiana Exchange. To keep the product authentic, Fabrizia uses only three ingredients (Sicilian lemons, raw sugar cane, and water). While most ingredients are obtained locally, the sugar cane is imported from Brazil. Up until this point, Fabrizias products where marketed exclusively in Italy. To take advantage of a potentially new markets for its products and expand sales, Fabrizia began making sales in the Peoples Republic of China three years ago. The company established a wholly owned subsidiary in China (Ning Meng Inc.) to handle the distribution of Fabrizia products in that country. In the most recent year, the sales in China accounted for 35% of Fabrizias sales and Ning Mengs sales to customers in China accounted for 20% of Fabrizia Groups total profits. Due to the rapid success in this market, the company recently opened a new factory in Beijing, China. To finance construction of the new facility, Fabrizia negotiated a listing of its shares on the London Stock Exchange to facilitate an initial public offering of new shares of stock.