Transaction 2 Westlife Ltd mainly operates in Windhoek. As part of its expansion strategy both locally and internationally, the following investments have been made Page 17 of 27 FACULTY OF COMMERCE, MANAGEMENT AND LAW Investment in Waverly Ltd (Waverly The management of Westlife has approached Jamie Ld (Jamie) to form a partnership to manufacture sporting goods from 1 January 2021. A separate entity Waverly, has been formed. Each entity will have a 50% shareholding in Waverly and Waverly is a separate legal entity The companies have signed an agreement that outlines the activities of the arrangement and establishes a joint operating committee A representative from each company sits on the joint operating committee and decisions require unanimous consent Westlife and Jamie wil each be responsible for their own area of expertise The companies carry out different parts of the manufacturing process, cach using its own resources and expertise in order to manufacture and distribute the goods jointly. The two companies share the revenues from sales and jointly incur expenses. The revenues and common costs are shared as contractually agreed in the agreement. A separate bank account is established through which revenue will be received and shared costs will be paid. The bank account is in the name of both companies. Each company incurs their own separate costs such as labor costs manufacturing costs, supplies inventory of unused parts and work in progress and recognizes their separately incurred costs fully Westlife and Jamie have committed to purchase Waverly's entire product line. The products must therefore to the quality control of both Westile and Jamie. Any cash shortages that the partnership may incur will be financed by both parties in accordance with their shareholding AC 14 15 Provide a memorandum to the management of Westlife, dealing with the following questions 1. Is the agreement with Jamie a joint arrangement? "yeswhat is the classification thereon and if not, what is it? Page 18 of 27 FACULTY OF COMMERCE, MANAGEMENT AND LAW Communication skils: logical flow conclusion and format 1. 30