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Virtual Corp. (\"VC\") Case Assignment Virtual Corp. (VC) is a Canadian-based investment company that seeks to provide investor returns through strategic investments of companies offering remote based services and other online services. VC completed its initial public offering (IPO) on January 1, 2020 and begun its operations on that date. The Company trades on the TSX Venture and therefore reports under IFRS. VC is effectively a shell company that raises capital through share issuances in CAD from Canadian investors. The general and administrative costs incurred by VC are all incurred in CAD. VC's presentation currency is the CAD. Today is August 1, 2020. You have recently joined VC as the new VP Finance. Your first major task is to assist WFI with the June 30, 2020 interim financial statements for reporting purposes. The major accounting considerations have yet to be made for the investments and transactions below. Speed Inc. (\"SI\") On January 1, 2020, VC purchased 10,000,000 common shares of Speed Inc (SI) for $10,000,000 USD. SI also issued $5,000,000 USD of convertible debt to VC USD. Each $1 USD of convertible debt can be converted for 1 common share at an exercise price of $0.90 USD. SI provides remote based conference services to customers. SI was wholly owned by two shareholders before the VC purchase. With this share purchase, VC obtained 4 of the 7 seats on the board of directors. 1 of the remaining seats is held by the CEO of Webcam Corp. (\"WC\"), 2 of the remaining seats are held by the other two owners who hold the remaining 12,000,000 shares. The reason VC purchased the shares of SI, was because it expects to direct the relevant activities of SI in the future. VC also plans on providing additional funding to SI in the future for improvements in its technology. Once SI is cash flow positive, SI plans on declaring monthly distributions of dividends to be used as returns for the investors of SI. The following is a copy of the draft statement of financial position of SI. Speed Inc Statement of Financial Position January 1, 2020 (In USD) Book Value Fair Value 1,000,000 1,200,000 Current Liabilities 600,000 700,000 Ordinary Shares 300,000 Retained Earnings 100,000 Current Assets A business valuator (CBV) has estimated the fair values that were not recorded on the accounting records. The CBV has valued SI's brand at a fair value of $3,000,000 USD, with an indefinite useful life. The brands have both been legally trademarked. SI's workforce has been valued at $1,000,000 USD. SI has a patent for its web-conferencing technology. This technology is utilized to generate subscription revenue. The patent has a legal life of 25 years, and the CBV estimates that the technology will be obsolete in 5 years. The patent has an estimated value of $5,000,000 USD. SI is headquartered in Vancouver, British Columbia. A majority of its customers pay in USD. The Company's payroll costs are entirely paid in CAD. SI's operating costs are in USD other than its rent costs. Webcam Corp. (\"WC\") VC purchased 15% of the shares of Webcam Corp. (WC) on February 1, 2020 for $1,000,000. WC manufacturers high quality webcams for business and individual consumers. VC purchased the shares of WC to develop strategic partnerships with its other future technology investments. VC's Chief Operating Officer joined the board of WC and is also acting as the Chief Operating Officer for WC until the Company finds a suitable full time Chief Operating Officer. WC generated an income of $25,000 from February 1, 2020 to June 30, 2020, This came to a surprise to the management of VC, as VC was expecting a much stronger performance, especially with the increased prospect of sales due to COVID-19. VC is a private company, therefore no share data is available, however VC management believes it has significantly overpaid for the WC shares. VC is considering purchasing the remaining 85% of shares of WC at a lower price per share to help turnaround operations in the future. The sale of webcams is distinctly different than conference services provided by SI, and the CEO would be monitoring this performance separately