(Case analysis, LO 2, 3, 4) Re-read the Savoy Health Club Ltd. case that was given as the Solved Problem in this chapter (see pages 288-289).

Required:

Jim Floor has approached you to advise him regarding his pending acquisition of Savoy Health Club Ltd. Mr. Floor has become familiar with the accounting concerns being addressed by Fred Irving and he would like you to prepare a report explaining appropriate accounting treatments for the accounting issues. Mr. Floor wants full explanations and justifications for the recommendations you make so that he can explain them to Fred Irving and to the arbitrator, if necessary.