Capital Reorganization

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Associate
An entity, including an unincorporated entity such as a partnership, over which the investor has significant influence and that is neither a subsidiary nor an interest in a joint venture.

Equity method
1. ac title named “Investment in associate”
2. Cost, it initially recognized at cost
3. Post acq P&L, the carrying amount is increased or decreased to recognize the investor’s share of the P&L of the investee after the date of acq 4. Dividend received, distributions received from an investee reduce the carrying amount of the investment ___

Capital Reorganization
When an entity is faced with financial crisis, the capital reorganization scheme may be the possible alternative to liquidation of the entity.

S58(1) CO a Co. may seek an approval of capital reduction
1.reduce the liability of its shares, which the share capital not paid up 2.cancel any paid-up share capital, which is lost or unrepresented by available assets 3. pay off any paid-up share capital which is excess of the wants of the company

The following features are important for the success of reorganization scheme 1. it must provide an incentive. Every party involved would be better off than liquidation 2. all parties should be fairly treated

3. it should raise new capital to meet the immediate obligation and provide adequate working capital 4. Co.’s prospects must be good and trading must be able to restore it to profit after reorganization ___

Associate
An entity, including an unincorporated entity such as a partnership, over which the investor has significant influence and that is neither a subsidiary nor an interest in a joint venture.

Equity method
1. ac title named “Investment in associate”
2. Cost, it initially recognized at cost
3. Post acq P&L, the carrying amount is increased or decreased to recognize the investor’s share of the P&L of the investee after the date of acq 4. Dividend received, distributions...
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