ADVANCE FINANCIAL ACCOUNTING 1 Advance Financial Accounting Authors

Running head: ADVANCE FINANCIAL ACCOUNTING
Advance Financial Accounting
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Table of Contents
Introduction:...............................................................................................................................2
Depicting the events that led to the liquidation of ABC Learning:............................................2
Discussing the ethics and governance in explaining the company’s financial stress:...............3
Depicting whether liabilities played a vital role in liquidating the company:...........................3
Depicting the events that led to the liquidation of HIH Insurance:............................................4
Discussing the ethics and governance in explaining the company’s financial stress:...............5
Depicting whether liabilities played a vital role in liquidating the company:...........................5
Depicting the events that led to the liquidation of One Tel Phone Company:...........................6
Discussing the ethics and governance in explaining the company’s financial stress:...............7
Depicting whether liabilities played a vital role in liquidating the company:...........................7
Conclusion:................................................................................................................................8
Reference and Bibliography:......................................................................................................9

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Introduction:
The overall assessment mainly focuses on identifying the reasons behind the
liquidation of ABC Learning, HIH Insurance and One Tel Phone Company. in addition, the
evaluation also helps in understanding the events that led to the liquidation of the company.
The financial viability of the companies before the liquidation occurrence is mainly evaluated
to understand the actual problems that happened before the company became bankrupt.
Moreover, the factors involved in the liquidation process of ABC Learning, HIH Insurance
and One Tel Phone Company is directly evaluated. the assessment mainly aims in focusing
the expenses and debt accumulation, which is conducted by ABC Learning, HIH Insurance
and One Tel Phone Company.
Depicting the events that led to the liquidation of ABC Learning:
The main event that led to the liquidation of ABC Learnings occurred after 2001,
where the company enlisted in the Australian stock market. ABC Learning after the listing,
obtained high end debt to increase its centres in Australia and International market. The high
debt obtained by the company was the main event, which increased the chance of their
liquidation process. The debt accumulation of ABC Learnings mainly increased
exponentially after the share issue, which was used in the expansion plans of the organisation.
In addition, the number of centres of ABC Learnings mainly increased from the level of 43 in
2001 to 2238 in 2007, which was only possible with help of high-end debt accumulation.
Moreover, during 2005 Eddy Groves mainly manipulated the Annual report to boost their
overall financial progress and project the investors with high profit financial report. The
financial troubles of ABC learning relatively started from 2007 where Its overall profit
declined by 42% in 2007, which directly affected its ability to pay the 1.8 billion in debt
accumulated by the organization (Leong 2015). The directors of the organization had to dump

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their shares due to margin calls, which increased the supply of shares in the market and
directly affected its share price, which declined by 43%
Discussing the ethics and governance in explaining the company’s financial stress:
After evaluating the case of ABC learning it could be identified that there was certain
levels of ethics and governance which was violated by the organization and its directors to
support their need for finance. furthermore, the CEO of the organization manipulated the
annual reports to support it financing needs and boost its share price. The problems of
governance were identified when the company was not utilizing adequate strategy for their
expansion process. Moreover, ABC learning was directly accumulating debt from the market
to support its expansion process without the concern of solvency (Scott 2015). The high debt
accumulation conducted by the organization was directly affecting its capability to support
the interest payments, as the overall revenue of ABC Learning declined. This incapability of
the organization to support its interest payment was directly triggered by negligence in
conducting governance. There were certain ethical dilemmas which was adopted by Eddy
Groves for improving the figures on its annual report. Eddy Groves directly increase the
values of intangible assets in accordance with its revenues to depict ABC learning as a high
profitable organization (Press and Woodrow 2018). This ethical dilemma directly indicated
the manipulation which was conducted by directors to lure in more investors and increase
their share price.
Depicting whether liabilities played a vital role in liquidating the company:
Therefore, ABC learning case study directly reflects the overall problems that was
created for the organization after accumulating high level of debt in its operations. The debt
was mainly accumulated to support its rapid expansion process, which did not increase
revenues of the organization, as expected by the management. Furthermore, the rising interest