Advanced Financial Accounting

Running head: ADVANCED FINANCIAL ACCOUNTING
Advanced Financial Accounting
Name of the Student:
Name of the University:
Authors Note:

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ADVANCED FINANCIAL ACCOUNTING
Contents
Answer 1:.........................................................................................................................................2
Investment in 35% of issued shares of Orange Limited:.............................................................2
Investment in 80% of issued shares of Orange Limited:.............................................................3
Answer 2:.........................................................................................................................................4
References:......................................................................................................................................6

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ADVANCED FINANCIAL ACCOUNTING
Answer 1:
To: The Manager of Hamilton Limited.
From: Accountant of Hamilton Limited
Date: 14th May, 2019.
The Australian Intellectual Property Law encourages innovation to prosper by stating that the
business entities and individuals developing new innovation will be provided with necessary
protection under the law to ensure that it is not copied and used by other businesses and
individuals without the consent and the permission of the innovator. Intellectual property
includes designs, trademarks, formulas, patents and secret processes. As per the Intellectual
Property Law in the country the third parties are prohibited from using the patented innovation
without the consent of the innovator.
In this case Hamilton Limited is looking to reduce its operating cost by using new technological
processes and innovation most of which are patented by the Orange Limited. Hamilton Limited
has tried to convince Orange Limited to sell the patent or allow the former to use the patented
technology of the later without any success. In order to gain access to the patented technology
Hamilton Limited has decided to invest in the issued shares of Orange Limited. Accordingly, the
accounting requirements and subsequent outcome of investment in the issued shares of Orange
Limited are explained below under two different alternatives.
Investment in 35% of issued shares of Orange Limited:
As per Accounting Standard AASB 128, Investment in Associates and Joint Ventures an entity
will be considered to have significant influence in the investee company if the former holds more
than 20% of the voting power in the investee. In this case if Hamilton Limited buys 35% of