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Financial accounting for the liquidation Assignment PDF

   

Added on  2021-06-17

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Financial accounting for theliquidation

Table of ContentsEXECUTIVE SUMMARY...................................................................................................................3EVENTS THAT LED TO LIQUIDATION..........................................................................................3INTRODUCTION.............................................................................................................................3ABC LEARNING..........................................................................................................................4HIH INSURANCE........................................................................................................................5ONE.TEL......................................................................................................................................5ROLE OF ETHICS AND GOVERNANCE..........................................................................................6DOES BAD ETHICS AND GOVERNANCE LEAD TO FINANCIAL STRESS?..........................6LIBILITIES CONTRIBUTING TO LIQUIDATION...........................................................................7Conclusion.............................................................................................................................................7References.............................................................................................................................................8

EXECUTIVE SUMMARYThis report is a brief discussion regarding the crucial outcome of any major corporatecollapse, LIQUIDATION. For better understanding of the same, the real-life examples of bigAustralian Corporate players, ABC Learning; HIH Insurance; One.Tel are, on a one-to-onebasis conferred. The initial section talks about the events that may lead to the liquidation of acorporate entity by taking refences from the case studies of the prior mentioned companies.Further in the report the management practices in light of good ethics and governance aresought to find the role of the same in bringing a company on the edge of liquidation byincreasing the financial stress that the entity faces. In the end of the report a deliberation isdone regarding the contribution of liabilities in increasing the chances of a concern to bewound up. EVENTS THAT LED TO LIQUIDATIONINTRODUCTIONLiquidation is the other name for winding up. It is the process which is taken intoconsideration when company fails to perform its liabilities throughout the time. It is theprocedure to end the company for the ultimate benefits of the stakeholder and society at large.This procedure is followed when company is incurring loss from its busienss. Winding upcould be defined as procedure or steps “to finish up”. In other words, winding up states theclosing of corporation. If the same is used inn the context of a business, liquidation orwinding up means the closing of its business by a concern. When a business is closed it mustsettle all the claims pending against it, be it of creditors or bankers or government orlabourers. So, when a business decides to pay off all the obligations by using the funds italready have and by selling off the assets and using the money procured out of the sale, thatscenario is termed as liquidation. Liquidation is not a one-day process. It’s a complete seriesof multiple events (Puranam, & Vanneste, 2016). There are many factors which may lead towards the liquidation of an entity. It’s not necessarythat a company is liquidated only when its capacity to pay out the litigations and liabilitiesgets extinct. There are other reasons too. Sometimes a company is liquidated because of the

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