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Case- XYZ ltd an IT company is not an MNC based in the USA.
ABC ltd an IT company is an MNC based in Germany.
The Germany company wants takeover the USA company.When the
ABC ltd scans XYZ ltd company's financial statements it
shows profit (no fraud or infringement was made in accounts
of XYZ ltd).But the finance department of ABC ltd says the
XYZ ltd financial statements show various losses.
Question- Cite four reasons why XYZ ltd shows loss, while it
has made profit?
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Answer Posted / navit thareja
Loses can be on account of
A) Interest Rate Risk on their Investments.
B) Exchange Rate Risk when Converting Targets Currency to
Acquirers Currency.
C) Contingent Liabilities.
D) Loses found out by the Acquirer of any SPV of Target
company.
E) Most important Reason, Converting US GAAP to IFRS.
Can be on account of the Inventory Policies.
Policies on Investments.
| Is This Answer Correct ? | 6 Yes | 0 No |
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