Question 1 (5 marks) Excelsior Hotels Inc. (Excelsior) is a publicly traded company that owns and operates luxury hotels

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Question 1 5 Marks Excelsior Hotels Inc Excelsior Is A Publicly Traded Company That Owns And Operates Luxury Hotels 1 (56.2 KiB) Viewed 64 times

Question 1 (5 marks) Excelsior Hotels Inc. (Excelsior) is a publicly traded company that owns and operates luxury hotels. On August 1, Excelsior made a $100,000,000 investment in Llama Hotels Ltd. (LHL), a company that owns and operates boutique hotels in North America. This $100,000,000 investment gave Excelsior a 25% ownership interest in LHL. With its investment in LHL, Excelsior does NOT have any board representation. Excelsior's management team is NOT involved in the strategic operations and decisions of LHL. LHL's management team has been successfully operating the business for over 20 years, and Excelsior will mostly be acting as a passive investor. Required: a) In addition to the percentage of ownership, identify and evaluate three other factors required to determine whether Excelsior has significant influence in LHL. Conclude as to whether Excelsior has significant influence, and support the conclusion. (4 marks) b) Explain how the investment should be accounted for in Excelsior's year-end financial statements (journal entries are NOT required). (1 mark)