Accounting standards covered in this assignment Section 1 – Group written analysis (30 marks) In 2007, Slater & Gordon (
Posted: Wed May 04, 2022 4:20 pm
Accounting standards covered in this
assignment
Section 1 – Group written analysis (30
marks)
In 2007, Slater & Gordon (S&G) became the world’s first
law firm listed on a stock exchange. S&G is headquartered in
Melbourne, where William Slater and Hugh Gordon founded it in 1935.
Progressively, S&G has become one of the industry’s most
recognised brands, developing a reputation for defending the
underdog and being regarded as “anti-globalist, anti-capitalist,
pro-worker, pro-environment and pro-indigenous peoples”[1].
Since listing, net fee revenue grew by over 10% per year and the
share price rose from a $1 to $8.07, prior to crashing in 2015.
This collapse started from the 2014 acquisition of Quindell PLC, a
UK law firm. The acquisition cost GBP637million (about
AUD1.3billion), funded by an AUD890million share issue and a
AUD375million bank loan. Approximately AUD1billion of the
acquisition price was recognised as goodwill. By the time S&G
released its 2016 annual report, it had recorded about
AUD787million of ‘badwill’ (impairment losses on goodwill).
Your group is required to research the Quindell acquisition and
answer the following five questions:
Question 1
For each incentive, you must provide sufficient evidence to
justify your analysis. Evidence may include – but is not limited to
- legislative changes, figures and proof from documents or media
resources released by the company or any other reliable source. You
must correctly reference all sources used.
Question 2
Question 3
Select an annual report of S&G where the company disclosed
contingent assets and contingent liabilities. Consider the
following three alternatives and the three possible ways to account
for them:
Method one: Do not include contingent assets and contingent
liabilities in the financial statements. Do not provide information
about contingent assets or contingent liabilities in the notes to
the financial statements.
Method two: Do not include contingent assets and contingent
liabilities in the financial statements. However, disclose details
of the contingent assets and contingent liabilities in the notes to
the financial statements.
Method three: Fully disclose contingent assets and contingent
liabilities, and any gains or losses related to them, in the
financial statements.
You must answer the following questions (see next page):
Question 3 (continued)
If S&G were to adopt method one, would it affect the
credibility of the financial statements? Provide an analysis to
justify your answer (3 marks).
[1] Full article, see
https://www.crikey.com.au/2007/04/11/sl ... -pitfalls/.
https://www.annualreports.com/HostedDat ... H_2007.pdf
https://www.annualreports.com/Company/slater-gordon
https://www.annualreports.com/HostedDat ... H_2019.pdf
assignment
Section 1 – Group written analysis (30
marks)
In 2007, Slater & Gordon (S&G) became the world’s first
law firm listed on a stock exchange. S&G is headquartered in
Melbourne, where William Slater and Hugh Gordon founded it in 1935.
Progressively, S&G has become one of the industry’s most
recognised brands, developing a reputation for defending the
underdog and being regarded as “anti-globalist, anti-capitalist,
pro-worker, pro-environment and pro-indigenous peoples”[1].
Since listing, net fee revenue grew by over 10% per year and the
share price rose from a $1 to $8.07, prior to crashing in 2015.
This collapse started from the 2014 acquisition of Quindell PLC, a
UK law firm. The acquisition cost GBP637million (about
AUD1.3billion), funded by an AUD890million share issue and a
AUD375million bank loan. Approximately AUD1billion of the
acquisition price was recognised as goodwill. By the time S&G
released its 2016 annual report, it had recorded about
AUD787million of ‘badwill’ (impairment losses on goodwill).
Your group is required to research the Quindell acquisition and
answer the following five questions:
Question 1
For each incentive, you must provide sufficient evidence to
justify your analysis. Evidence may include – but is not limited to
- legislative changes, figures and proof from documents or media
resources released by the company or any other reliable source. You
must correctly reference all sources used.
Question 2
Question 3
Select an annual report of S&G where the company disclosed
contingent assets and contingent liabilities. Consider the
following three alternatives and the three possible ways to account
for them:
Method one: Do not include contingent assets and contingent
liabilities in the financial statements. Do not provide information
about contingent assets or contingent liabilities in the notes to
the financial statements.
Method two: Do not include contingent assets and contingent
liabilities in the financial statements. However, disclose details
of the contingent assets and contingent liabilities in the notes to
the financial statements.
Method three: Fully disclose contingent assets and contingent
liabilities, and any gains or losses related to them, in the
financial statements.
You must answer the following questions (see next page):
Question 3 (continued)
If S&G were to adopt method one, would it affect the
credibility of the financial statements? Provide an analysis to
justify your answer (3 marks).
[1] Full article, see
https://www.crikey.com.au/2007/04/11/sl ... -pitfalls/.
https://www.annualreports.com/HostedDat ... H_2007.pdf
https://www.annualreports.com/Company/slater-gordon
https://www.annualreports.com/HostedDat ... H_2019.pdf