One of the overarching learning goals of Advanced Financial Accounting is the accounting for the relationships that can exist between investor and investee. Using the requirements of the relevant Australian Accounting Standards (AASB Standards), the case study requires students to research and critically analyse information in order to identify the relationship between a numbers of entities. The assessment will be marked out of 20 marks, which will represent 20% of the total marks.
Individual Business Report (1,000 words limit) 20 marks
DUE DATE: Wednesday, 2 September 2020 by 11 am
CONSULTATION IN RELATION TO THE CASE STUDY
To ensure consistency of information, please place all questions relating to the case study on the Blackboard Discussion Board Case Study thread. We will respond to questions promptly when using this platform. We will not be discussing the case study in private consultation sessions.
Case Study Information
Traffic Management Holdings Ltd (TMHL), a public company, commenced trading in 2001. TMHL has investments in a number of partly and wholly owned subsidiaries and a diverse shareholder group including original owners, self-managed superannuation funds, and other sophisticated investors. TMHL Group achieved turnover of $100 million last financial year (FY19 ended 30 June 2019), has gross assets of $62m and employs over 1,000 employees across Australia and New Zealand. Debt within the company is provided by way of debentures issued to the public and also through one of the major four Australian banks. During the course of this financial year, FY20 ending 30 June 2020, the company has pursued a strategic growth strategy undertaking a number of investments. The Directors of TMHL have decided to change audit firms and have approached your audit and advisory firm to undertake the audit and to seek initial advice on how to account for the investments they have made during the FY20 financial year. All shares and units issued by each of the entities are ordinary shares or units with normal voting rights. All key facts as known to the company in relation to the investments made are provided on the following page:

Canberra Ltd
• TMHL Ltd owns 45% of the issued capital.
• The remaining shares are owned by a diverse group of investors who each hold a small parcel of shares, many of whom are unlikely to attend meetings.
• The current board of directors of Canberra Ltd has seven members.
• Six directors on the board of Canberra Ltd are appointed by TMHL Ltd.
Sydney Ltd
• TMHL Ltd owns 90% of the issued capital.
• The remaining shares are owned equally between two shareholders.
Melbourne Ltd
• TMHL Ltd owns 40% of the issued capital.
• Three institutional investors equally hold 50% of the issued capital. These shareholders regularly attend meetings and vote.
• The remaining 10% of the issued capital are owned by a geographically diverse group of investors who each hold a small parcel of shares, many of whom are unlikely to attend meetings. Adelaide Ltd
• TMHL Ltd owns 35% of the issued capital.
• Sydney Ltd owns 25% of the issued capital.
• The remaining shares are owned by a small group of investors who each own 10% of the issued shares.
• TMHL Ltd and Sydney Ltd each have two appointees on the board of directors which has five members.
Perth Ltd
• TMHL Ltd owns 25% of the issued capital.
• The remaining shares are owned by three institutional investors who each own 25% of the issued capital.
• All investors have rights to the net assets of Perth Ltd. They take a keen interest in the running of the company and attend all meetings.
• The shareholders of Perth Ltd have a contractual agreement whereby each investor cannot make any operating, investing or financing decisions without the expressed consent of the other parties.

Given the information above, the directors of Traffic Management Holdings Ltd would particularly like to know:
? does AASB 3 Business Combinations, AASB 10 Consolidated Financial Statements and/or AASB 128 Investments in Associates and Joint Ventures apply to the Traffic Management Holdings Ltd Group in the FY20 financial year
? the type of investment for each entity identified above (i.e. you need to clearly identify the investor-investee relationship(s)) including a summary of the identifying criteria and an application of this criterion;
? the accounting method(s) to be adopted for each investment identified above during the financial year ; and
? which entities, if any, would form part of the Traffic Management Holdings Ltd Group.
As a consultant, you are required to give a business-oriented report for the directors of Traffic Management Holdings Ltd to explain the way in which Traffic Management Holdings Ltd would account for its investments made during the financial year.
You must justify your conclusions with suitable referencing to the relevant Australian Accounting Standards. Your report should include any assumptions made and is to clearly identify what, if any, additional information Traffic Management Holdings Ltd would need to make a final determination if there is any uncertainty.
Requirements:
Prepare and submit a memorandum to the Board of Directors of Traffic Management Holdings Ltd that summarises your responses to case study. This should be a formal report and your memorandum should clearly recommend a reporting method for Traffic Management Holdings Ltd.
• Overall word limit without the appendix is 1,000 words.
• All calculations should be rounded to the nearest whole percentage amount.
• You must cite the specific provisions including paragraph from the relevant AASB using one of the following two examples for in-text referencing: AASB 102:11 or AASB 102 para. 11. You might find the following link helpful
ttp://www.utas.edu.au/accounting-communication-matters/writing-an-essay-orreport/referencing/accounting-standards
• Do not reproduce significant parts of the regulations / standards in your report. The focus should be on interpretation and application of the standard, with a concise, well-structured analysis for your client with key referencing to critical elements of the appropriate accounting standards.
• The use of tables/figures/diagrams is essential. For example; a diagram is to be used to demonstrate the shareholding relationship between each entity and table/s is/are to be used to summarise voting rights and interests held.
• This assessment must be the sole work of the individual student and not done in collaboration with other students. Students may discuss with one another the general principles of the Accounting Standards; however, you may not collaborate/discuss on the specifics of the proposal or how the Standards are relevant to the proposal.
• The deadline for the upload of the report is 11.00 am on Wednesday, 2 September 2020.
Please ensure you upload:
A PDF of the memorandum, within 1,000 words limit.
The file name for the submission should be prepared as:
“Family name” “Given name” “Student ID” ACCT3103
(for example: Gao_Tina_41234567_ACCT3103)