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Exchange for Equity Interest - Initial Public Offering(IPO) - Cannabis Funding Inc. Case Assignment
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Cannabis Funding Inc. Case Assignment Answer
Task: Cannabis Funding Inc. (CFI) is a Canada-based investment company that seeks to provide investment returns through investment and capital appreciation in the Canadian cannabis industry. CFI provides funding for facility expansions, operations and initial construction in exchange for equity interests and a portion of the cultivation production. CFI invests in and supports cannabis cultivation companies in Canada and facilitates connections between licensed producers and consumers. CFI completed its initial public offering (IPO) on January 1, 2018, and began its operations on that date. The Company trades on the TSX Venture and therefore reports under IFRS. Today is February 1, 2019. You have recently joined CFI as the new VP of Finance. Your first major task is to assist CFI with December 31, 2018, financial statements for reporting purposes. The major accounting considerations have yet to be made for the investments below. Green Choco Inc (GCI) CFI purchased 45% of the shares of a new Company – Green Choco Inc (GCI) on February 1, 2018, for $1 per share. GCI is a newly formed entity where 45% of the shares are owned by CFI, and the remaining 55% of the shares are owned by Silver Health Therapeutics (SHT). There are no separate agreements which provide CFI or SHT with rights to the specific assets and obligations of GCI. GCI was formed to operate a cannabis production facility in Ontario. The main operator of GCI will be SHT management. SHT will run the day to day operations of GCI. A board of directors for GCI was created that includes CFI’s chief operating officer and SHT’s chief operating officer. Major business decisions surrounding funding, cannabis strain selection, sales channels and other significant operating issues must go through the board of directors for approval. If the approval of decisions for the board of directors is split, the decision will go to third-party arbitration. On March 1, 2018, CFI issued a $10,000,000 loan to GCI to help fund the operations. The loan charges an interest rate of 10% per year. On March 2, 2018, CFI owned land which it sold to GCI for $2,200,000. The land had a net book value on CFI’s books of $2,000,000. GCI is planning to finish its cannabis production facility in late 2019. GCI’s net loss from February 1, 2018, to December 31, 2018, was $1,200,000.This Accounting Assignment has been solved by our Finance/Accounting experts at onlineassignmentbank. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+ Students in Australia, UK & US by helping them to score HD in their academics. Our Experts are well trained to follow all marking rubrics & referencing style.