Professor Tsang free essay sample

Why would you choose to run a business as a partnership? (2). A and B are in partnership as accountants. Without B’s knowledge, A, in the name of the partnership, entered the following transactions, although he had no express authority to do so: (i) (ii) purchased new office stationery and equipment for the firm. purchased shares to the value of $15,000 in the partnership name in an exploration company soon to be floated on the ASX. (a) (b) Discuss the liability of the partnership. Can B be personally liable for either of the transactions? (3) Andy, Bob and Chris were old school friends. Bob and Chris were running a surf shop together. The business was having financial difficulties. Andy had recently inherited a lot of money and Bob and Chris asked him to lend the business $100,000 to enable them to buy sufficient stock for the summer season. Andy wanted to help his friends but also wanted to ensure that he would get his money back. We will write a custom essay sample on Professor Tsang or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page He agreed to lend Bob and Chris the money in return for a payment of $10,000 per year out of the gross returns of the shop. (a) Discuss whether or not a partnership exists between Andy, Chris and Bob. b) Would it make any difference if the terms of the loan provided for Andy to be paid $10,000 per year out of the profits of the business and he was to be consulted on any business decisions involving liability of $5,000 or more? Explain your answer in terms of the Partnership Act. 2 1. The Corporations Act 2001 addresses issues relating to the national regulation of companies in Australia. What were the main problems of earlier schemes? 2. Ryan is an ambitious amateur theatrical director who sees a future in commercial promotion of small-scale amateur dramatic productions. The actors will be paid a small fee but there is a profit to the promoters. In case the show is successful there is the chance of an extended season, country tours or even television broadcast. Ryan has been told of the various forms of business organisation, and he asks your advice about the formation of a company. He envisages that a number of his friends would be prepared to invest substantial sums of money, and that 40 or more theatrical acquaintances will be prepared to make a nominal investment as a gesture of support. (i) (ii) What kind of company would best suit the needs of these investors? a) (b) (c) who will manage the affairs of the company? how will they be appointed? will the company have a common seal? 1 (3) Nicola and May are presently partners in a business which operates a second-hand book shop. They have two employees working for the business. The shop is located in leased premises. The business is doing well and has been profitable for them. An opportunity has ari sen to purchase two second-hand bookshops in nearby suburbs. Nicola and May are keen to expand their business. They will need a large injection of funds to purchase the additional businesses. They will need to appoint a manager to at least one of the shops, as they will be fully occupied by the other two. Nicola is concerned about her potential liability for the debts and liabilities of the partnership. Also, she is concerned about the future of the business if one of them should decide to leave, as the lease is in both of their names. Advise Nicola on the advantages and disadvantages of forming a company. If you recommend that registering a company which type would be the most appropriate? (4). Indri runs a soil testing business. He decides to form a company to take over the business. He is the sole shareholder and sole director. Indri sells his business to the company at an inflated price and lends the company $90,000 to help meet the cost of purchase. As security for the loan, Indri arranges a mortgage over a vacant block of land, which he transferred to the company as part of the business sale. In the first year of operation, the business makes a small profit (after paying both Indri and his daughter’s wages), but by the end of 2004 it is clear that the building industry is going through a major slump. Indri becomes desperate and works even harder. While working late into the night, Indri badly lacerates his hand and needs micro-surgery. His efforts to keep the business afloat are in vain and the company is forced into liquidation. On realization of the assets, it is found that the company has approximately $95,000 to go towards meeting creditors’ claims of $210,000: (i) If Indri is the only secured creditor, will he get his $90,000 back? (ii) Can Indri claim workers’ compensation, assuming that he is otherwise entitled to it? 3 (1) What is the relationship between the decision in Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising and Addressing Co. Pty Ltd (1975) 133 CLR 72 and s. 129(3) of the Corporations Act. (2) X is the promoter of X Pty Ltd, a company to which X proposes to sell some land for high-rise development. (Assume the present zoning of this land does not permit such development). What would you advise X to do, and why? (3) Ryan signs a lease for a theatre to be used by Astor Theatre Group Pty Ltd, a company that has not yet been registered. How can the company be bound (and have rights) under such a lease? Can Ryan avoid personal liability if the lease with the company doesn’t proceed? (4) Alan and Bill are the only shareholders and directors of Sailaway Pty Ltd (Sailaway) which distributes and sells yachting clothing and equipment. As well as a warehouse and attached shop, Sailaway owns a large block of waterfront land which it uses for storage. Alan is also the chairman and majority shareholder of Broadacres Pty Ltd (Broadacres) which buys rural land for subdivision into hobby farms. Broadacres needs 2 to borrow $1. 5 million to fund its latest purchase. It already has a large overdraft and has no unencumbered assets to use as security for another loan. Alan organized a loan of $1. 5 million to Broadacres from ABC Bank on the basis that Sailaway would guarantee the loan by executing a mortgage over its waterfront land. Alan signed the mortgage documents as a director of Sailaway and forged Bill’s signature as the other signatory. Tom, the local manager of ABC Bank, had been involved in earlier dealings with Sailaway and knew that its business did not include property development. However, Tom was away at the time the documents and the transactions were organized by a relieving manager who did not ask any questions about Sailaway’s involvement.