'Gourmet Products Inc. Essay\r'

'gastronome Products Inc. (GPI) is a Canadian publicly traded retailer of aged balsamic vinegars, culinary sauces, spices, herbs, and seasonings. Products atomic number 18 sold glob altogethery through several(prenominal) Internet sites created and operated by GPI.\r\nOn supercilious 15, 20X0, GPI completed the acquisition of all the super acid sh atomic number 18s of Abruzzi Oils Inc. (Abruzzi), an Italian producer and retailer of strong point olive oils, for cash consideration of C$6,000,000. The acquisition cost was allocated to the fair pass judgment of the identifiable assets and liabilities. The acquisition cost include a bottling machine with a halt value of $400,000 and a fair food market value of $750,000. However, to avoid any(prenominal) spare depicting complications, the entire purchase dis convertibleity related to this machine was allocated to good entrusting.\r\nGPI intends to keep the Abruzzi title and brand intact. Operations in Italy volition be maint ained, but GPI leave behind event some of the olive oil outturn to Canada. The Abruzzi line of speciality olive oils will be featured on all of GPI’s Web sites. In dressing for ongoing works, GPI has temporarily transferred two omnibuss and volt employees to Italy to work at the Abruzzi home piazza for a period of two geezerhood to ensure the transition runs smoothly and that the plate of operations can be change magnitude to meet the forecasted sales growth. GPI is recording wages paid as consulting fees and is no lifelong taking source deductions.\r\nOne tutor has accepted that the move would cause un opened stress on his family if they remained in Canada so he has decided to take his married woman and children with him for the two- social class period. GPI has just negotiated the purchase of a labelling machine in Italy for EUR 200,000. The equipment is expected to be useful for a period of 12 years. GPI has borrowed EUR 200,000 from the Banca Cammerata in I taly to finance the equipment purchase. The loan, dated July 1, 20X0, is at 7% and is repayable in euros in 15 equal annual instalments, commencing deluxe 1, 20X0. The interest is payable monthly in euros by GPI.\r\nThe ownership of the labelling machine was transferred to Abruzzi on September 1, 20X0, in exchange for a EUR 200,000 note. The terms of the note are similar to the terms GPI negotiated with the Banca Cammerata, except that GPI is not charging Abruzzi any interest. The CFO of GPI stated this type of construction would minimize the foreign currency risk that GPI is exposed to. On the basis of an extended review of the relationship surrounded by GPI and Abruzzi, Abruzzi has been classified as a foreign operation in consonance with IAS 21. In accordance with IFRS, Abruzzi revalued its land and building asset sort out to fair market value, resulting in an adjoin to the land and building account of EUR 20,000. Abruzzi’s accountant recorded the offsetting credi t as a gain in meshwork and loss. A revaluation loss of EUR 5,000 had been recognized for land and buildings in the previous year.\r\nThe integrated tax rate in Italy is advantageously less than Canada’s combined peasant and federal rates. Both GPI and Abruzzi have a September 30 fiscal year end. GPI’s usual intactsale markup on its product imported is 60%; however, GPI has been getting goods from Abruzzi at 150% to a higher place Abruzzi’s cost. The decision to use 150% above Abruzzi’s cost was made by the CFO. As a result, GPI has had a very low profit margin on its retail sales of Abruzzi olive oils.\r\nYou are Asif Majarani, a senior audit manager working in the assurance discussion section of Majarani Associates, CGAs, a CGA soaked in Winnipeg. Majarani Associates has lead different specialized departments †advisory, taxation, and transaction serve †with three other partners, one managing each(prenominal) department. Your firm has been engaged to prepare the amalgamated financial statements for the fiscal year outcome September 30, 20X0, for GPI. This is the third year the firm has been engaged by GPI. You recently met with Ed Moore, chief executive officer of GPI, on October 15 to concord additional information. Moore mentioned that he had some concerns most the upcoming project of converting the existing payroll department system to a new applied science platform.\r\nA new payroll software product system has been purchased since the payroll system soon in use is designed for a small company. GPI’s growth has strain the payroll system’s cogency to provide timely payroll processing. Delays in payment of payroll have caused licking for employees, although this does occur on an infrequent basis. The IT director is strongly suggesting that a direct cutover rebirth approach be taken so that the new system can be used as soon as possible to realize the benefits. It is also the least (prenominal) expensive approach.\r\nMoore is concerned that this is a baseless approach and he believes that a gibe conversion would be a break in option. He is particularly concerned since he has heard that other companies have found errors during the implementation of this specific software system, although these errors are easily resolved once identified. Furthermore, since this is the premier(prenominal) time GPI has been required to prepare unify financial statements for its shareholders, Moore is concerned about how the users will be able to differentiate between the financial positions and results of operations for the two assure entities.\r\nRequired\r\na) In your discussion group, canvas the case as a whole and identify all the issues to be include in the report to the CEO. Note: Candidates must participate in the online discussion. Failure to berth in the online discussion and respond to the posts of others will result in failing the discussion-based chat compete ncies. b) Prepare a report to the CEO (900 to 1,100 words), listing the adjustments that should be considered in preparing the unite statements. You should also address any other issues raised in the case. Complete this report independently of your group and submit it as a hand-in assignment.\r\n'