Using an Internet web browser, search for AICPA’s Statement on Standards for Attestation Engagements (SSAE) No. 18, and perform the following: a. Explain the relevance of SSAE 18 and what….
What questions would you ask management of the new firm about the debt restructuring?
Muscocho Explorations Ltd., Flanagan McAdam Resources, and McNellen Resources Inc. signed an agreement in January 1996 with their principal secured creditor, Canadian Imperial Bank, to restructure the CA$8.95 million secured debt the three companies owed the bank. Under the agreement, Canadian Imperial received proceeds from the sale of the Magnacon Mill as well as a $500,000 payment for the Magino Mill. The bank agreed to convert its remaining debt to 10 percent of the equity in a new company created by combining Muscocho, Flanagan, and McNellen. What information would you need to record the effects of this transaction in the books of the new combined firm? What financial statement effects of the transaction can you quantify? As a financial analyst, what questions would you ask management of the new firm about the debt restructuring?