TB YE 31.12.2016 Bank Trade receivables VAT receivable Investme...

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TB YE 31.12.2016 Bank Trade receivables VAT receivable Investment in subsidiary Deposits Computers Accumulated depreciation (computers) Servers Accumulated depreciation (servers) Share capital Accumulated profit/losses Trade payables VAT payable Deposits Interest payable Loans Sales revenue Cost of sales Net salaries Salary tax Employee contributions Employer contributions Office rent Regulatory licence Depreciation Accountants Marketing Fees and penalties Interest expense FX differences Income tax Information on the company: EUR Dr 8.000.000,00 6.000.000,00 685.500,00 100.000,00 900.000,00 500.000,00 1.000.000,00 116.109,20 8.800.000,00 110.000,00 16.500,00 18.000,00 18.000,00 90.000,00 100.000,00 750.000,00 100.000,00 150.000,00 200.000,00 897.897,63 1.268.648,62 189.920,47 EUR Cr 375.000,00 750.000,00 100.000,00 3.000.000,00 900.000,00 1.500.000,00 931.835,93 10.453.740,00 12.000.000,00 The company was founded in Germany on 1.2.2013 and is a internet marketing company. It's main revenue streams are in EUR (which is it's functional and reporting currency), while it's costs of sale are mainly in USD. For FX rates, the company refers to www.xe.com for simplicity. The loan is a 3-year cash loan, principal amount USD 11 million, taken out 9.2.2016. VAT is 15%, returns made quarterly CIT is 20%. Deposits are received from and paid to customers and suppliers respectively. Please comment on: 1. any unusual BS items you may see 2. based on the depreciation expense and the accumulated depreciation figures, estimate date of purchase of computers and servers (you can assume they were bought on the same date and that straight line depreciation is used) 3. based on the VAT payable amount, calculate how many quarters VAT is still outstanding for 4. total company equity (losses are tolerated 3 years in a row) 5. any ratios you may see fit to be commented on In 2017, the following occured: 1. on 10.1.2017 the company bought a software licence valid from 1.1.2017 to 30.6.2018 for USD 1.200.000,00. 2. on 30.6.2017, all of the company's computers were sold for a value of EUR 350.000,00 and subsequently new ones were bought on the same date for EUR 650.000,00. 3. sales revenue for 2017 was EUR 9.800.000,00 4. gross margin (gross profit/sales revenue) stayed the same Please: 1. book the listed events 2. remember to use xe.com for any FX issues 3. provide us with the final TB as at 31.12.2017 as well as the PL for 2017 Finally, please comment on the following information: 1. The company plans to deal with a major customer in Malaysia. You've heard that the Malaysian tax authorities usually charge a withholding tax (WHT) on payments abroad and that marketing services are more often than not treated as royalties by the authorities. Please investigate what this means for our company's future revenue stream coming from Malaysia. 2. The company owns a subsidiary in Mexico and would like to draw dividends from it.

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Unusual Balance Sheet Items.
These are items that do not frequently occur in the statement of financial position. From our example, below are the unusual items;
1. Deposits
2. FX Differences
Calculation of the estimated date of purchase for computers and servers.
The depreciation ratio between the two items is;
1:2 (375,000/750,000)
The total depreciation for the year is 750,000
Annual depreciation for both computers and servers can be calculated as below;
For computers
1/3*750,000= 250,000 and
For Servers
2/3*750,000= 500,000
To get the actual number of depreciation years, we divide the accumulated depreciation with the annual depreciation amount as shown below.
375,000/250,000 and/or 750,000/500,000
Both give us 1 and a half years. On estimate, this means that the computers and servers were bought on...

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