w.php?id=511241 oard My courses Policies Student services More ✓ You, CPA, were just hired as the financial reporting manager of Spring Limited on January 3, Year 6. Spring Limited is

a private company which produces variety of frozen fruits and sells them to major grocery stores. Spring Limited applies ASPE for its financial reporting. The company is in the process of preparing its financial statements for the fiscal year ended December 31, Year 5 and you have discovered that Spring Limited recently purchased 1,000 common share (20%) of Flowers Incorporated which is a private company producing and distributing frozen dinner across Ontario. To find out more about the investment in Flowers Incorporated, you have decided to meet with the CEO of Spring Limited. During the discussion with the CEO, you have noted the following: • Flowers Incorporated is currently expanding its operation and that is the reason why Spring Limited decided to invest fund to Flowers Incorporated by purchasing 1,000 common shares; C • One of the senior managements of Spring Limited would be one of the five members of the Board of Directors of Flowers Incorporated; Spring Limited also loaned $2,000,000 to Flowers Incorporated. It is a five-year term loan which Flowers Incorporated will pay 4% interest per annum; and • The CEO informed you that Spring Limited's main focus is to produce frozen fruits and it has no intention to produce frozen dinner. The CEO also indicated that he has no intention to impact of how Flowers Incorporated operates. ● The CEO believed that Flowers Incorporated has great potential and that was the main reason why Spring Limited invested in Flowers Incorporated. The CEO would like to know how the N prime video Jo ENG w.php?id=511241 oard My courses Policies Policies Student services More O distributing frozen dinner across Ontario. To find out more about the investment in Flowers Incorporated, you have decided to meet with the CEO of Spring Limited. During the discussion with the CEO, you have noted the following: ● OG Flowers Incorporated is currently expanding its operation and that is the reason why Spring Limited decided to invest fund to Flowers Incorporated by purchasing 1,000 common shares; . One of the senior managements of Spring Limited would be one of the five members of the Board of Directors of Flowers Incorporated; Spring Limited also loaned $2,000,000 to Flowers Incorporated. It is a five-year term loan HAMPA which Flowers Incorporated will pay 4% interest per annum; and • The CEO informed you that Spring Limited's main focus is to produce frozen fruits and it has no intention to produce frozen dinner. The CEO also indicated that he has no intention to impact of how Flowers Incorporated operates. Required: Prepare an internal memorandum to address the CEO's concern. The CEO believed that Flowers Incorporated has great potential and that was the main reason why Spring Limited invested in Flowers Incorporated. The CEO would like to know how the ownership of Flowers Incorporated should be reported in the financial statement of Spring Limited for the fiscal Year 5.