Final Assignment

发布时间：2025-07-24

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It is Friday afternoon at 4:45 pm, you’ve just finished submitting your billable hours and timesheet. Its been a long week of overtime, and you have an amazing weekend planned. You’re all set to go home and start your weekend!

It is now 4:53 pm. Just as you stand up to leave, the partner is here, standing at your desk. “I need you to stay tonight, we’ve got an important client that wants to meet first thing Monday morning.”

The client is none other than Mister Fudge. Mister Fudge is equal parts sweet and mysterious. He started a private candy company years ago in St. Catharines called Fudge!Fudge!Fudge! He was inspired by the success of Fiesta!Fiesta!Fiesta! and Pizza!Pizza!Pizza! He has spent the last 15 years building up the company but is ready for new adventures. New adventures aren’t cheap, and he needs cash to fund the next chapter of his life. As far as you know, he lives alone on top of a hill in a big mansion with his trusty sidekick dog, Nougat.

You’re annoyed that Fudge has ruined your weekend but unpack your laptop and sit back down.

The partner has asked you to calculate the after-tax cash available for the following exit strategies.

Option 1:

A corporate buyer has offered Mister Fudge $1,500,000 in cash for 100% share ownership of Fudge’s company. Fudge has complained that this isn’t a good deal because the FMV assets are valued at over $2.5 million dollars.

Option 2:

Sell off all assets and wind-up the corporation (cancel the shares).

Option 3:

Sell off all assets, retain the corporation, but cease operations. Use the corporation to access cash via dividends or other available sources.

1) Use excel to show all calculations in an organized manner.

2) Summarize your findings in an easy-to-read format for the partner and client.

3) Offer a recommendation to Mister Fudge. Be sure to briefly address qualitative considerations (non-economic) in your recommendation.

Balance Sheet information as at December 31

Cash		15,000
Accounts Receviable	60,000
Less: reserve for doubtful accounts	5,000	55,000

Inventory		110,000
Marketable securities		26,000
Land		385,000
Building - UCC		223,000
Equipment - UCC		110,000
Customer List - UCC		20,600
		944,600

Liabilities		645,000
Future income taxes		41,000
Common shares (PUC)		18,000
Retained Earnings		240,600
		944,600

Additional Information
	Cost	FMV
Accounts Receivable	60,000	52,000
Inventory	110,000	127,000
Marketable Securities	26,000	26,000
Land	385,000	950,000
Building	566,000	1,197,000
Equipment	300,000	90,000
Customer Lists	42,453	70,000

- Unrecorded goodwill is valued at $60,000

- A separate buyer has been found for the accounts receivable. The buyer is willing to offer immediate cash for the outstanding A/R. Treat the A/R as capital property.

- The company has non-eligible RDTOH of $6,000 and a capital dividend account of $12,000.

- The provincial corporate tax rate is 4% on income eligible for the small business deduction and 12% for all other income.

- For ease of calculations you can assume Fudge will be effectively taxed in the highest personal tax bracket, 50%.

All Problems will be judged based on the following criteria

Criteria	Excellent (A) 4	Good (B) 3	Satisfactory (C) 2	Needs Improvement (D/F) 1
Quantitative Accuracy	All calculations/data are accurate and clearly presented.	Minor errors in data or calculations.	Some errors and/or lack of clarity.	Multiple errors or unclear data usage.
Use of Methods	Appropriate methods applied effectively with clear rationale.	Mostly appropriate methods with some justification.	Limited methods used or weak justification.	Methods poorly chosen or misapplied.
Data Interpretation	Insightful analysis connecting data to conclusions.	Generally strong analysis with minor gaps.	Basic interpretation with limited insight.	Misinterpretation or vague conclusions.
Visual Representation	Charts/graphs enhance understanding and are professionally done.	Charts/graphs are clear but could be improved.	Visuals included but lack clarity or relevance.	Poor or missing visual representation.
Qualitative Depth	Rich, nuanced insights supported by evidence.	Well-reasoned but less nuanced discussion.	Surface-level insights with limited evidence.	Vague or unsupported qualitative analysis.
Contextual Understanding	Deep awareness of context/background of data/subject.	Good understanding with some contextual gaps.	Limited contextual integration.	Context is missing or misunderstood.
Writing & Communication	Clear, organized, and engaging writing.	Mostly clear, with minor issues in flow or style.	Some unclear or disorganized writing.	Difficult to follow or poorly written.
Critical Thinking	Challenges assumptions; considers alternative perspectives.	Demonstrates thoughtfulness with limited depth.	Basic analysis without deep questioning.	Lacks critical engagement or reflection.