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Ifrs 10 Application to Hyundai and Kia

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Ifrs 10 Application to Hyundai and Kia
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ACCT333 Advanced Financial Accounting
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Group Project Assignment (IFRS 10)
Cheong Wang Shen Gordon

Prepared for: Prof Bernardine Low
Prepared by: Gordon Cheong Wang Shen Jason Tan Zhu En Twain Teo Wei Ren Wee Huixiang (G4)

Table of Contents Question 1: IFRS 10 flowchart 3 Question 2 5 (a) Identifying ambiguity of control 5 Background 5 Control issues 5 Co-owning of subsidiaries 5 Inter-company director relations 6 Same platform manufacturing 6 (b) & (c) Application of IFRS 10 flowchart to determine existence of control by Hyundai 7 Step 1: Determine the purpose and design of investee (Kia) 7 Step 2: Determine relevant activities 7 Step 3: Determination of ability to direct relevant activities 8 Step 4: Determine if exposed to variable returns 9 Step 5: Determine if Hyundai is a principal or an agent 10 Question 3 10 Identification of four requirements in IFRS 10 that are challenging to interpret and apply 10 Considering the purpose and design of the investee 10 Determining the relative size of voting rights 11 Considering related parties 12 Determining if investor is a principal or agent 12 References 14

Question 1: IFRS 10 flowchart

Question 2
(a) Identifying ambiguity of control
Background
The Hyundai Motor Company (hereafter referred to as Hyundai) is a multinational automaker based in Seoul, South Korea. Hyundai is one of the two best-known divisions of the global conglomerate Hyundai, the other being Hyundai Heavy Industries, the largest shipbuilder globally. A famous Korean businessman, Chung Ju-yung, founded Hyundai in 1974.
Following the Asian Financial Crisis in 1997, Hyundai bought over Kia Motors Corporation (hereafter referred to as Kia) in 1998, which resulted in the formation of the Hyundai Kia Automotive Group (HKAG). It consists of multiple affiliated companies


References: 1) Hyundai 2010 Annual Report http://worldwide.hyundai.com/company-overview/investor-relations/financial-information-Annual-Report-view.aspx?idx=13&&nCurPage=1&ListNum=11 2) Kia 2010 Annual Report http://www.kmcir.com/eng/library/annual.asp 3) Merger and Reconfiguring of Hyundai-Kia (Byoung-Hoon Lee, Sung Jae Cho) http://gerpisa.org/rencontre/9.rencontre/S13Lee-Cho.pdf 4) HYUNDAI MOTORS’ DE-CHAEBOLIZATION EFFECTS (Hyunjoong Jun) http://gerpisa.org/rencontre/9.rencontre/S13Jun.pdf
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