Question# Evaluating the acquisition by Aristocrat Leisure Ltd

  1. Question# Evaluating the acquisition by Aristocrat Leisure Ltd (30 marks)

    On 7 July 2014 Aristocrat Leisure Ltd announced that it entered into an agreement to acquire North American-based gaming machine provider Video Gaming Technology Inc (VGT). The details of the acquisition are disclosed in Note 35 to the 2015 financial statements of Aristocrat Leisure Ltd.

    Required:
    Answer the following questions regarding this acquisition.

  2. How much did Aristocrat pay for the acquisition? Briefly comment on the magnitude of the consideration. (3 marks)
  3. What justification did Aristocrat give in the annual report for the acquisition of VGT? (3 marks)
  4. Evaluate the impact of the acquisition on the financial statements of Aristocrat in the year of acquisition. (7 marks)
  5. Comment on how investors reacted to the acquisition. (3 marks)
  6. Evaluate whether the acquisition objective was achieved. (7 marks)
  7. Aristocrat incurred $17,568,000 in acquisition-related costs. The company expensed these costs instead of including them in the purchase consideration. What is the conceptual justification for this accounting treatment? (3 marks)
  8. Explain whether IFRS 3 might have influenced the acquisition decision of Aristocrat. (4 marks)

    Note: The ASX code of Aristocrat is ALL. You can download Aristocrat’s annual reports, other announcements and share price history from ASX website: https://www2.asx.com.au/. You can use any other relevant resources available online. However, all material must be referenced correctly using the APA referencing style.

    Marking criteria
    This assignment shall be marked according to the following criteria:
    Technical content (70%): This refers to the appropriate analysis of the issues asked in the question and the appropriate use of IFRS.
    Quality of writing (30%)
    Flow of ideas
    Clarity of writing
    Citation and referencing
    The penalty for late submission will be a reduction by 5% or one grade (e.g. B+ to B) per day up to a maximum of five days. An assessment item will not be marked if it is more than five days late.

    Instructions

    Plagiarism is strictly prohibited.
    Use APA 7th edition citation and referencing style.

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