Subject category:
Finance, Accounting and Control
Published by:
Ivey Publishing
Version: 2002-03-20
Share a link:
https://casecent.re/p/16204
Write a review
|
No reviews for this item
This product has not been used yet
Abstract
The risk management and corporate finance team at Citibank had to decide which of several proposals would best meet the needs of a potential client, Gulf Canada Corporation (Gulf). The client was the new owner of a $200 million subordinated oil indexed debenture. The immediate problem was that Gulf''s auditors wanted the newly acquired debenture to be recorded on the year-end balance sheet at some amount significantly less than the $200 million original cost, to reflect the uncertainty over its value. Since Gulf believed that the recent decline in oil prices was temporary, the company did not want to write down the value of the debenture and it certainly did not want to report reduced earnings as a result of the sizable loss that would hit the income statement if the assets were written down.
About
Abstract
The risk management and corporate finance team at Citibank had to decide which of several proposals would best meet the needs of a potential client, Gulf Canada Corporation (Gulf). The client was the new owner of a $200 million subordinated oil indexed debenture. The immediate problem was that Gulf''s auditors wanted the newly acquired debenture to be recorded on the year-end balance sheet at some amount significantly less than the $200 million original cost, to reflect the uncertainty over its value. Since Gulf believed that the recent decline in oil prices was temporary, the company did not want to write down the value of the debenture and it certainly did not want to report reduced earnings as a result of the sizable loss that would hit the income statement if the assets were written down.