A group of five successful business people were awarded the franchise for one of two new expansion..

A group of five successful business people were awarded the franchise for one of two new expansion teams in the North American Sports League (NASL). The professional sports franchise was named the Rockets Franchise (RF). The Rockets are scheduled to begin playing in the 2013/14 season. It is now June 2013, three months away from opening night. The group formed a joint venture to operate RF. The main reason for doing so was to gain the flexibility that they believed this structure could offer them. RF has appointed your accounting firm as auditors for the year ending December 31, 2013. RF has also requested your firm s assistance with the development of RF s accounting policies. You, CA, assigned to the job, and the partner have met with the client. The following are notes from that meeting. 1. The venturers have various business backgrounds, and not all of them are looking for substantial financial reward. However, there are limits to how much they are willing to invest if the project is not financially successful. Most have successful businesses already established and are looking for ways to get public exposure. Three of the venturers have each contributed $2 million in cash, which will be used for start-up costs. One of the venturers has contributed a parcel of land on which the new stadium will soon be built. The fifth venturer has contributed a combination of cash, office equipment, time, and industry knowledge. 2. A management group has been hired to operate RF


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