University : The National Finance Institute -Australia- UniLearnO is not sponsored or endorsed by this college or university.
Subject Code : FNS50315
Country : Australia
Assignment Task

 

Task

  • Andrew Bisset has been a real estate agent for over 20 years and jointly with his wife Jane
  • own 6 shops at 55 Park Road, Belmont. Mr and Mrs Bisset own the shopping centre under
  • the Bisset Family Trust. The property was valued 2 years ago at $1,450,000 and has a
  • current ABZ Bank Mortgage of $625,000.
  • Five of the shops are rented out for $96,000. The sixth shop is occupied by Mr Bisset’s real
  • estate business, Bisset’s Real Estate Pty Ltd, which pays annual rental of $42,000 to the
  • family trust. For tax purposes Bisset’s Real Estate pays rent which is $20,000 in excess of
  • the fair market rental value of the shop it occupies.
  • Bisset’s Real Estate Pty Ltd was formed at the beginning of the last financial year to take
  • over the real estate agency business, which was previously conducted by a partnership
  • between Mr Bisset and Joseph Hooper. Bisset’s Real Estate Pty Ltd took over the business
  • when Mr Hooper retired; Andrew Bisset is the sole director of Bisset’s Real Estate Pty Ltd.
  • Mr and Mrs Bisset now wish to acquire 3,000m2 of land near their existing shopping centre
  • and hold it for 1 – 2 years pending rezoning. The purchase price is $600,000. The land was
  • previously used as a State Government Health and Dental Centre, but the building was
  • demolished when it became obsolete. The land is currently zoned ‘Special Purpose’, but
  • the local council earmarked the land for future ‘Commercial’ use in it recently released
  • Town Planning Scheme. The land is located at 423 Belmont Road, Belmont and has a two
  • street frontage with considerable passing traffic.
  • The Bissets have contracted to purchase the property in their capacity as trustees of their
  • family trust and settlement is due with 60 days. They wish to raise 100% of the purchase
  • price plus $25,000 for stamp duty, financing and conveyancing costs. They are willing to
  • offer both the land and their existing shopping centre as security for the proposed loan.
  • They will contribute a further $20,000 over the next 1-2 years to cover the costs associated
  • with re-zoning of the property and obtaining approval to develop another shopping centre.
  • ABZ Bank policy does not allow lending against land zoned ‘Special Purpose’ and cannot
  • assist with the purchase. The Bissets have appointed you to approach an alternative lender
  • to refinance their ABZ Bank Loan and obtain the additional funds required.
  • Assume an interest rate of 7% for a commercial loan, 9% for an overdraft.
  • Andrew Mark Bisset – DOB 29/07 1965 DL # 2945758
  • Jane Elizabeth Bisset – DOB 15/06 1967 DL # 2786454
  • Married with three adult children (one working in the real estate business)
  • Address: 12 Currumbin Close, Carindale QLD 4152
  • Accountant – Ainslie and Partners Telephone - 07 3349 9999
  • Andrew has been a real estate agent for 22 years in the Brisbane South East area, he
  • specialises in commercial and industrial property (rent roll comprises 75% commercial and
  • industrial properties). His gross salary last financial year was $78,000. In the previous
  • financial year he drew $55,000 from the partnership with Joseph Hooper.
  • Information
  • Jane has worked as the property manager since Bisset’s Real Estate Pty Ltd took over the
  • agency after the partnership. Her salary last financial year was $43,000. She did not work
  • in the previous financial year.
  • Last Financial year Bisset’s Real Estate Pty Ltd recorded the following financial results:
  • Gross Revenue $346,000
  • Net Profit $ 72,000
  • Depreciation $ 14,000
  • Director Superannuation $ 11,000
  • In the previous financial year the partnership of Andrew Bisset and Joseph Hooper trading
  • as Bisset’s Real Estate recorded the following financial results:
  • Gross Revenue $422,000
  • Net Profit $ 84,000
  • Depreciation $ 16,000
  • Director Superannuation $ 11,000
     

 


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  • Posted on : August 24th, 2019

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