These Teaching Notes present suggested answers and potential discussion points for the questions presented in the “Case Learning Objectives and Implementation Guidance” section.

This question gets the students thinking about how companies are structured and how the financial statements reflect that structure.1 The question helps students think about what defines a “company” and its boundaries (i.e., the separate entity concept). The instructor can discuss how legal aspects of a company drive whether two or three companies exist. For example, we could have two separate companies—one for Jacques' Cupcake Shoppe (JCS) and one for Gilles' Cupcake Bakery (GCB)—because we received stock from each business. We could also have three separate companies if, in addition to the stock from Jacques and Gilles, we set up a holding company for our own business in the U.S. The main takeaway for students is that legal aspects of stock ownership drive the number...

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