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Case 5-5 Tax Inversion (a GVV case) Jamie Keller was pleased with his new job position as director of international consolidation for Gamma Enterprises. Gamma Enterprises was a consolidation of high-tech gaming companies, with subsidiaries of Alpha, Beta, Gamma, Delta, and Epsilon. This past year Gamma had completed a tax inversion with Epsilon, which is headquartered in Ireland, becoming the parent company. Gamma was the oldest company of the group and the only subsidiary with material inventory Jamie was preparing for a meeting with Jason Day, the CFO of the group, as well as the senior manager on the audit of Gamma. The discussion was planning for the year-end and issues with the tax inversion and consolidation with Epsilon as the parent company. Jamie and Jason were in the conference room when Thomas Stein, the senior auditor, arrived. Jamie was surprised "Thomas, what a surprise! I did not know that we would be working together on the annual financial "Yes, it's good to see you. We did many a team project together in school. Congratulations on your new as Thomas was an accounting classmate from State University. statements. Long time, no see," Jamie said. position. Jason told me what a great job you were doing." Jason cleared his throat and said, "I see we all know each other. Let's get started as I think there are a lot of year-end issues with this tax inversion. First, the company will keep the corporate physical headquarters here in Philadelphia, but many of the governance meetings will be at Epsilon headquarters in Dublin, Ireland. Jamie, I need you to prepare a study for the board to consider at the next meeting as to whether all the subsidiaries should change to IFRS for the consolidation or not. Thomas, can you briefly explain the issues with such a change?" Under IFRS most assets will be revalued to fair market values. That will increase the values on the balance sheet. The biggest drawback will be the taxes the company will owe with changing from LIFO to weighted Case 5-5 Tax Inversion (a GVV case) Jamie Keller was pleased with his new job position as director of international consolidation for Gamma Enterprises. Gamma Enterprises was a consolidation of high-tech gaming companies, with subsidiaries of Alpha, Beta, Gamma, Delta, and Epsilon. This past year Gamma had completed a tax inversion with Epsilon, which is headquartered in Ireland, becoming the parent company. Gamma was the oldest company of the group and the only subsidiary with material inventory Jamie was preparing for a meeting with Jason Day, the CFO of the group, as well as the senior manager on the audit of Gamma. The discussion was planning for the year-end and issues with the tax inversion and consolidation with Epsilon as the parent company. Jamie and Jason were in the conference room when Thomas Stein, the senior auditor, arrived. Jamie was surprised "Thomas, what a surprise! I did not know that we would be working together on the annual financial "Yes, it's good to see you. We did many a team project together in school. Congratulations on your new as Thomas was an accounting classmate from State University. statements. Long time, no see," Jamie said. position. Jason told me what a great job you were doing." Jason cleared his throat and said, "I see we all know each other. Let's get started as I think there are a lot of year-end issues with this tax inversion. First, the company will keep the corporate physical headquarters here in Philadelphia, but many of the governance meetings will be at Epsilon headquarters in Dublin, Ireland. Jamie, I need you to prepare a study for the board to consider at the next meeting as to whether all the subsidiaries should change to IFRS for the consolidation or not. Thomas, can you briefly explain the issues with such a change?" Under IFRS most assets will be revalued to fair market values. That will increase the values on the balance sheet. The biggest drawback will be the taxes the company will owe with changing from LIFO to weighted

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