The Liquidation Auditing Report of Tubular Precision Products (Suzhou) Co., Ltd.

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Suzan Golden
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1 苏州众勤会计师事务所 SUZHOU A L L P R O 中国苏州工业园区苏华路 2 号国际大厦 C e r t i f i e d P u b l i c A c c o u n t a n t s C o., L t d. T E L : ( 8 6 ) / F I n t e r n ati onal Building, 2 S u h u a R o a d P. R. C F A X : ( 8 6 ) S u z h o u I n d u s t r y P a r k P. R. C h i n a The Liquidation Auditing Report of Tubular Precision Products (Suzhou) Co., Ltd. The liquidation committee of TPP: Under entrustment, we have audited TPP s Liquidation Balance Sheet for Mar.24 th, 2010, and its Liquidation Income Statement for the period from Dec. 28 th, 2009 to Mar.24 th, These liquidation financial statements are provided by and thus on the hand of the company (TPP), while we are responsible for the auditing suggestions made upon them. Our auditing process follows China s Independent Auditing Standards, and we implemented certain necessary procedures including checking the accounting records by sampling in the process. We hold the opinion that these liquidation financial statements obey the regulations of Accounting Standards for Enterprises, Accounting System for Business Enterprises, and Measures for Liquidation of Foreign Investment Enterprises. They also respect financial position of the company on Mar.24 th, 2010, as well as its liquidation gain or loss for the period from Dec. 28 th, 2009 to Mar.24 th, Attached to this report are: 1. Liquidation Balance Sheet of TPP, 2. Liquidation Income Statement of TPP, 3. Inventory Sheet of TPP on Mar.24 th, 2010, 4. Explanations for the Liquidation Matter of TPP, 5. Supplementary information provided by administration of TPP. SUZHOU ALLPRO ACCOUNTING FIRM Chinese Certified Public Accountant Chinese Certified Public Accountant SUZHOU CHINA Mar.24 th,

2 Attachment1. Liquidation Balance Sheet of TPP Period Ending 24-Mar Dec-09 Assets Current Assets Cash and Cash Equivalents 338, ,775, Accounts Receivable - 8,686, Other Receivables 74, Accounts Payment - 25, Inventory - 305, Deferred and Prepaid Expenses - - Total Current Assets 338, ,867, Long Term Investments Gross Long Term Investments - 30,980, Less: Depreciation - 6,310, Net Long Term Investments - 24,670, Intangible Assets Deferred Long Term Asset Charges - - Total Assets 338, ,537, Liabilities Current Liabilities Short Term Investments - (24,145,738.80) Accounts Payable - 3,067, Tax Payable - (937,677.27) Other Payables - 32, Accrued Expenses 204, , Total Current Liabilities 204, ,368, Long Term Debt - - Total Liabilities 204, ,368, Stockholders' Equity Paid in Capital 61,123, ,123, Liquidation gain or loss (9,035,301.21) - Retained Earnings (51,954,452.20) (51,954,452.20) Total Stockholders Equity 133, ,169, Director of the Liquidation Committee: Financial Administrator of Liquidation Committee: Lister: 2

3 Attachment2. Liquidation Income Statement of TPP Period: From 28-Dec-09 to 24-Mar-10 Gain (Loss) on Assets Disposal Net income on disposal of fixed assets (12,462,440.20) Net income on disposal of raw materials (250,768.34) Less: Bad Loans (95,644.36) Gain (Loss) on Liabilities Disposal Immunity of Short Term Liabilities 74, Accounts Payment which need not be paid 53, Less: Input Taxes which are not deducted (948,533.16) Total Gain (Loss) on Liquidation - Liquidation Fees Liquidators Salaries (374,141.04) Redundancy Expenses (1,006,550.34) Travelling Expenses (193,274.40) Correspondence Expenses (67,423.91) Utilities (67,683.21) Service Charge (213,950.00) Employee benefits (116,558.50) Other Taxes and Fees ( 82,171.94) Financial Charge (121,557.02) Site Clearing Expenses (386,390.00) Staff Compensation for Injuries (178,055.26) Others (64,304.55) Total Liquidation Expenses (2,872,060.17) Net Income on Liquidation (9,035,301.21) Director of the Liquidation Committee: Financial Administrator of Liquidation Committee: Lister: 3

4 Attachement3. Inventory Sheet of TPP on Mar.24th, 2010 Accounts Amount Remarks Cash and Cash Equivalents Cash 6, Deposit in Bank of China 329, Tax Account in Agriculture Bank of China 1, Total Cash and Cash Equivalents 338, Total Property 338, Director of the Liquidation Committee: Financial Administrator of Liquidation Committee: Lister: 4

5 Attachement4. Explanations for the Liquidation Matter of TPP 1. Introduction to the Company TPP (the Company) is a wholly foreign-owned enterprise invested by the TUBE INVESTMENTS OF INDIA LIMITED, and established on June.28th, 2006, in Suzhou, Jiangsu Province, China. Under the approval of the People s Government in Jiangsu Province, the company received the No. [2006] document, the Certificate of approval issued by the foreign trade office in the Government of Jiangsu Province. On June.28th, 2006, the company received the No Business License issued by the Administration Bureau for Industry and Commerce in Jiangsu Province. On Oct.27th, 2008, the company replaced its Business License with a new one, and the Registration Number is The company started its operation in May, 2007 with the registration capital of 8.05 million dollars. And it has an operation period of 50 years. On Dec.28th, 2009, the Board of Director of TPP decided to liquidate the company. The company has received the No. [2009]77 document, the Approval reply for liquidation of TPP approved by the Economic and Trade Development Council of Suzhou Industrial District in Jiangsu Province, China. On Jan.22th, 2010, the liquidation committee of the company published a liquidation notice including its liquidation background, beginning date of the liquidation process, and the names and contacts of the members of the liquidation committee on the XINHUA DAILY. 2. Accounting rules of the Liquidation 1) Basis of Liquidation The liquidation process follows the Accounting Standards for Business Enterprises and the Procedures for Liquidation of Foreign-Funded Enterprises. 2) Period of Liquidation The liquidation process started on Dec.28 th, 2009, and lasted until Mar.24 th, ) Priority to Liquidation Expenses a) Fees required by the management, sales and distribution process of the liquidation property of the company; b) Notice, litigation and arbitration costs; c) Other expenses occurred in the liquidation process. 4) Liquidation Order of the Property a) Staff salaries and labor insurance; b) State taxes; c) Other liabilities. 5) Distribution of Residual Property After paying the liquidation expenses and all the liabilities, the residual property is distributed to the investors according to their actual proportion of investment. 5

6 3. Liquidation Situation The entire liquidation process of TPP follows the liquidation rules and liquidation procedures. The receivables turn into bad loans, bringing a loss of 95, yuan to the company. The net loss on disposal of fixed assets is 12,462, yuan. The net loss on disposal of inventory is 250, yuan. The immunity of short term liabilities is 7,541, yuan. The total liquidation expenses turn out to be 2,872, yuan, which includes 372, yuan of liquidators salaries, 1,008, yuan of redundancy expenses, 213, yuan of service charge, 386, yuan of site clearing expenses, and 891, yuan of other expenses. The total loss on liquidation is 9,035, yuan. And the stockholders equity on the liquidation closing day is 133, yuan. 4. Other Explanations Until now, the process of nullifying the company s tax registration is still in progress. 6

7 Attachement5. Supplementary information provided by administration of TPP Period Ending Accounts 24-Mar-10 Amounts Audited Net Income on Liquidation (9,035,301.21) Adjustment on Taxable Income Excessive Employee Benefits 68, Commercial Insurance for the Staff Paid before Tax 3, Unlisted Loss on Bad Loans 95, Unlisted Loss on Abandonment of Fixed Assets occurred in Liquidation 5,855, Expenses without a receipt 18, Staff Compensation for Injuries (Already paid) 178, Accrued Expenses without a receipt 204, Adjusted Taxable Income (2,612,393.18) 7

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