Question 3 – Accounting Theory Application (10 marks) The UK construction firm Carillion, which is involved in a host of major government projects has gone into compulsory liquidation. Carillion relied on large contracts, some of which have proved much less lucrative than it expected. Last year it slashed the value of them by £845m, of which £375m related to public-private partnerships (PPPs) such as Royal Liverpool university hospital. As its contracts underperformed, its debts soared to £900m. The company needed a £300m cash injection, but the banks that lent it money refused to put more in. The government also refused to bail it out. That left the company unable to continue trading, forcing it to go into liquidation.
Extract from The Guardian article dated 15 Jan 2018 Identify two stakeholders for Carillion. For each stakeholder describe how an accounting theory can be used to help understand their perspective towards Carillion based on the details provided above. (10 marks)
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