Andrews Company, a cement manufacturer, acquired all the voting common stock of Benson Company, a rug manufacturer,

Question:

Andrews Company, a cement manufacturer, acquired all the voting of Benson Company, a rug manufacturer, as part of a diversification program. As a result of a later decision to discontinue the diversification program and to concentrate on its primary line of business, Andrews divested all of its diversified businesses except for Benson. Andrews decided to retain an investment in Benson because it believed that Benson was well positioned for future growth and profitability. However, because of its current corporate strategy to commit capital resources only to its primary line of business, Andrews was unwilling to provide the capital needed to support the projected growth of Benson. Thus, Andrews caused Benson to issue additional shares of Benson's voting in an initial public offering.
After Benson's initial public offering, Andrews' stockholding represented less than 50 percent of the total number of shares of Benson's voting outstanding. But Andrews' shares were the largest block of Benson's voting held by any single party, with the remainder widely held-no single party held more than 3 percent of the total number of shares of Benson's voting outstanding. Benson had no other classes of equity securities or contingently issuable voting common stock.
Required
For each of the six cases below, indicate, with supporting reasons, what the consolidation conclusion would be under U.S. and under IFRS.
a. Andrews is able to elect a majority of Benson's board of directors solely as a result of exercising the voting rights of its large minority stockholding. Not all of Benson's stockholders exercise their right to vote, giving Andrews a majority of the votes cast. Following is information on votes cast in three separate cases (1), (2) and (3):

Andrews Company, a cement manufacturer, acquired all the voting common

b. Instead of the facts in part a, Andrews is able to dominate the election of the board of directors through nominating its choices for board members, obtaining proxies from other stockholders, and convincing still other stockholders to cast their votes for its nominees. While Andrews' ability to dominate the composition of Benson's board of directors is largely due to its large minority stockholding, Andrews itself is not able to cast a majority of the votes as a result of ownership of voting rights. Following is information on votes cast in three separate cases (4), (5) and (6):

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