Chaplin Ltd is a financing company and its primary interest in investing is return on investment. It refrains from getting involved in the management of its investments. If an investee is not managed properly, Chaplin Ltd sells its shares in that investee and selects a more profitable investee to invest in.

On 1 July 2020, it held 35% of the issued share capital and 80% of the convertible debentures of Charlie Ltd. Lately, when Charlie Ltd was having cash flow difficulties, it persuaded Chaplin Ltd to convert some of the convertible debentures into equity to ease the effects of interest payments on cash flow. As a result, Chaplin Ltd’s equity interest in Charlie Ltd increased to 55%. Chaplin Ltd still wanted to remain as a passive investor. For instance, Charlie Ltd did not get involve in the recent appointments of board of directors. They were appointed by the holders of the remaining 45% of shares.

Required:

Determine whether Chaplin Ltd is the parent of Charlie Ltd. Please provide reasoning in the support of your conclusion.

Answer rating: 100% (QA)

I will nswer this questin frm the IFRS ersetive n investr determines whether it is ... View the full answer