Company C has a 25% interest in the share capital of company Q, which is a...

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Company C has a 25% interest in the share capital of company Q, which is a company involved in the same industry as company C. The remaining equity in Q is held by the two founding shareholders of company C. They hold two of the five seats on company Q's board, but do not have special expertise in the industry. Consequently they have allocated the other three director appointments to nominees of company C. The nominees of company C take the lead in framing strategic decisions at company Q's board meetings, with the other two directors actively monitoring company Q's business activities. Explain how the investments are to be treated in the consolidated financial report of company C in line with extant International Accounting Standards. That is, does C has control over Q? Company C has a 25% interest in the share capital of company Q, which is a company involved in the same industry as company C. The remaining equity in Q is held by the two founding shareholders of company C. They hold two of the five seats on company Q's board, but do not have special expertise in the industry. Consequently they have allocated the other three director appointments to nominees of company C. The nominees of company C take the lead in framing strategic decisions at company Q's board meetings, with the other two directors actively monitoring company Q's business activities. Explain how the investments are to be treated in the consolidated financial report of company C in line with extant International Accounting Standards. That is, does C has control over Q?

Answer rating: 100% (QA)

According to International Accounting Standards IAS 27 a company has control over another company if ... View the full answer