Great Ltd plans to acquire 40 % of the ordinary shares that carry voting rights of Beans
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Question:
Investment 2
Great Ltd holds 20% of the voting rights of Hudson Ltd while another entity, Moon Bucks Ltd holds 80% of the voting rights. Great Ltd also holds debt instruments that are convertible into voting shares of Hudson Ltd at a fixed price that is 'in the money'. If the debt was converted, Great Ltd would hold 63% of the shares of Hudson Ltd.
Required:
The CEO of Great Ltd has asked your advice on whether investment in Beans Ltd and Hudson Ltd are its subsidiaries and if so do they need to be included in the consolidated financial statements of Great Ltd.
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