Jim ltd owns 50% of Gloria ltd's ordinary shares. The remaining 50% of gloria ltd's shares are owned by mel ltd. Jim ltd and melt ltd have five seats on the board, with no party having the casting vote. However, mel ltd appoints the managing director. Profits are split 50-50 after the provision of the managing director's salary. Jim ltd is the only holder of 5 000 options in gloria ltd, which are exercise able at any time at a 10% discount to the fair value of the ordinary shares at the exercise date. Should jim ltd consolidate gloria ltd? justify your decision with an explanation of why or why not?

Answer rating: 100% (QA)

To determine whether Jim Ltd should consolidate Gloria Ltd we need to consider the criteria outlined ... View the full answer