Applying the principles of control in IFRS 10 Consolidated Financial Statements, as described in Section 22.6.2 of this chapter, you are required to consider whether certain investments of Austin pic are subsidiaries.

Austin pic has investments in a number of companies, and the company’s accountant has asked your advice on whether certain of these companies should be treated as subsidiaries under IFRS 10 Consolidated Financial Statements.

(a) Austin pic owns 45% of the voting shares of Bond Ltd.

(b) Austin pic owns 60% of the voting shares of Bradford Ltd and Bradford Ltd owns 30% of the voting shares of Derby Ltd. Recently, Austin pic purchased 70% of the voting shares of Coventry Ltd. Coventry Ltd owns 30% of the voting shares of Derby Ltd. The accountant believes Derby Ltd is not a subsidiary of Austin, as Austin effectively owns only 39% of the shares of Derby - 60% x 30% = 18% through Bradford and 70% x 30% = 21% through Coventry.

(c) Recently, Austin pic purchased 60% of the ordinary shares of Norwich pic.