At 31 December 2018, Zimts total assets balance would most likely be: A. highest if Zimt is
Question:
At 31 December 2018, Zimt’s total assets balance would most likely be:
A. highest if Zimt is deemed to have control of Oxbow.
B. highest if Zimt is deemed to have significant influence over Oxbow.
C. unaffected by the accounting method used for the investment in Oxbow.
Zimt,AGis a consumer products manufacturer headquartered in Austria. It complies with IFRS. In 2017, Zimt held a 10 percent passive stake in Oxbow Limited. In December 2017, Zimt announced that it would be increasing its ownership to 50 percent effective 1 January 2018. Franz Gelblum, an analyst following both Zimt and Oxbow, is curious how the increased stake will affect Zimt’s consolidated financial statements. Because Gelblum is uncertain how the company will account for the increased stake, he uses his existing forecasts for both companies’ financial statements to compare various alternative outcomes. Gelblum gathers abbreviated financial statement data for Zimt (Exhibit 1) and Oxbow (Exhibit 2) for this purpose.
Transcribed Image Text:
EXHIBIT 1: Selected Financial Statement Estimates for Zimt AG ( Millions) Year Ending 31 December Revenue Operating income Net income 31 December Total assets Shareholders' equity 2017 2018* 1,500 1,700 135 153 66 75 2017 2018* 1,254 1,421 660 735
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