B Ltd

A Ltd owns 40% of the issued capital.

The remaining shares are owned by a diverse group of investors who each hold a small parcel of shares, many of whom are unlikely to attend meetings.

The current board of directors of B Ltd has seven members.

Five directors on the board of B Ltd are appointed by A Ltd.

C Ltd

A Ltd owns 35% of the issued capital.

B Ltd owns 45% of the issued capital.

The remaining shares are owned by a small group of investors.

A Ltd has one appointee and B Ltd has two appointees on the board of directors which has five members.

Given the information above, the directors of A Ltd would particularly like to know:

• the type of investment for each entity (i.e. you need to clearly identify the investor-investee relationship) including a summary of the identifying criteria and an application of this criterion;
• the accounting method to be adopted for this type of investment