Company C has 1,000 common shares outstanding. Company A holds 600 shares of C and Company B holds 400 shares of C. Company B also holds 250 stock options. Each option, if exercised, is converted to one common share. Assume the options have an exercise price of $30, and the current estimated fair value of the share is $28.50. Also assume that all three companies are in the same industry and so both companies A and B may realize some level of synergy if they control Company C.

1. Which company should consolidate Company C under IFRS and under US GAAP? Explain.
2. Repeat part (a) assuming the exercise price of the options is $60 instead of $30. Explain.
3. Go back to assuming that the options have an exercise price of $30, but now assume that in addition to the above holdings Company A is holding 50 convertible bonds, where each bond could be converted to 4 common shares at any time before maturity. Taking into account the value of the bonds and the current value of the shares, the conversion feature is slightly out of the money (but not deeply out of the money). Answer part (a) with this additional information. Explain.