Question
Scrooge holds 70% of the voting rights of Cratchett. Marley has 30% of the voting rights of Cratchett. Marley also has an option to acquire
Scrooge holds 70% of the voting rights of Cratchett. Marley has 30% of the voting rights of Cratchett. Marley also has an option to acquire half of Scrooge's voting rights, which is exercisable for the next two years, but at a fixed price that is deeply out of the money (and is expected to remain so for that two-year period). Required: IFRS 10 / AASB 10 Consolidated Financial Statements focuses on control as the key concept underlying the parent/subsidiary relationship, explain the circumstances in which an investor controls an investee according to IFRS 10 / AASB 10. Now, consider the case of Cratchett, explain whether either Scrooge or Marley should consolidate Cratchett in accordance with IFRS 10 / AASB 10.
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