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The directors of Cafee plc are considering investing in the shares of Chocolate Ltd but are unsure of the accounting implications of the investment. Required:
The directors of Cafee plc are considering investing in the shares of Chocolate Ltd but are unsure of the accounting implications of the investment. Required: Advise the directors of the differences in the accounting treatment of the investment if Cafee plc were to buy the following shareholding in Chocolate Ltd; a) 10% shareholding [2 marks] b) 40% shareholding and gain significant influence [6 marks] c) 90% shareholding and gain control [12 marks] (no calculations are required). The directors are unsure which of the shareholdings above will require disclosure as a related party. Required: d) Discuss which of the above shareholdings with reasons would give rise to a related party under IAS24 Related Parties (no calculations are required). [3 marks]
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