X, Inc. is negotiating with Y, Inc. to acquire 100% of X, Inc.'s share capital. X, Inc. is currently owned by Y, Inc. and meets the definition of business defined in IFRS 3. The sale of shares is subject to approval by X, Inc.'s shareholders and the government. Because the agreement takes time, prior to the sale of shares, X, Inc and Y, Inc entered into an agreement that: Both parties settle it legally with the consent of the necessary agreements;Determine the purchase price;Determined that the following decisions and actions may be taken by Y, Inc. only with X, Inc's approval until the sale of shares, through:o Changes in the management of Z, Inc;o Dividend payment; and,o New project contracts that exceed IDR 200 billion. Does X, Inc control Z, Inc as a result of this agreement?

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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X, Inc. is negotiating with Y, Inc. to acquire 100% of X, Inc.'s share capital. X, Inc. is currently owned by Y, Inc. and meets the definition of business defined in IFRS 3. The sale of shares is subject to approval by X, Inc.'s shareholders and the government. Because the agreement takes time, prior to the sale of shares, X, Inc and Y, Inc entered into an agreement that:

Both parties settle it legally with the consent of the necessary agreements;
Determine the purchase price;
Determined that the following decisions and actions may be taken by Y, Inc. only with X, Inc's approval until the sale of shares, through:

o Changes in the management of Z, Inc;

o Dividend payment; and,

o New project contracts that exceed IDR 200 billion.

Does X, Inc control Z, Inc as a result of this agreement?

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