PT X is negotiating with PT Y to acquire 100% share capital of PT Z. PT Z is currently fully owned by PT Y and meets the business definition as defined in IFRS 3. Share sales must be approved by PT X shareholders and the government. Because the agreement takes time, before the time the share sale is completed, PT X and PT Y make an agreement that: • Both parties are committed to completing legally subject to the necessary agreements; • Determine the purchase price; • Determine that the following decisions and actions can be taken by PT Y only with PT X's approval until the sale of shares, through: o Changes in the management of PT Z; o Dividend payment; and, o New project contracts that exceed USD 200 billion. Does PT X control PT Z as a result of this agreement? Give references from the related IFRS.
PT X is negotiating with PT Y to acquire 100% share capital of PT Z. PT Z is currently fully owned by PT Y and meets the business definition as defined in IFRS 3. Share sales must be approved by PT X shareholders and the government. Because the agreement takes time, before the time the share sale is completed, PT X and PT Y make an agreement that:
• Both parties are committed to completing legally subject to the necessary agreements;
• Determine the purchase price;
• Determine that the following decisions and actions can be taken by PT Y only with PT X's approval until the sale of shares, through:
o Changes in the management of PT Z;
o Dividend payment; and,
o New project contracts that exceed USD 200 billion.
Does PT X control PT Z as a result of this agreement? Give references from the related IFRS.
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