Rose plc has two shareholders: · Investor A plc owns 60% of Rose plc’s ordinary shares and voting rights; · Investor B plc owns the remaining 40%. Rose plc’s articles of association stipulate that at least 80% of the voting rights are required to make decisions about Rose’s relevant activities. Rose plc does not depend on its shareholders for settling its liabilities and no shareholder has contractual rights or obligations to the individual assets nor liabilities of Rose plc. How should the investment in Rose plc be consolidated in Investor A plc’s group financial statements according to IFRS? a. As a subsidiary b. As an associate c. As a joint venture d. As a joint operation e. As a liability
Rose plc has two shareholders: · Investor A plc owns 60% of Rose plc’s ordinary shares and voting rights; · Investor B plc owns the remaining 40%. Rose plc’s articles of association stipulate that at least 80% of the voting rights are required to make decisions about Rose’s relevant activities. Rose plc does not depend on its shareholders for settling its liabilities and no shareholder has contractual rights or obligations to the individual assets nor liabilities of Rose plc. How should the investment in Rose plc be consolidated in Investor A plc’s group financial statements according to IFRS? a. As a subsidiary b. As an associate c. As a joint venture d. As a joint operation e. As a liability
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Rose plc has two shareholders:
· Investor A plc owns 60% of Rose plc’s ordinary shares and voting rights;
· Investor B plc owns the remaining 40%.
Rose plc’s articles of association stipulate that at least 80% of the voting rights are required to make decisions about Rose’s relevant activities.
Rose plc does not depend on its shareholders for settling its liabilities and no shareholder has contractual rights or obligations to the individual assets nor liabilities of Rose plc.
How should the investment in Rose plc be consolidated in Investor A plc’s group financial statements according to IFRS?
a.
As a subsidiary
b.
As an associate
c.
As a joint venture
d.
As a joint operation
e.
As a liability
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