Comments

  1. avatar says

    1) If company “A” holds 33% shares in another company “B”, and the other 67% shares are spread over different shareholders and no one share holder has major stake in the company “B”. Will Company “A” make a consolidated financial statement?

    2) If Company “C” owns 30% stake in company “D” and a subsidiaries of Company “C” owns another 25% in company “D”. Will Company C prepare consolidated financial statements?

    • Avatar of MikeLittle says

      In answer to your second question, yes, without doubt. Because company C owns 30% and controls another 25% giving total control. Ah! But what if the subsidiaries don’t vote in the way that company C wants them to? Well in a very short period of time the company C directors will find themselves jobless!

      Now, your first question! It really all depends upon on how well spread the remaining 67% is. If the next biggest shareholder has just 0.0000001% of company B shares / votes, then it would appear that company A has effective control. But if the next biggest shareholder has, say, 30% of company B’s shares / votes, then it would seem likely that company A does not have effective control

      Do you see trouble ahead? I do, for sure! Auditors claiming that the investee should be consolidated under the principles of effective control whereas directors of company A resisting denying effective control! Watch this space – it could be fun!!!

      • avatar says

        At the end of the days , if the auditor says something, the company will have to follow them i guess.

        Thanks for clearing my doubts so fast :)

      • Avatar of MikeLittle says

        Well, it’s not quite as easy as that! but there must be (and I’ve never experienced this) many heated discussions within the confines of the board room where auditors are claiming one thing and the directors are claiming the opposite.

  2. avatar says

    Hello Sir,

    I am planning to take f7 & f9 exam in June 2014. I am fully depends on your class and lectures. I am currently working so getting very less time to study, I hope your full support.

    Whether it is necessary to read the first five chapters before going to your classes.

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