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Inveresk has equity shareholdings in three other companies, as shown below, and has a seat on the board of each:
Inveresk Other shareholders
Raby 40% No other holdings larger than 10%
Seal 30% Another company holds 60% of Seal’s equity
Toft 15% Two other companies hold respectively 50% and 35% of Toft’s equity, and each has
a seat on its board. Inveresk exerts significant influence over ToftWhich of the above shareholdings are associates of Inversk?
A Raby only
B Raby and Seal only
C Raby and Toft only
D Raby, Seal and ToftAnswer C
Hello Sir, I am wondering why Seal is not considered an associate since Invesk holds >20% of its shares and has at least one seat on the board?
Thank you!
Hi,
As the other entity owns 60% and has control of the business then we will not be able to exert any influence over the business and hence it not being an associate. An investment between 15% and 50% is a guideline for an associate but we need to ensure that it gives us significant influence. In this instance it doesn’t.
Thanks
Inveresk Ltd has equity shareholdings in three other companies.
Inveresk Ltd Notes
Raby Ltd – 40% – No other holdings larger than 10%Seal Ltd – 25% – Another company holds 75% of Seal Ltd’s equity and dominates the
board of directorsToft Ltd – 30% – This investment has been classified as held for sale under IFRS 5 Noncurrent assets held for sale and discontinued operations
Which one will be treated as Investment in Associates of Inveresk as per IAS 28?
It will be very helpful if you explain this one too.
Thanks
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