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Calrification required on CONTROL definintion

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Calrification required on CONTROL definintion

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
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    Posts
  • October 28, 2020 at 8:21 am #593330
    ahmadimam120
    Participant
    • Topics: 21
    • Replies: 18
    • ☆

    Hello sir, I am confused on two aspects of control definition. In the definition control of in addition to the point that you must be exposed to variable returns (i.e, you must have invested in ordinary shares of subsidiary rather bonds and preference shares to have control over investee) it is stated that you must have the POWER and also ABILITY to use power.

    Kindly explain what is ”power” , how do you get ”power” and what is meant by ”ablility to use the power”

    and whether all these 3 elements of control definition need to satisfy at once for your to exercise control over an investee?

    October 30, 2020 at 9:24 pm #593589
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    Hi,

    Power is through voting rights. So if you have the majority of the voting rights then you control the entity, however you should also use those voting rights as if not then you wouldn’t be controlling the entity.

    Thanks

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