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What am I missing here?
Isn’t Jimmy an associate? We have consolidated in this example.
https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/tech/sa_july11_corp_report.pdf
I can’t think straight now 😀
May be too stressed!Thank you. God bless for all your help 🙂
What percentage of Jimmy’s share capital is under the direct control of Rodders? 20%
And what percentage of Jimmy’s share capital under the control of Tommy? 40%
And who controls Tommy? Why, it’s Rodders
So Rodders controls 60% of the Jimmy votes and therefore Jimmy is a subsidiary
Ok?
So why do we not do the following:
Direct Control: 20
Indirect control: 70 x 40 = 28
Hence total control: 48
NCI: 52and how is this different to https://www.accaglobal.com/content/dam/acca/global/pdf/sa_apr2010_P2.pdf
Thank you
Because when a general meeting of the Jimmy shareholders takes place, what percentage of votes do we control?
20% + 40% = 60%
It’s not 20% + (70% x 40%) = 48%
When votes are cast, we cast 60% and that’s control
Think of a pure vertical group with 60% holdings right the way down 5 levels (this, I guarantee, will not face you tomorrow!)
What interest does the parent have in the company on level 5?
60% x 60% x 60% x 60% = 12.96% So is that company on level 5 an investment, an associate or a subsidiary?
Ok?
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