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Dear tutors, may I know how to determine the joint control existed in this arrangement?
I thought since it’s more than one combination of 72% and joint control not existed unless contract specifically stated which combination.
Thanks in advance.
Question:
Fill also jointly controls coal mines with other entities. The Theta mine is owned by four participants. Fill owns 28%, and the other three participants each own 24% of the mine. The operating agreement requires any major decisions to be approved by parties representing 72% of the interest in the mine. Fill is considering purchasing one of the participant’s interests of 24%.The directors of Fill wish advice on whether the proposed revision to the Conceptual Framework will affect the decision as to whether Fill controls the mine.
(In future, please post with a thread header relating to the topic not the question – e.g. Joint Control).
Joint control = each party has the right of veto over key decisions.
So, my view is, that:
1. Before the ‘acquisition’ – Fill would have accounted for it as an associate.
2. Afterwards – still an associate because the others could block Fill’s decisions .
I think that they are using the word ‘joint control’ very loosely in the model answer.
As always you get through if you show the definitions of control, joint control and possible significant influence.
IF YOU WISH TO RESPOND PLEASE DO SO IN A NEW THREAD ‘JOINT CONTROL’
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