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can you please explain what IFRS 10 and IFRS 11 and there differences, i actually thought this is similar to associates ias 28.
also the pass paper 12/12 coate seems really hard to understand
10 is consolidations and 11 is about joint arrangements.
The big issue so far as I am concerned with 10 is this concept of effective control where, without holding >50% of the votes, dependent upon the disposition of the remaining shares, you may be considered to have effective control.
Additionally, where you hold potential control at some time in the future by way of converting into shares, for example, a loan to the company, and upon that conversion you will now have control, then it’s a subsidiary
Fascinating stuff!!
Why the difficulty with Coate? Be specific and let me know
coate holds 50% of a previously wholly owned sub ( patten) and sells it to manis, but the agrrement was that coate will have control over pattens operating and financial policies.
however coate does not feel the agreement does not control patten.
coate only holds 50% of the shares therefore he does not have the effective power to control patten.
coate does not have the rights to appoint or resign. whereas under the agreement of the shareholders, it is all operating and financing activities.
therefore IFRS 10 does not apply for Coate. Is this correct? Im just nor sure.
Secondly, it may be the characteristics of IFRS 11 joint arrangement. where both coate and manis may have joint control to control the operating activities of patten. but there is two- joint ventures and jointly controlled entities, what are the differences? are they been tested in this syllabus?
thank you so much.
Where a 50% holder has to have permission to appoint / remove directors, then that 50% holder does not have control and therefore the invested company is NOT a subsidiary of the 50% holder.
Where the other shares are held by just one person, this is a 50 / 50 joint arrangement that is a joint venture.
A jointly controlled entity is where two or more people jointly hold a majority of the voting power (say two 30% holders)
It’s most unlikely that the examiner is going to base a 35 mark question around this. IF joint ventures / joint arrangements comes into the exam, it will likely be a short paragraph expecting you to equity account for the results / investment in the venture
OK?
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