AASB 124 Defines Control As

question 38

Multiple Choice

AASB 124 defines control as:

• A) The exercise of power to direct the decision-making of another entity in relation to financial and operational decisions so as to enable the controlling entity to benefit as a result.
• B) The capacity to influence the financial and operational decision-making of another entity through the board of directors so as to achieve the co-operation of the other entity in obtaining the ends of the controlling entity.
• C) The power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
• D) The potential ability to obtain desired outcomes through another entity by influence through representatives on the governing board of the other entity.
• E) None of the given answers.

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Definitions:

Contractual Agreement

A legally binding contract specifying the terms and conditions under which parties agree to perform certain actions.

Note Principal

The original amount of money borrowed or the amount still owed on a loan, separate from interest.

Interest Expense

The cost incurred by an entity for borrowed funds, often expressed as a percentage of the principal.

Straight-line Method

A method of calculating depreciation by evenly spreading the cost of an asset over its useful lifespan.