At Balance Date, Company a Has 40% of the Voting

question 47

Multiple Choice

At balance date, Company A has 40% of the voting rights in Company B. In addition Company A holds potential voting rights in Company B amounting to 6% that are currently exercisable, and a further 9% of voting rights in Company B that can be exercised in two years' time. Which of the following statements is correct?

• A) Consolidated financial statements must be prepared for Company A and B in the current year.
• B) Consolidated financial statements need not be prepared for Company A and B for the current year.
• C) Consolidated financial statements must be prepared as Company A controls Company B at balance date.
• D) Consolidated financial statements must be prepared as Company A has more than half of the voting rights in Company B at balance date.

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Definitions:

Participative

A leadership style where decision making is shared among group members, typically leading to increased commitment and cooperation.

Toxic Effect

Harmful or destructive impact often resulting from exposure to a toxic substance or negative behaviors in an environment.

Destructive Leader

A leadership style characterized by manipulation, control, and the undermining of individuals’ rights, often leading to negative outcomes for the organization or group.

Suspicious Motives

The assumption or belief that underlying intentions or motivations of an individual or group are questionable, dishonest, or harmful.