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

question 33

Multiple Choice

At balance date, Company K has 40% of the voting rights in Company L. In addition, Company K holds potential voting rights in Company L amounting to 8% that are currently exercisable, and a further 12% of voting rights in Company L that can be exercised in two years' time. Which of the following statements is correct?

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

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Definitions:

Interpersonal Popularity

The extent to which an individual is liked, admired, or supported by their peers and others in a social context.

Authoritarian Parenting

A parenting style characterized by high demands and low responsiveness, where parents enforce strict rules and expect obedience without question.

Permissive

A parenting style characterized by low demands with high responsiveness, where parents are lenient and often only step in when absolutely necessary.

Narcissism

A personality trait characterized by an inflated sense of self-importance, a deep need for excessive attention and admiration, and a lack of empathy for others.