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:

Nonhuman Beings

Entities or organisms that are not classified as human, including animals, plants, and in some contexts, artificial intelligences.

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.

Mental Set

A tendency to solve problems using procedures that worked before on similar problems.

Stereotype Threat

A burden of doubt a person feels about his or her performance, due to negative stereotypes about his or her group’s abilities.