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.

Question

Quizplus · Accepted Answer

The Answer of 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.

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