PT X is negotiating with PT Y to acquire 100% share capital of PT Z. PT Z is currently fully owned by PT Y and meets the business definition as defined in IFRS 3. Share sales must be approved by PT X shareholders and the government. Because the agreement takes time, before the time the share sale is completed, PT X and PT Y make an agreement that: • Both parties are committed to completing legally subject to the necessary agreements; • Determine the purchase price; • Determine that the following decisions and actions can be taken by PT Y only with PT X's approval until the sale of shares, through: o Changes in the management of PT Z; o Dividend payment; and, o New project contracts that exceed USD 200 billion. Does PT X control PT Z as a result of this agreement? Give references from the related IFRS.

PT X is negotiating with PT Y to acquire 100% share capital of PT Z. PT Z is currently fully owned by PT Y and meets the business definition as defined in IFRS 3. Share sales must be approved by PT X shareholders and the government. Because the agreement takes time, before the time the share sale is completed, PT X and PT Y make an agreement that: • Both parties are committed to completing legally subject to the necessary agreements; • Determine the purchase price; • Determine that the following decisions and actions can be taken by PT Y only with PT X's approval until the sale of shares, through: o Changes in the management of PT Z; o Dividend payment; and, o New project contracts that exceed USD 200 billion. Does PT X control PT Z as a result of this agreement? Give references from the related IFRS.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 27GI

See similar textbooks

Similar questions

In the business combination of Polka and Spot Select one: a. all of the costs except those of registering and issuing the securities are included in the purchase price of Spot. b. the salaries of Polka's employees assigned to the merger are treated as expenses. c. only the accounting and legal fees are included in the purchase price of Spot d. the costs of registering and issuing the securities are included as part of the purchase price for Spot.
. Entity X and Entity Y incorporated Entity Z to manufacture a microchip to incorporate entities as componentsfor their final products for cellular phones and tablets.The contractual agreement of the incorporating entities provided that the decisions on relevant activities ofEntity C will require the unanimous consent of both entities.Entity X and Entity Y have rights to the assets, and obligations for the liabilities, relating to the agreement.Entity X and Entity Y will own the ordinary shares of Entity Z in the ratio of 60:40.The contractual agreement of Entity X and Entity Y also provided the following about the assets andliabilities of Entity Z:• Entity X owns the land and incurs the loan payable of Entity Z.• Entity Y owns the building and incurs the note payable of Entity Z.• The other assets and liabilities are owned by Entity X and Entity Y based on their capital interest inEntity Z. • The sales revenue of Entity Z includes sales to Entity X and Entity Y in the amount of…
16. With regard to contracts that can be settled in either cash or shares IFRS requires that share settlement must be used. IFRS gives companies a choice of either cash or shares. GAAP requires that share settlement must be used. the FASB project proposes that the IASB adopt the GAAP approach, requiring that share settlement must be used.
7. Which of the following provisions contained in an otherwise negotiable instrument will cause it to be nonnegotiable? a. It is payable in Mexican pesos. b. It contains an unrestricted acceleration clause. c. It grants to the holder an option to purchase land. d. It is limited to payment out of the entire assets of a partnership. 17. Industrial Factors, Inc., discounted a $4,000 promissory note, payable in two years, for $3,000. It paid $1,000 initially and promised to pay the balance ($2,000) within 30 days. Industrial paid the balance within the 30 days, but before doing so learned that the note had been obtained originally by fraudulent misrepresentation in connection with the sale of land which induced the maker to issue the note. For what amount will Industrial qualify as a holder in due course? a. None because the 25% discount is presumptive or prima facie evidence that Industrial is not a holder in due course. b. $1,000. c. $3,000. d. $4,000.
On 1 October 2018, Jojo Bhd with 2 other parties, Kenari Bhd and Tiong Bhd, structured a joint arrangement in an incorporated entity, Koko Bhd, with rights to the net assets of the arrangement. Jojo Bhd has 40% of the voting rights in the joint arrangement while Kenari Bhd and Tiong Bhd have 35% and 25% of the voting rights respectively. The contractual arrangement between these three parties specifies that at least 75% of the voting rights are required to make decisions about the relevant activities of the arrangement. Required:(a) Explain whether all the three parties in the joint arrangement would have joint control over Koko Bhd. (b) Briefly explain the two types of joint arrangement in accordance with MFRS11: Joint Arrangement.
PT K and PT L own 27 percent and 15 percent of the common shares of PT M, having voting rights at the shareholders general meeting. PT L also owns 80 percent of the common shares of PT K, having voting rights at the shareholders general meeting. It is determined that PT K is a subsidiary of PT L. Following an analysis, PT K and PT L do not control or jointly control PT M. Required: Determine whether PT K and PT L have significant influence over PT M. Please explain.
If share-based options granted to employees under a share-based payment transaction vest immediately a.The entity should defer recognition of the services rendered by the employeesb.The entity should record a liabilityc.The employees are unconditionally entitled to the share-based paymentsd.The entity should account for the services when these are rendered by the employees during the vesting period
Hippo Co. is a holding company. It holds all the shares of Opco. Shareholder H holds all the shares of Hippo Co. What should Opco be directed to do prior to its sale in order to minimize taxable capital gains? a. Transfer all assets to Hippo Co. before sale. b. Transfer all shares in Opco to Shareholder H prior to the sale c. Transfer all the shares of Hippo Co. to shareholder H prior to the sale. d. Pay a tax-free dividend to Hippo Co. from Opco prior to the sale
B. On 14 July 2020 Comby Bhd. and Diandra Bhd each acquired 30 per cent of the ordinary shares that carry voting rights at a general meeting of shareholders of Zuka Bhd for RM100,000.00 The purchase price is equal to the fair value of 30 per cent of Zuka's identifiable assets less 30 per cent of its identifiable liabilities. Comby Bhd. and Diandra Bhd immediately agreed to share control over Zuka Bhd. For the year ended 30 June 2020 Zyka's 1scognised a loss of RM600,000.00. Comby Bhd. and Diandra Bhd. have no constructive or legal obligation in respect of their jointly controlled entity's loss and have made no payments on its behalf. Zuka Bhd recoguised profit for the year ended 30 June 2021 of RM800,000.00 There is no published price quotation for Zuka Bhd. REQUIRED: Calculate the investment for Comnby Bhd. and Diandra Bhd. using equity method for the year 2020 and 2021.
Adele Holdings Ltd shares joint control over a joint arrangement, Sherrin Ltd, with the company's two founding shareholders. Adele Holdings Ltd accounts for its equity interest in Sherrin Ltd in accordance with IFRS 11 Joint Arrangements. At a later date, Adele Holdings Ltd obtains control over the business of Sherrin Ltd by purchasing the remaining interest held by the founding shareholders in Sherrin Ltd. Which of the following statements is correct regarding Adele Holdings Ltd's accounting in Sherrin Ltd? a: Adele Holdings Ltd should remeasure its previously held interest in Sherrin Ltd at the acquisition date whether the activities of Sherrin Ltd meet the definition of a business or not. O b. Adele Holdings Ltd should not remeasure its previously held interest in Sherrin Ltd at the date of acquisition of the remaining interest held by the founding shareholders. C. Adele Holdings Ltd may determine whether it shall remeasure its previously held interest in Sherrin Ltd at its choice…
Under the PCA, proposed mergers, acquisitions and joint ventures should satisfy the size of party test and the size of the transaction test for the merger or acquisition to be subject to compulsory notification. The size of party pertains to the computation of the aggregate value of the assets in the Philippines and revenues from sales in, into, or from the Philippines of the filing Ultimate Parent Entity (“UPE”), including all entities that it controls, directly or indirectly. Notification is compulsory if the transaction breaches the compulsory notification thresholds: the aggregate annual gross revenues in, into or from the Philippines, or value of the assets in the Philippines of the ultimate parent entity (UPE) of at least one of the acquiring or acquired entities, including that of all entities that the UPE controls, directly or indirectly, exceeds PHP6 billion (size of the party test); and the value of the transaction exceeds PHP2.4 billion (size of the transaction test). Here…
please answer it with a solution. REQUIRED: DETERMINE THE FAIR VALUE OF THE SHARES ISSUED BY BENI CO. TO ACQUIRE PATTY.