ACCA FR · Chapter 12 · Question 1 of 13
Under IFRS 10, an investor controls an investee when it has which of the following?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Power over the investee, exposure or rights to variable returns from it, and the ability to use its power to affect those returns
Explanation
IFRS 10 defines control by three elements, all of which must be present: power over the investee, exposure or rights to variable returns, and the ability to use that power to affect the investor's returns. Holding most of the voting rights usually gives power, but control can also exist with less than 50%. Significant influence describes an associate, not a subsidiary.
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