ABC requires a 75% majority to approve decisions regarding the relevant activities of the entity. It also outlines that each shareholder is entitled to vote in proportion to their respective ownership interests. Details of the shareholdings are as below: • Shareholder A holds 51 % • Shareholder B holds 30% • The remainder 19% are held by other investors (widely spread) Is ABC jointly controlled?

ABC requires a 75% majority to approve decisions regarding the relevant activities of the entity. It also outlines that each shareholder is entitled to vote in proportion to their respective ownership interests. Details of the shareholdings are as below: • Shareholder A holds 51 % • Shareholder B holds 30% • The remainder 19% are held by other investors (widely spread) Is ABC jointly controlled?

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter11: The Corporate Income Tax

Section: Chapter Questions

Problem 12MCQ

See similar textbooks

Similar questions

An associate is an entity in which an investor has significant influence over the investee. Which the following indicate the presence of significant influence? (I) The investor owns 660,000 of the 3,000,000 equity voting shares of the investee. (II) The investor has representation on the board of directors of the investee. (Ill) The investor is able to insist that all of the sales of the investee are made to a subsidiary of the investor. (IV) The investor controls the votes of a majority of the board members. Choose one of the correct pair. Please provide your explaination A) (I) , (II) B) (II), (Ill), (IV) C) (I), (III), (IV) D) (I), (II), (III), (IV) E) None of the above.
P Ltd owns 45% of the shares of S Ltd. P Ltd can appoint or remove four of the six directors on the board of S Ltd. Each director is entitled to one vote at the directors’ meeting. The decisions made at the directors’ meetings direct the relevant activities of S Ltd. Identify the correct options that reflect the control that P Ltd has in S Ltd. (i) P Ltd currently holds the majority of the voting rights (4/6 =66,6%) at the directors’ meeting.(ii)The voting rights that P ltd has give the current ability to use its majority vote at the directors’ meeting to direct the relevant activities of S Ltd.(iii) P Ltd is exposed to variable returns from S Ltd through dividends and the value of its investment in S Ltd. (iv) P Ltd has the ability to use its majority voting rights (power) at the directors’ meeting to affect its returns (through dividend policies, operating decisions, etc.). (v)P Ltd has no control over S Ltd because of the 45% shareholding. Select one: a. (i),(iii),(v) b.…
An associate is an entity in which an investor has significant influence over the investee.Which TWO of the following indicate the presence of significant influence?I The investor owns 360,000 of the 1,500,000 equity voting shares of the investee.II The investor has representation on the board of directors of the investee.III The investor is able to insist that all of the sales of the investee are made to a subsidiary of theinvestor.IV The investor controls the votes of a majority of the board membersA I and IIIB II and IVC I and IID III and IV
‘An associate is an entity over which the investor has significant influence’ (para 3). Which of the following indicate the presence of significant influence? A. The investor controls the votes of a majority of the board members B. The investor is able to insist that all of the sales of the investee are made to a subsidiary of the investor C. The investor owns 330,000 of the 1,500,000 equity voting shares of the investee
The matrix below shows the stock ownership in four corporations by four unrelated individuals: Shareholder | Percentages of Stock Owned in Corporations A B C D 1 10% 5% 10% 20% 2 30% 40% 30% 10% 3 30% 15% 10% 20% 4 30% 40% 50% 50% Which of the above corporations, if any, are members of a brother-sister controlled group? Explain why each corporation is included or not.
Tom Bhd, Dick Bhd and Harry Bhd decided to enter into a joint arrangement and form aseparate vehicle, Stooge Sdn Bhd. Tom Bhd holds 25%, Dick Bhd owns 35% and HarryBhd owns 40% of the equity shares in Stooge. The investors agree that decisions can bemade with 80% consent and the profit of Stooge will be distributed to each investoraccording to their respective shareholding in Stooge. Each investor has equalrepresentation on the board of directors of Stooge Sdn. Bhd. However they are unsure asto the nature of the joint arrangement Required:a. Advise Tom, Dick and Harry as to whether the joint arrangement is a joint operation ora joint venture, in accordance with MFRS 11 Joint Arrangements.b. Assuming that Tom Bhd, Dick Bhd and Harry Bhd each has to prepare the consolidatedfinancial statements, explain the accounting treatment for the investment in the jointarrangement.
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.
P Ltd owns 55% of the shares of S Ltd. Each share entitles the holder to one vote at the AGM.The decisions made at the AGM direct the relevant activities of S Ltd.Identify the correct statement(s) regarding control.(i) P Ltd holds the majority of the voting rights at the AGM.(ii) P ltd has the ability to use its majority voting rights at the AGM to affect its returns.(iii) P Ltd is not exposed to variable returns from S Ltd through dividends and the value of investment in S Ltd.(iv) P Ltd has control over S Ltd and S Ltd is a subsidiary of P Ltd.Select one:a.(i), (ii) and (iii)b.(i) and (iv)c.(i), (iii) and (iv)d.(i), (ii) and (iv)
Determine the basis of stock in the hands of the shareholder, the basis to the corporation of the contributed property, and the gain, if any, to the shareholder in each of the follow independent cases. In all cases, assume that the 80% test is met. a. Pierre contributes a vehicle with a FMV of $ 6,000.00 and basis of $ 8,000.00. b. Marcus contributes land with a FMV of $ 500,000.00, basis of $ 300,000.00, and debt of $ 250,000.00. c. Same as b. Except Marcus also receives cash of $ 25,000.00. d. Patricia contributes an apartment building with a FMV of $ 200,000, basis of $ 50,000.00, and debt of $ 125,000.00
Acme Corporation’s articles of incorporation require cumulative voting for the election of its directors. The board of directors of Acme Corporation consists of nine directors, each elected annually. a. Smith owns 24 percent of the outstanding shares of Acme Corporation. How many directors can he elect with his votes? b. If Acme Corporation were to classify its board into three classes, each consisting of three directors elected every three years, how many directors would Smith be able to elect?
Lansing Company is owned equally by Jennifer, her husband Dan, and DeWitt Corporation, which is owned 50 percent by Jennifer and her sister Jane. Each of the three shareholders holds 220 shares in the company. Under the §318 stock attribution rules, how many shares of Lansing stock is DeWitt Corporation deemed to own? Multiple Choice 220 440 550 660
Rose plc has two shareholders: · Investor A plc owns 60% of Rose plc’s ordinary shares and voting rights; · Investor B plc owns the remaining 40%. Rose plc’s articles of association stipulate that at least 80% of the voting rights are required to make decisions about Rose’s relevant activities. Rose plc does not depend on its shareholders for settling its liabilities and no shareholder has contractual rights or obligations to the individual assets nor liabilities of Rose plc. How should the investment in Rose plc be consolidated in Investor A plc’s group financial statements according to IFRS? a. As a subsidiary b. As an associate c. As a joint venture d. As a joint operation e. As a liability