Page 22 - Topic 1 - 1. Consolidated & Separate Financial Statement

CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

Illustration 3

• What if the debentures are convertible at a fixed future

date?

• Q Ltd does not currently have the practical ability to convert the
debentures

• Therefore, the potential voting rights associated with the

debentures are not substantive

• Q Ltd only considers its current holding of 15% of the voting rights

and determines that it does not control a majority of the voting
rights

• Therefore, Q Ltd does not have power over M Ltd

22