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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
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