Page 11 - Financial Accounting 2.1 ITC Preparation June 2018

ITC EXAM PREP – JUNE 2018

Discussion Questions - solution

• An investor controls an investee when it is exposed, or has rights, to variable

returns from its involvement with the investee and has the ability to affect

those returns through its power over the investee. [IFRS 10.6] (Theory)

Power
• An investor has power over an investee when the investor has existing

rights that give it the current ability to direct the relevant activities. [IFRS

10.10] (Theory)
• The relevant activities are the activities that significantly affect the

investee’s returns. [IFRS 10.10] (Theory)

• Power arises from rights. [IFRS 10.11] (Theory)

• Sushi Stars (SS) owns 15% of the share capital and voting rights. The
majority of the voting rights are thus not held by SS (Application)

• SS can however make decisions about relevant activities since they can

appoint the board of directors, who in turn direct the relevant
activities.(Application)

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