Page 12 - Financial Accounting 2.1 ITC Preparation June 2018

ITC EXAM PREP – JUNE 2018

Discussion Questions - solution

Variable returns

• Revenue is an example of variable returns, since it is a return that is not

available to other interest holders. [IFRS 10.B57(c)] (Theory)

• SS will purchase all the tuna from Tuna Ltd. (Application)
• SS will use the tuna in its own operating functions and will generate revenue.

(Application)

Link between power and returns
• Sushi Stars Ltd is also able to affect these returns through its power over Tuna

Ltd by means of the contract. (Application)

• The contract states that Tuna Ltd cannot supply to any other entity.

(Application)

Sushi Stars Ltd is thus exposed to variable returns and is able to affect those

returns through its power over Tuna Ltd. Sushi Stars Ltd thus controls Tuna Ltd
(Conclusion)

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