An investment bank with which Chip Ltd has business relationships holds
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An investment bank with which Chip Ltd has business relationships holds

Case Study 11: Parent-subsidiary relationship (AASB10)

Chip Ltd has 37% of the voting interest in Dale Ltd. An investment bank with which Chip Ltd has business relationships holds a 15% voting interest in Dale Ltd. Because of the closeness of the business relationship with the bank, Chip Ltd believes it can rely on the bank’s support to ensure it cannot be outvoted at general meetings of Dale Ltd. However, there is no guarantee that the bank will always support Chip Ltd.

Required

Discuss whether Chip Ltd is a parent of Dale Ltd.

Hint
Business Chip Ltd is a parent of Dale Ltd because the parent entity controls one or more entities. This is because Chip ltd has voting shares on Dale ltd and similarly on the bank investment. Therefore, these consolidated financial statements of the parent and its subsidiaries are presented as those of a solitary economic entity. ...

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