Case Study 3: Right to variable returns (AASB10)
Some have argued that the criteria for consolidation should refer to significant variable returns. These parties argue that the consolidated financial statements are not meaningful if they include subsidiaries in which the parent’s level of returns is less than 50% or is not significant.
Required
Discuss:
1. the place of a returns criterion in the definition of control
2. possible returns that could occur as a result of obtaining control of another entity
3. the need to place a specified level of returns in the definition of control.
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