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3) V Ltd is a 65% owned subsidiary company of A Ltd. During the financial year,...

3) V Ltd is a 65% owned subsidiary company of A Ltd. During the financial year, V Ltd suffered a substantial loss that ultimately deteriorated the financial position of the group. To overcome this and avoiding consolidation accounting, the management of A Ltd sold 16% of its ownership in V Ltd to Z Ltd without voting power. Justify whether A Ltd can exclude V Ltd from the consolidation process? A) Yes, as the control is lost, the parent now holds only 49% in the subsidiary. B) No, as it is the intention of the parent to uphold the financial position dishonestly. C) No, as A Ltd continues to control V Ltd. D) Yes, as the AASB10 allows a parent to exclude the subsidiary from consolidation.

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V Ltd is a 65% owned subsidiary company of A Ltd. During the financial year, V Ltd suffered a substantial loss that ultimately deteriorated the financial position of the group. To overcome this and avoiding consolidation accounting, the management of A Ltd sold 16% of its ownership in V Ltd to Z Ltd without voting power. Justify whether A Ltd can exclude V Ltd from the consolidation process?

Since the management of A Ltd sold 16% of its ownership in V Ltd to Z Ltd without voting power,  Ltd continues to control V Ltd

Hence, Answer is Option C: C) No, as A Ltd continues to control V Ltd.

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