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QUESTION 1: Total of 23 marks On 30 June 2020, Zeta Ltd owns shares in five investee companies, Alpha Ltd, Beta Ltd, Gamma Lt
operating policies require unanimous approval from all six directors. Required: On 30 June 2020, for financial reporting purp
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Answer #1

Relationship of each of its Investees on 30th June.

Alpha ltd: As Zeta ltd owns 55% of share capital of Alpha ltd. Alpha ltd is a subsidiary of Zeta Ltd and Zeta has Control over its subsidiary which enables it to direct the Operating and financial policies.

Beta Ltd : As Zeta ltd owns 20% of share capital of Beta ltd. Alpha ltd is a Associate of Zeta Ltd and Zeta does not have any Control or significant influence.

Gamma Ltd: Zeta ltd owns 40% of share capital of Gamma ltd and owns call option to acquire further 20%. As on 30th June as the option is not exercised, Gamma Ltd remains associate of Zeta ltd.

Delta Ltd: Zeta ltd owns 30% of share capital of Delta ltd and given that in recent AGM less than 50% of voting rights were exercised. As Zeta ltd constitues more than 50% of voting rights as majority of share holders do not attend the AGM. It seems to have a Significant Influence on Delta Ltd.

Eta Ltd: It can be inferred from above given data that Zeta Ltd has a significant influence over Eta Ltd. Relationship of Control cannot be established as it only holds only 50% of the voting rights and control requires more than 50%.

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