Class 09 – LO9.3 Explain and apply the definition of significant influence
Self study question based on past final exam question – Solution
Marks were awarded to students on their ability to develop a persuasive argument for or against significant influence. Below is a summary of the key discussion points.
Clear definition of significant influence referring to the key aspects of power to participate, financial and operating policy decisions excluding joint control and unilateral control
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Technical reference for significant influence definition: AASB 128 paragraph 3
Refer to AASB 128 suggested level of ownership level of -20%
Technical reference for suggested level of ownership level: AASB
128 paragraph 5
Discuss other indicators of significant influence as they apply to the
Technical reference for other indicators: AASB 128 paragraph 6
Excited< 20% ownership in Extreme
Directorship in Extreme
Positions on Extreme’s Business Planning & Operations Committee
Positions on Extreme’s Finance Committee
Provision of technical & operations support
Telecommunications manager position
Conclusion
Reference to key facts of question
Class 09 – LO 9.2 Explain in which entities the equity method is applied
Marks were awarded on student’s ability to adequately explain where equity accounting should be adopted. Below is a summary of the key discussion points
Excited Ltd is single entity investor
Equity accounting journal done in Excited Ltd single entity financial
statements
Feed into CWS via Excited Ltd single entity financial statements
Tech reference: AASB 128 paragraph 16
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