Financial accounting and Reporting 2

PowerPoint Presentation
MEMO TO CFO OF TOM LTD- MR.KING EDWARDS
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SUMMARY    
As per AASB 10, the standards and principles related to financial statements which is consolidated needs to be prepared if a parent company actually has control of one or more of its subsidiary entities or companies (Australian Legislation, 2016). Consolidated financial statements and reports need not be prepared by the parent company if such a company satisfies any of the following conditions (aasb.gov.au, 2011)
the parent company may be a partly owned company or a fully owned company of a different company, and all its owners including those who does not have rights to vote have been familiarized not to oppose their respective parent or main company from not preparing their consolidated financial statements and reports
the parent company may not be publicly listed or be trading in the public securities market with its equity stocks and debt stocks
till date not filed any particular financial statements with any regulatory authorities or securities commission
any of its partly owned or intermediary company which is a parent company prepares financial reports which abides with IFRS policies and can be viewed by the public     in which its partly and fully owned subsidiaries may be included at a fair value price through AASB 10.
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ISSUE 1
Tom Ltd and Toots Ltd each hold 50% of the shares in Jerry Ltd, all companies being involved in the mining industry. Tom Ltd agrees that Toots Ltd should provide the management of Jerry Ltd because of the expertise provided by its managing director, Bob Gates. Toots Ltd receives a management fee for providing its expertise
Since Toots and Tom Ltd holds 50% each of shares in Jerry Ltd and also Toots Ltd is leading the business activities of the Jerry Ltd due to its expertise in the mining industry and also charges fee for the same. It is clearly understood that Tom and Toots Ltd both are not the parent companies of Jerry Ltd.
Both Tom and Toots Ltd does not hold rights in Jerry Ltd because both of them does not have the power to directly deal with the...