Which of the following statements are true in relation to
business combinations?
(i) Control is the power to govern the financial and operating
policies of an entity (or business) so as to obtain benefits
from its activities.
(ii) Control is generally presumed when an acquirer acquires
more than one-half of the voting rights of the acquiree
unless demonstrated otherwise.
(iii) Joint control exists when strategic financial and
operating decisions relating to the activities of an entity require unanimous consent of the parties sharing control.
(iv) The boards of directors who are generally appointed by
the shareholders of the companies are responsible for the
decision making of companies.
Select one:
O a. (i) only
O b. () and (il) only
O c. (), (ii) and (ii) only O d. (), (i), (ii) and (iV)
The correct answer is c. (i), (ii) and (iii) only.
Statement (i) is true because control in a business combination refers to the power to govern the financial and operating policies of the acquired entity.
Statement (ii) is true because control is generally presumed when an acquirer acquires more than one-half of the voting rights of the acquiree unless demonstrated otherwise.
Statement (iii) is true because joint control exists when strategic financial and operating decisions relating to the activities of an entity require unanimous consent of the parties sharing control.
Statement (iv) is false because the boards of directors are responsible for the decision making of the companies, but they are not generally appointed by the shareholders.