• A joint Arrangement is an arrangement where two or more parties exercise joint Control that is Contractually agreed upon on sharing of Control

Collective Control of an arrangement exists when all the parties must act together to direct activities that significantly affect the returns of the arrangement. If collective control exists, it must be assessed whether joint control exists

Is the contractually agreed sharing of Control over an arrangement, which exists only when decisions about relevant activities require the unanimous consent of the parties sharing control

Is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities relating to the arrangement. These parties are called joint operations.

Is a joint arrangement whereby the parties that have joint Control of the arrangement have rights to the Net Assets of the Arrangements. These parties are called joint ventures

This is an entity in which the investor has significant influence and that is neither a subsidiary nor a joint venture

We would need to determine if the company would have significant influence or joint control over S ✅

The information provided states that the terms of the agreement include the company will have representation on the board of directors as ✅ well as participation in policy-making processes, such as the approval of dividends ✅

A company holds 30% of the shareholding in S. As this is more than 20% but less than 49%. ✅ The investemnt in S could either be an investment in an Associate or a joint Venture. ✅

These factors constitute evidence of significant influence

Therefore the acquisition of S shall be accounted for as an instrument in an associate in the accounting records of the company.

In terms of IAS 27 Separate Financial Statements of the PC, the investment will initially be recorded at Cost or at Fair Value in terms of IFRS 9

In terms of IAS 28 Investment in Associates and Joint Ventures, investment in associates must be accounted for using the equity method.

Subsequently, in the group Financial Statements, the investments will be carried at the Initial Recognition Price (Cost/Consideration) plus PC's share of the post-acquisition net assets (or since acquisition reserves/changes in equity since acquisition) Less any dividends rececied from the Associate

Participation in policy-making processes, including participation in decisions about dividends
or other distributions

Material transactions between investor and investee

Therefore, when the potential voting rights are taken into account, Tele Rings potentially owns 25% (15% + 10%) of voting rights which may represent significant influence.

Tele Rings will also be involved in the policy-making processes of Cell Buzz but will not have power to make the ultimate decisions and therefore will not have control over Cell Buzz

PC has an option to acquire a further 10% of S ordinary share capital and this option is presently exercisable and in the money

PC acquired 15% of shares in S which does not represent significant influence as it is less than 20% of the decision making rights