In AASB 10, indicators of an acquiring entity’s power to control the other combining entities in a business combination do not include the power to:

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BlackTom AI · Accepted Answer

The question asks about indicators in AASB 10 that show an acquiring entity’s power to control other entities in a business combination, specifically asking which indicator does not reflect such power.
Option 1: 'exercise more than half of the voting rights in another entity through the site of the voting power or by virtue of an agreement with other investors.' Having more than half of voting rights directly translates to the practical ability to direct decisions, which is a classic indicator of control under AASB 10.
Option 2: 'appoint or remove a majority of the members of the governing body of the acquired entities.' The power to appoint or remove a majority of the governing body is a strong signal of control because it enables the acquirer to direct the relevant activities and outcomes of the entity.
Option 3: 'cast the majority of votes at meetings of the governing body.' Controlling the majority of votes in governance forums allows the acquirer to influence or determine decisions, another recognized indicator of power to control under the standard.
Option 4: 'none of the above.' This option asserts that none of the listed items are indicators of control power. Given that Options 1–3 each describe a clear mechanism by which control can be exercised, this statement is true only if none of the preceding options are indicators. Since they are all indicators, the assertion that none of the above indicators exist would be incorrect in terms of the standard.
In summary, all three first options describe valid indicators of control power as per AASB 10, meaning there is no item that fails to indicate control. Therefore, the statement 'none of the above' correctly reflects that none of the prior options are non-indicators. This aligns with the principle that control may be evidenced through voting power, governance appointments, or voting outcomes in governing bodies.

22754 Corporate Accounting - Autumn 2025 Online Self-study Quiz (Module 2A)

In AASB 10, indicators of an acquiring entity’s power to control the other combining entities in a business combination do not include the power to:

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