At balance date, Company K has 40% of the voting rights in Company L. In addition, Company K holds potential voting rights in Company L amounting to 8% that are currently exercisable, and a further 12% of voting rights in Company L that can be exercised in two years' time. Which of the following statements is correct?
A) Consolidated financial statements need not be prepared for Company K and L for the current year.
B) Consolidated financial statements must be prepared for Company K and L in the current year.
C) Consolidated financial statements must be prepared as Company K controls Company L at balance date.
D) Consolidated financial statements must be prepared as Company K has more than half of the voting rights in Company L at balance date.

Question

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The Answer of At balance date, Company K has 40% of the voting rights in Company L. In addition, Company K holds potential voting rights in Company L amounting to 8% that are currently exercisable, and a further 12% of voting rights in Company L that can be exercised in two years' time. Which of the following statements is correct?
A) Consolidated financial statements need not be prepared for Company K and L for the current year.
B) Consolidated financial statements must be prepared for Company K and L in the current year.
C) Consolidated financial statements must be prepared as Company K controls Company L at balance date.
D) Consolidated financial statements must be prepared as Company K has more than half of the voting rights in Company L at balance date.

At Balance Date, Company K Has 40% of the Voting