Discuss whether woodchuck ltd is a subsidiary

Assignment Help Accounting Basics

Reference no: EM132893666

Exercise 1:

Hewey Ltd, Dewey Ltd and Louie Ltd each own one-third of the ordinary shares that carry voting rights at a general meeting of shareholders of Woodchuck Ltd. Hewey Ltd, Dewey Ltd and Louie Ltd each have the right to appoint two directors to the board of Woodchuck Ltd. Hewey Ltd also owns call options that are exercisable at a fixed price at any time and, if exer- cised, would increase Hewey Ltd's voting rights in Woodchuck Ltd to 60%, while Dewey Ltd's and Louie Ltd's would become 20% each. The management of Hewey Ltd does not intend to exercise the call options.

Required
Discuss whether Woodchuck Ltd is a subsidiary of any of the other entities.

Exercise 2:
Sylvester Ltd owns 40% of the shares of Tweety Pie Ltd; no other party owns more than 3% of the shares. The annual general meeting of Tweety Pie Ltd is to be held in one month's time. Historically, only the holders of around 75% of the shares were present and voted in each of the previous years' annual meetings.

Required
Discuss the potential for Tweety Pie Ltd to be classified as a subsidiary of Sylvester Ltd.

Reference no: EM132893666

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