00:01
Alright, so here the question says that abc limited has a 15 % holding in the shares of xyz limited.
00:07
In addition, abc has through one of its subsidiaries a currently exercisable option to buy 15 % more shares in xyz.
00:18
Although the exercise price is in the money, abc does not have the intention and the financial ability to exercise this option.
00:27
So, how should this investment be classified? now, here we see that abc limited it only have 15 % stake in xyz limited, right, which is not enough to give it control over xyz.
00:42
So, it is not, it cannot be classified as a subsidiary, right.
00:46
Now, abc limited it has an option to buy an additional 15 % stake in xyz limited.
00:52
However, it does not intend to exercise this option because it lacks financial ability to do so, right.
00:59
So, this option, so therefore, we say that this option does not give abc limited significant influence over xyz limited.
01:08
So, we cannot also, cannot be classified as a joint venture, right...