Control Logan Ltd has acquired,during the current year , the following investments in the shares issued by other companies: Fitzroy Ltd $120000(40% of issued capital) Murray Ltd $117000(35% of issued capital) Logan Ltd is unsure how to account for these investments and has asked you ,as the auditor,for some professional advice. Specifically,Logan Ltd is concerned that it may need to prepare consolidated financial statements under AASB 127. To help yo, the company has provided the following information about two investee companies: Fitzroy Ltd 1)The remaining shares in Fitzroy Ltd are owned by a diverse group of investors who each hold a small parcel of shares. 2)Historically, only a small number of the shareholders attend the general meetings or question the actions of the directors. 3)Logan Ltd has nominated three new directors and expects that they will be appointed at the next annual general meeting.The current board of directors has five members. Murray Ltd 1)The remaining shares in Murray Ltd are owned by a small group of investors who each own approximately 15% of the issued shares. One of these shareholders is Fitzroy Ltd, which owns 17%. 2)The shareholders take a keen interest in the running of the company and attend all meetings 3)Two of the shareholders, including Fitzroy Ltd, already have representatives on the board of directors who have indicated their intention of nominating for re-election. Required A.Advise Logan Ltd as to whether,under AASB 127, it controls Fitzroy Ltd and/or Murray Ltd. Support your conclusion. B.Would your conclusion be different if the remaining shares in Fitzroy Ltd were owned by three institutional investors each holding 20%? If so,why?
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