Multiple Choice
Gigi Ltd is acting as a trustee for Bonberre trust.Gigi has complete control of the operating and financing decisions of the trust.The nominated beneficiaries of the trust are Mr and Mrs Bonberre,who each receive 50 per cent of the trust profits.Given the situation described,what is Gigi Ltd most likely to be required to do to account for the Bonberre trust under AASB 10?
A) Gigi Ltd should be required to consolidate the trust as it controls the operating and financing decisions.
B) Gigi Ltd should not be required to consolidate Bonberre trust because a trust cannot be a subsidiary under The Corporations Law.
C) Gigi Ltd should treat the trust as an investment in its books, valued at the present value of any future income streams expected to be received in return for managing the trust.
D) Gigi Ltd should not consolidate the trust because, while it does control the financing and operating decisions of the trust, it cannot do so in a way to benefit Gigi Ltd.
Correct Answer:
Verified
Correct Answer:
Verified
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