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Bill Pty Ltd (Bill) is a private company with many strategic investments. The finance director is concerned that he might be required to consolidate some of these investments, pursuant to AASB 10. Details of the investment relationships are as follows:

iV. Bill operates the trustee company for the Bill Trading Trust. The trust is a discretionary trust with the nominated beneficiaries being the directors of Bill. These directors are Mr Fuschia, Mrs Glady and Mr Lilac. Over the years the trust has distributed its income in the following proportions; Mr Fuschia 70, Mrs Glady 20 and Mr Lilac 10. Under the terms of the trust deed, Bill has complete control over the operating and financing decisions of the trust. V. Bill holds 75% interest in Felix Pty Ltd (Felix). The interest was created when Bill converted a substantial loan it made to Felix into equity at the invitation of Felix when Felix began trading poorly and recovery of the loan seemed uncertain. Felix has a large deficiency in net assets and has been consolidated for many years. Bill is a passive investor, having no seats on the board of directors and no say in the financing or operating decisions of Felix.

a. Discuss in which entity control lies; and, b. Explain whether consolidation is required.

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