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Part 1 Montreal Ltd is engaged in the manufacturing of scarves. In order...

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Accounting

Part 1
Montreal Ltd is engaged in the manufacturing of scarves. In order to expand its scope of business, three years ago, Montreal Ltd purchased 44% of the ordinary shares of Detroit Ltd. The remaining 56% shareholdings are held by four other shareholders who possessthe equal proportions of shares.
Required:(a) Explain the concept of de facto control. (b) According to the above scenario, explain whether Montreal Ltd can control Detroit Ltd.
Part 2
Calgary Ltd holds 36% of the issued share capital of Brandon Ltd which is a retailer ofsouvenir products. There is a contractual arrangement under which Calgary Ltd candirect the activities of purchase and sale of goods of Brandon Ltd such as determiningthe suitable kinds of suppliers, the order quantity of the inventory, the selling price of the products and the sales quantity. This contractual arrangement can only be revoked in the special resolution of Brandon Ltd.Required:Explain whether Calgary Ltd can control Brandon Ltd.

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