Control Assumption

CFA Level II FRA
#1

CFAI Reading 16 Q11 excerpt:

In December 2009, Zimt announced that it would be increasing its ownership in Oxbow to 50 percent effective 1 January 2010.

Selected Financial Statement Estimates for Zimt AG (€ Millions):

Revenue 2009 2010

1500 1700

Selected Financial Statement Estimates for Oxbow Limited (€ Millions):

Revenue 2009 2010

1200 1350

Q:Based on Gelblum’s estimates, if Zimt is deemed to have control over Oxbow, its 2010 consolidated sales (in € millions) will be closest to:

  1. €1,700.
  2. €2,375.
  3. €3,050.

Answer: C is correct. Under the assumption of control, Zimt would record its own sales plus 100 percent of Oxbow’s. €1,700 + 1,350 = €3,050.

My question: I didn’t see “assumption of control” mentioned anywhere in Wiley or CFAI material. Why do we assume 100% control if the problem clearly states the ownership would increase to only 50%?

#2

The question says “if Zimt is deemed to have control”