· On 1 July 2019, Broncos Ltd acquired 40% of the ordinary shares holding voting rights of Thurston Ltd. The remaining 60% of Thurston Ltd’s ordinary shares are held by Cowboys Ltd. During the year,...

· On 1 July 2019, Broncos Ltd acquired 40% of the ordinary shares holding voting rights of Thurston Ltd. The remaining 60% of Thurston Ltd’s ordinary shares are held by Cowboys Ltd. During the year, Broncos Ltd also acquired 250,000 options, with each option giving it the right to acquire an additional 2 ordinary shares in Thurston Ltd for an exercise price of $2.25 per ordinary share. The expiry date for Broncos Ltd to exercising the options is 30 June 2021. If all of the options are exercised, Broncos Ltd would then hold 55% of Thurston Ltd’s ordinary shares with voting rights and Cowboys Ltd would hold the remaining 45%. The market price of Thurston Ltd’s ordinary shares at 30 June 2020 is $2.20. Broncos Ltd is in a very healthy financial condition, however it has not yet exercised any of the options. In early July 2020, the market price of Thurston Ltd’s shares increased to $2.33 and it appears likely that the price will continue to rise during the year ended 30 June 2021.

Required:

Explain which of the companies (Broncos Ltd or Cowboys Ltd) would likely be considered the parent company of Thurston Ltd in the year ended: (a) 30 June 2020; and (b) 30 June 2021?