Which of the following circumstances would not trigger the need for an investor to reassess whether it controls an investee?
A. A potential voting right in the investee is granted
B. A change in market condition occurs, which does not cause a change to one or more of the three elements of control
C. An investee’s governance changes such that its current ability to direct relevant activities is no longer directed through voting rights, but instead, is directed by contract
D. An investor increases its holdings in the investee
B. A change in market condition occurs, which does not cause a change to one or more of the three elements of control, would not trigger the need for an investor to reassess whether it controls an investee. According to the principles outlined in the reference materials, an investor should reassess control when there are changes in the facts and circumstances that affect the assessment of control, such as the grant of a potential voting right, changes in the investee's governance structure, or an increase in the investor's holdings. If a change in market conditions does not impact the elements of control (power, returns, or both), it would not necessitate a reassessment of control.
