29-Oct-2015 05:59

Consolidating accounts examples

The objective of IFRS 10 is to establish principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities.[IFRS 10:1] The Standard: [IFRS 10:1] An investor controls an investee when the investor is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee* Added by Investment Entities amendments, effective 1 January 2014.

An investor considers all relevant facts and circumstances when assessing whether it controls an investee. An investor that holds only protective rights cannot have power over an investee and so cannot control an investee [IFRS , IFRS ].This site uses cookies to provide you with a more responsive and personalised service.By using this site you agree to our use of cookies.Please read our cookie notice for more information on the cookies we use and how to delete or block them.The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected.Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

IFRS 10 Consolidated Financial Statements outlines the requirements for the preparation and presentation of consolidated financial statements, requiring entities to consolidate entities it controls.

Control requires exposure or rights to variable returns and the ability to affect those returns through power over an investee.

IFRS 10 was issued in May 2011 and applies to annual periods beginning on or after 1 January 2013.

An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. An investor must be exposed, or have rights, to variable returns from its involvement with an investee to control the investee.

[IFRS 10:5-6; IFRS 10:8] An investor controls an investee if and only if the investor has all of the following elements: [IFRS 10:7] Power arises from rights. Such returns must have the potential to vary as a result of the investee's performance and can be positive, negative, or both.

[IFRS ] A parent must not only have power over an investee and exposure or rights to variable returns from its involvement with the investee, a parent must also have the ability to use its power over the investee to affect its returns from its involvement with the investee. When assessing whether an investor controls an investee an investor with decision-making rights determines whether it acts as principal or as an agent of other parties.

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