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To have control over an investee, an investor must not only have power over an investee and exposure or rights to variable returns from its involvement with the investee, but it also must have the ability to use its power over the investee to affect its returns from involvement with the investee. Head office: Columbus Building, 7 Westferry Circus, Canary Wharf, London E14 4HD, UK. There are varying views as to whether this exemption can be applied by a subsidiary whose parent prepares consolidated financial statements under local GAAP that are identic… Relevant activities and power to direct those. A Basis for Conclusions has also been issued by the IASB. Publication: Use of IFRS Standards around the world [PDF], How the IFRS Interpretations Committee helps support consistent application, Supporting materials for the IFRS for SMEs Standard, IFRS 10 Consolidated Financial Statements. IFRS 10 addresses the scope of consolidated financials statements and the procedures for their preparations.
IFRS 10’s objective is to establish principles for presenting and preparing consolidated financial statements when an entity controls one or more entities. The key principle is that control exists, and consolidation is required, only if the investor possesses power over the investee, has exposure to variable returns from its involvement with the investee and has the ability to use its power over the investee to affect its returns. Whether an investor is a principal or an agent when exercising its controlling power. The continuous reassessment would consider both changes in an investor’s power over the investee and changes in the investor’s exposure or rights to variable returns. 0000006424 00000 n
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Resources (This includes links to the latest standards, drafts, PwC interpretations, tools and practice aids for this topic).  It also requires disclosures about judgements used to determine whether control exists, why it determined that control did not exist and its relationship with entities it did not consolidate. A partial gain or loss is recognised when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. See Legal for more information. When the investor is exposed, or has rights, to variable returns from its involvement with the investee; and. Key features and significance of IFRS 10.
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NZ IFRS 10 – This version is effective for reporting periods beginning on or after 1 Jan 2020 (early adoption permitted) Date of issue: Nov 2012 Date compiled to: 20 Sep 2019 . %PDF-1.7
The second criterion in the consolidation assessment is that the investor has exposure, or rights, to variable returns from involvement with the investee. 0000036500 00000 n
Element of control: the ability to use power over the investee to affect the investor’s returns. At its meeting in May 2016 the Board decided to defer work on the Equity Method research project until the Post-implementation Reviews (PIR) of IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities are undertaken.  IFRS 12 requires the disclosures related to subsidiaries, joint ventures and interests in other entities which are not consolidated to be combined into a single disclosure. Chartered Professional Accountants of Canada (CPA Canada) has identified these external resources to help you better understand IFRS 10, which establishes principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities. Check your inbox or spam folder now to confirm your subscription. 0000006001 00000 n
Control requires exposure or rights to variable returns and the ability to affect those returns through power over an investee. IFRS 10 replaces the consolidation requirements in IAS 27, Consolidated and Separate Financial Statements, and SIC-12 Consolidation - Special Purpose Entities.
 IFRS 10 revised the definition of having "control" of another entity, and thus requiring that entity to be consolidated onto the controlling entity's balance sheet. [IFRS 10 para 2]. The principles concerning consolidated financial statements under IFRS are set out in IFRS 10, ‘Consolidated financial statements’. Therefore, a parent controlling a sub-group that is consolidated at higher level under IFRS, and is not publicly listed, need not prepare consolidated financial statements if all the criteria contained in IFRS 10.4a are met.
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E���}0�Pۣ+̴�z�_�� An investor would reassess whether it controls an investee if there is a change in facts and circumstances. 0000001176 00000 n
IFRS 10’s objective is to establish principles for presenting and preparing consolidated financial statements when an entity controls one or more entities. Existence of power over specified assets only. International Financial Reporting Standard (IFRS) – 10. 0000002949 00000 n
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This reassessment will be made based on changes in facts and circumstances but would be visited at least once in each reporting period. Once entered, they are only 0000046961 00000 n
 These extra disclosures were also in response of criticism of the previous accounting guidance in light of the financial crisis. 0000036449 00000 n
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This may involve a preliminary consideration of IFRS 12 issues such as the level of disaggregation required.  During the crisis, accounting rules were criticized for permitting certain risky arrangements to be excluded from company balance sheets. The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. IFRS 10 – Consolidated Financial Statements IFRS 12- Disclosure of Interests in Other Entities. PricewaterhouseCoopers LLP has not verified the contents of any third party web sites and does not endorse, warrant, promote or recommend any information, services or products which may be provided or accessible through them or any body or person which may provide them. 0000005254 00000 n