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Ifrs Iii - C1
Ifrs Iii - C1
Ifrs Iii - C1
Chapter 1
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Learning objectives
✓ Explain economic motivations for entering inter-entity
arrangements
✓ Explain advantages and disadvantages of reporting
schemes
✓ Explain different level of power of investors over
investees
✓ Classify investments
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Nội dung
1. Khuyến khích mở rộng ranh giới kinh tế
2. Thông tin tài chính & - Hệ thống báo cáo
3. Phân loại đầu tư vào công cụ vốn Video 1: P1-1
3.1. Khái quát đầu tư vào CCV
3.2. Kiểm soát
(1) Quyền lực
(2) Năng lực sử dụng quyền lực
(3) Thu nhập
3.3. Ảnh hưởng đáng kể
Video 2: P1-2
3.4. Đồng kiểm soát
4. Các phương pháp hạch toán & IFRS
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Capitalizing
on slack debt Increased
or operating market shares
capacity
Tapping on Economies
growth of scale
opportunities and scope
Reduced
risk through
diversification
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Disaggregated
Separate financial Aggregated
reporting for business
statements for the reporting for the
units within a legal or
legal entity economic entity
economic entity
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Reporting schemes
Operating Separate
segment financial Group reporting
reporting statements
IFRS 8-KTQT 2
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Reporting schemes
Operating Separate
segment financial Group reporting
reporting statements
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Reporting schemes
Operating Separate
Group
segment financial
reporting
reporting statements
3. Types of investment
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P+A+R
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P+A+R
Sources of power: control over another entity that directs relevant activities
Control may be direct (e.g. voting right) or indirect (e.g. management contracts and
other arrangements)
E.g. Investor A controls Entity X. Entity X has 20% interest in Entity Y, but it is able to
direct the relevant activities of Y because Y is dependent on X for its technical know-
how. Through X, Investor A has control of Y.
Sources of power: Statutory and contractual provisions, rights to veto or enter into
transactions
Rights: must be “substantive rights” and not “protective rights”
E.g. if a franchising contract allows the franchisor to intervene to protect the franchise
brand name, the power is protective and is not a sufficient basis to give rise to power to
direct most relevant activities of the entity.
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P+A+R
Sources of power: special relationship
consider all sources of power including interpersonal and operational
links between an investor and the investee
May arise from the following situations:
The key management personnel of the investee are current or
previous employees of the investor;
The investee’s operations are dependent on the investor (for
example, provision of critical services or specialized knowledge);
A significant portion of the investee’s activities are conducted on
behalf or involve the investor; or
The investor’s exposure or rights to returns is proportionately higher
than its ownership interests in the investee.
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P+A+R
Substantive rights
Substantive rights relate to rights to make decisions on the most
significant activity (activities) that affect an entity’s returns.
Consider whether there are barriers that prevent the use of the
right, e.g. financial barriers, operational barriers or legal and
regulatory barriers
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Unilateral ability
When an investor is able to exercise power on another entity
without restrictions from other parties
Control is therefore different from joint control which requires
unanimous consent from parties.
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P+A+R
Currently exercisable
In the situations with potential ordinary shares, the rights must be
exercisable in a timely manner to enable the holder to direct
relevant activities to make returns.
Illustration 2.3 Decision making rights over different activities
Investor A and Investor B own 50% interest each in Entity X. Through contractual
agreement, Investor A has power to make decisions on strategic policies relating to
research and development while Investor B has power to make decisions on strategic
policies relating to marketing.
Discuss different scenarios.
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***************************************************************
***************
IFRS 10 is dynamic. Continually re-assess control when facts and
circumstances change with respect to power, ability and returns.
Power may be gained or lost through events that do not involve the investor.
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• For the test of control, IFRS 10 requires consideration of control from rights held
directly or indirectly through subsidiaries
• Control must be demonstrated at each intermediate level before the ultimate holding
company is said to have control over the lowest-level company
Affiliation structures
Situation 1 Situation 2
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Default assumption:
An investor has ownership of 20% or more of the voting power and equal to or
less than 50% of the voting power in an investee, including “potential voting rights”
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Multi-level structures
P Situation 1: P Situation 2:
P has significant P has significant
influence over: influence over:
80% 50% i) Y (50% direct 40% 50% i) A (40% direct
interest) interest)
ii) Z (65% indirect ii) C (50% direct
X Y interest) – P has A C interest)
no control over Y iii) B (42% indirect
50% 50% 80% 20% interest)
Z B
Situation 1 Situation 2
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Example 1
X Ltd is operated on an joint arrangement between K
international Ltd and M Ltd. K Ltd accounts for 30%. The
residual portion belong to M Ltd. X Ltd’s regulation says:
The Board has 6 member, of those 2 are from M Ltd, 4 are
from K
The Board is reelected in every 2 years
The Board’s decisions are made when at least 2/3 of the
Board’s member support
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Example 2
There are 3 parties relating to ABC Ltd. The share of A Ltd, B
Ltd, C Ltd in ABC are 40%, 40%, 20%. Upon agreement:
(2a) Strategic decision is made when all the members support
(2b) Strategic decision is made when 80% the members
support
(2c) Strategic decision is made when majority of the members
support
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Example 3
30%
60% 90%
30%
A B C (GTHL) D
M có thành viên là M giữ C để bán
chủ tịch HĐQT và trong ngắn hạn
40%
có quyền bỏ đa số
phiếu
70% 30% 40%
70% 30%
N O P Q R
60% B có quyền
đồng kiểm
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Q1
Which of the following companies would qualify to be regarded as
subsidiaries of Alpha?
(a) Beta in which Alpha has 15% votes and a place on the board of directors;
(b) Delta in which Alpha has 52% votes but no place on the board of
directors;
(c) Gamma in which Alpha has 25% shares and two places on the board of
directors;
(d) (d) Theta in which Alpha holds 100% votes and all places on the board of
directors
A. a & b
B. b & d
C. a & c
D. b & c
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Q2
Which of the following would qualify a company to be
regarded as a parent of another?
a. A parent should control the majority of the votes at
subsidiary’s shareholders’ meetings
b. A parent should own majority shares in the subsidiary
c. A parent it and its subsidiary must both be in the same
line of business
d. A parent and the subsidiary should both have the same
persons as their director
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Q4
Which of the following items is the best consideration for
an investor’s power over an investee?
A. Absolute voting right
B. Relative voting right
C. Absolute ownership ratio
D. Relative ownership ratio
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Q3
Control is the power:
a. To govern the financial and operating policies of an
undertaking.
b. To control more than 40% of the ordinary shares.
c. Appoint board members in proportion to your
shareholding.
d. To control more than 50% of net assets.
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Q4
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Q5
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Q6
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Q7
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End
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