BAGNPES – Advanced Accounting Part II

 PAS 27: in accounting for investments in

subsidiaries, jointly controlled entities, and
associates when an entity elects, or is
required by local regulations, to present
separate (non-consolidated) financial
statements
 PFRS 10: in the preparation and presentation
of consolidated financial statements for a
group of entities under common control of a
parent
 Consolidation – is the process of combining
the assets, liabilities, earnings and cash flows
of a parent and its subsidiaries as if they were
one economic entity.
 Parent - is an entity that controls one or
more subsidiaries.
 Group – parent and all of its subsidiaires
 Subsidiary – an entity that is controlled by
another entity, the parent. The criterion for
identifying a parent – subsidiary relationship
is control.
 Power over the investee. Power is the ability
to direct those activities which significantly
affect the investee’s returns. It arises from
rights (voting) or arrangements.
 Exposure, or rights, to variable returns from
involvement with investee returns must have
the potential to vary as a result of the
investee’s performance and can be positive,
negative or both.
 The ability to use power over the investee to
affect the amount of investor’s returns.
 A parent is required to present consolidated
financial statements in which it consolidates
its investments in subsidiaries
 The parent is itself a wholly-owned
subsidiary, or is a partially-owned subsidiary
of another entity and its other owners,
including those not otherwise entitled to
vote, have been informed about; and do not
object thereto, the parent not presenting
consolidated financial statements.
 The parent’s debt or equity instruments are
not traded in a public market.
 The parent did not file, nor is it in the process
of filing, its financial statements with a
securities commission or other regulatory
organization for the purpose of issuing any
class of instruments in a public market.
 The ultimate or any intermediate parent of
the parent produces consolidated financial
statements available for public use that
comply with International Financial Reporting
Standards.
 The investment account, shares in subsidiary,
as shown in the financial statement of the
parent
 The equity of subsidiary at the acquisition
date
 Recognition of goodwill
 Business combination achieved in stages
 It will require consolidation when the acquirer
acquires control of the acquiree
 The previous investment will be treated as
sale/purchase at fair value as if it were
disposed of and reacquired at FV acquisition
date
 FVTOCI = other comprehensive income
 FVTPL = profit and loss