Wiley IFRS: Practical Implementation Guide and Workbook, 3rd Edition

Chapter 19

CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS (IAS 27)

SCOPE

The Standard is to be applied in preparing the consolidated financial statements of groups of companies controlled by a parent entity. The objective of IAS 27 is to enhance the relevance, reliability, and comparability of the information that a parent entity provides in its separate financial statements and in its consolidated financial statements for a group of entities under its control. The Standard specifies

1. The circumstances in which an entity must consolidate the financial statements of another entity (being a subsidiary).

2. The accounting for changes in the level of ownership interest in a subsidiary.

3. The accounting for the loss of control of a subsidiary.

4. The information that an entity must disclose to enable users of the financial statements to evaluate the nature of the relationship between the entity and its subsidiaries.

DEFINITIONS OF KEY TERMS

(in accordance with IAS 27)

 

Consolidated financial statements. The financial statements of a group shown as those of a single economic entity.

Subsidiary. An entity controlled by another entity.

Parent. An entity that has one or more subsidiaries.

Control. The power to govern the financial and operating policies of an entity.

Noncontrolling interest. The portion of the equity interest not owned by the parent.

PRESENTATION OF FINANCIAL STATEMENTS

Financial statements should be presented by the parent entity unless these four conditions are ...