Wiley International Trends in Financial Reporting under IFRS: Including Comparisons with US GAAP, Chinese GAAP, and Indian GAAP

APPENDIX B

NEW IFRS ISSUED AND AMENDMENTS TO EXISTING STANDARDS EFFECTIVE IN 2011 AND LATER YEARS

PART I: NEW IFRS ISSUED AND AMENDMENTS TO EXISTING STANDARDS IN 2011 THAT ARE MANDATORILY EFFECTIVE FROM JANUARY 1, 2013, WITH EARLIER ADOPTION PERMITTED

IFRS 10, CONSOLIDATED FINANCIAL STATEMENTS

1. OBJECTIVE

1.1 This Standard was issued with the objective of having a single basis for consolidation for all entities, regardless of the nature of the investee. Under the existing International Financial Reporting Standards (IFRS), differently worded criteria for consolidation existed (i.e., the concept of “power to govern the financial operating policies of an entity so as to obtain benefits from its activities” under International Accounting Standard [IAS] 27 and a “risks and rewards” approach applicable in Standing Interpretations Committee [SIC] 12 for special-purpose entities). The new Standard expands on the meaning of “control” and unifies the language used.

2. SYNOPSIS OF THE STANDARD

A summary of this Standard, which will be effective for the accounting period commencing January 1, 2013, with early adoption permitted, is presented next.

2.1 According to the Standard the three elements of “control” are

1. Power over the investee

2. Exposure or rights to variable returns from the involvement with the investee

3. The ability to use power over the investee to affect the amount of the investor’s returns (An investor must establish that it possesses all three elements in order to ...