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

CHAPTER 16

CONSOLIDATED FINANCIAL STATEMENTS AND SEPARATE FINANCIAL STATEMENTS (IAS 27)

1. OBJECTIVE

1.1 This Standard is to be applied in the preparation and presentation of consolidated financial statements for a group of entities under the control of a parent.

1.2 The Standard is also to be applied in accounting for investments in subsidiaries, jointly controlled entities, and associates when an entity elects to or is required by local laws to present separate financial statements.

1.3 However, this Standard does not deal with accounting for business combinations which is dealt with in International Financial Reporting Standard (IFRS) 3, Business Combinations.

1.4 This Standard has been amended (see Appendix B), and the amended Standard is applicable to annual reporting periods beginning on or after January 1, 2013, with an option of earlier adoption.

2. SYNOPSIS OF THE STANDARD

This Standard, which deals with the preparation and presentation of consolidated and separate financial statements by entities, is summarized next.

2.1 Consolidated financial statements are the financial statements of a group of entities that are presented as those of a single economic activity.

2.1.1 A parent (an entity that has one or more subsidiaries), unless exempted in accordance with this Standard, shall present consolidated financial statements of the group in which it consolidates its investments in subsidiaries in accordance with this Standard and the interpretation on “consolidation of special ...