17. Principles of consolidated financial statements

Question 1

What is the IFRS definition of a Parent?

Answer 1

An entity that controls one or more entities

Question 2

What is the IFRS definition of a Subsidiary?

Answer 2

An entity that is controlled by another entity

Question 3

What are the three elements of control under IFRS 10?

Answer 3

• Power over the investee
• Exposure or rights to variable returns from its involvement with the investee
• The ability to use its power over the investee to affect the amount of investors returns

Question 4

Give four examples of when a parent needs not prepare consolidated accounts.

Answer 4

• Parent is owned wholly or partly and owners do not object
• Equity and debt instruments are not traded on public markets
• Does not issue class instruments on public market
• Ultimate parent company produces consolidated statements that comply with IFRS