6.10 Exemptions from preparing consolidated financial statements

Question 1

When is a parent exempted from preparing consolidated financial statements?

Answer 1

If all of the following apply:

• the parent itself is a wholly-owned subsidiary
• its securities are not publically traded or in the process of trading in public securities markets
• its ultimate or intermediate parent publishes IFRS-compliant financial statements

Question 2

Where a parent takes advantage of the exemption from consolidated financial statements, what additional disclosures must it make (under IAS 27)? (4 things)

Answer 2

• the fact that the exemption has been used
• the name and country of incorporation of the company whose IFRS-compliant parent company accounts have been published.
• a list of significant investments in subsidiaries, jointly controlled entities and associates, country of incorporation, ownership details.
• the method used to account investments.

Question 3

Why are the rules around exclusion of entities from producing consolidated accounts so strict?

Answer 3

To prevent companies using them to manipulate their results.

Question 4

Which standard lays out the basic procedures for consolidating group accounts?

Answer 4

IFRS 10