Consolidated Financial Statements

Question 1

What is the definition of control? (3 elements needed)

Answer 1

• Power over the investee
• Exposure or rights to variable returns from the invested
• The ability to use power over the invested to affect the reporting entity’s returns from the other company

Question 2

What is the accounting standard for Consolidated Financial Statements?

Answer 2

IFRS 10

Question 3

What is the acronym fortune criteria for control?

Answer 3

PET

Question 4

What is a subsidiary and the typical shareholding?

Answer 4

An entity that is controlled by the parent company

More than 50%

Question 5

What is an associate and it’s typical shareholding?

Answer 5

An entity over which the investor has significant influence

Between 20 and 50%

Question 6

What is a jointly controlled entity and its typical shareholding?

Answer 6

An entity over which the parent has joint control

Depends but often between 20 and 50%

Question 7

Define significant influence

Answer 7

The power to participate in financial and operating policy decisions of the associate but is not control or joint control over those policies

Question 8

What is the acronym for the criteria for significant influence?

Answer 8

RPMP

Question 9

What is the criteria for significant influence?

Answer 9

• Representation on the board of directors
• Participation in policy making processes
• Material transactions between investor and invested
• Provision of essential technical information