Consolidation Flashcards
Definition of control (IFRS10)
An investor can control the investee if and only if the investor has all of the following:
* Power over investee;
* Exposure or rights to variable returns from its involvement with the investee.
* The ability to use its power over investee to affect the amount of investors’ return.
Definition of power
Power is the ability to direct the relevant activities of the investee, such as:
* Voting rights;
* Rights to appoint, remove and reassign the key management personnel;
* Rights to appoint, remove another entity that direct relevant activities.
Definition of business
Business is an integrated set of activities or assets that is capable of being conducted and managed for the purpose of providing goods or services to customers, generating investment income or other incomes.
Identifying the acquirer (criteria)
- The entity obtains the control.
- The entity whose management dominates the combined entity.
- The entity transfers cash or other assets or incurs liability or issues its equity interests.
- The entity whose owner has largest portion of voting rights.
Definition of Joint Arrangement (IFRS11)
Joint arrangement is an arrangement of which two or more parties have joint control.
Definition of joint control
Joint control is contractually agreed sharing of control of an arrangement, which exists only when decisions about relevant activities require the unanimous consent of the parties.
Definition of joint venture
Joint venture is a joint arrangement whereby the parties have rights to the net assets of the arrangement.

Structured through separate vehicle.
Definition of joint operation
Joint operation is a joint arrangement whereby parties have rights to the assets and obligations to the liabilities, relating to the arrangement.
What is significant influence?
Significant influence is the power to participate in the financial and operating decisions, but not control them.
