F3 Consolidated Financial Statements

Question 1

Consolidated Financial Statements

Answer 1

• when you control over 50% of the company

Question 2

Exceptions to the consolidated financial statements being used @ 50% control

Answer 2

• the subsidiary is in legal reorganization

- bankruptcy or subsidiary operates under severe foreign restrictions

Question 3

IFRS Consolidation rules

Answer 3

• under IFRS a parent company must consolidate its investments in subsidiaries unless all of the following conditions are met;
  1) parent company itself if a wholly owned sub , or partially owned entity and the owners do not object the parent not presenting consolidated financial statements
  2) The parent company is not publicly traded and is not in the process of issuing securities in the public market
  3) the ultimate or any intermediaries parent of the parent company produces consolidated financial statements in compliance with IFRS

Question 4

Acquisition Method - Fundamental Principles

Answer 4

• consolidate sub at 100% FV at acquisition date
• Recognition principle: the acquirer recognizes all of the subsidiary’s assets and liabilities, including identifiable intangible assets
• Measurement Principle: the acquirer measures each recognized asset and liability and any noncontrolling interest at its acquisition date fair value