IFRS 10 - Consolidated Financial Statements

Question 1

parent

Answer 1

an entity that controls one or more other entities

Question 2

subsidiary

Answer 2

an entity that is controlled by another entity

Question 3

group

Answer 3

a parent and its subsidiaries

Question 4

control

Answer 4

• When it (the investor) is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee
• Control is assumed to exist when the investor has power to direct the relevant activities of the investee, ie the activities of the investee that significantly affect the investee’s returns.
• Power to direct the relevant activities of the investee include:
• rights in the form of voting rights of an investee (eg more than 50% of the voting rights – although there may be circumstances where such ownership does not give power)
• rights to appoint, reassign or remove members of an investee’s key management personnel
• rights to appoint or remove another entity that directs the relevant activities
• rights to direct the investee to enter into, or veto any changes to, transactions for the benefit of the investor
• other rights (eg decision-making rights specified in a management contract) that give the holder the ability to direct the relevant activities