Scribd
Upload
88 views

Ias 27

IAS 27 establishes requirements for consolidated and separate financial statements. It specifies when an entity must consolidate another entity, how to account for changes in ownership interests of a subsidiary, and how to account for loss of control of a subsidiary. It also specifies disclosure requirements regarding the relationship between a parent and its subsidiaries.

Uploaded by

Foititika.net
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
88 views

Ias 27

IAS 27 establishes requirements for consolidated and separate financial statements. It specifies when an entity must consolidate another entity, how to account for changes in ownership interests of a subsidiary, and how to account for loss of control of a subsidiary. It also specifies disclosure requirements regarding the relationship between a parent and its subsidiaries.

Uploaded by

Foititika.net
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

Technical Summary

This extract has been prepared by IASC Foundation staff and has not been approved by the IASB.
For the requirements reference must be made to International Financial Reporting Standards.

IAS 27 Consolidated and Separate


Financial Statements
The objective of IAS 27 is to enhance the relevance, reliability and comparability of
the information that a parent entity provides in its separate financial statements and in
its consolidated financial statements for a group of entities under its control.
The Standard specifies:
(a) the circumstances in which an entity must consolidate the financial statements of
another entity (being a subsidiary);
(b) the accounting for changes in the level of ownership interest in a subsidiary;
(c) the accounting for the loss of control of a subsidiary; and
(d) the information that an entity must disclose to enable users of the financial
statements to evaluate the nature of the relationship between the entity and its
subsidiaries.
Consolidated financial statements are the financial statements of a group presented as
those of a single economic entity. A group is a parent and all its subsidiaries.
A subsidiary is an entity, including an unincorporated entity such as a partnership, that
is controlled by another entity (known as the parent). Control is the power to govern
the financial and operating policies of an entity so as to obtain benefits from its
activities.

Presentation of consolidated financial statements


A parent must consolidate its investments in subsidiaries. There is a limited exception
available to some non-public entities. However, that exception does not relieve
venture capital organisations, mutual funds, unit trusts and similar entities from
consolidating their subsidiaries.

Consolidation procedures
A group must use uniform accounting policies for reporting like transactions and
other events in similar circumstances. The consequences of transactions, and
balances, between entities within the group must be eliminated.
In preparing consolidated financial statements, an entity combines the financial
statements of the parent and its subsidiaries line by line by adding together like items
of assets, liabilities, equity, income and expenses. In order that the consolidated
financial statements present financial information about the group as that of a single
economic entity, the following steps are then taken:
(a) the carrying amount of the parent’s investment in each subsidiary and the parent’s
portion of equity of each subsidiary are eliminated (see IFRS 3, which describes
the treatment of any resultant goodwill);
(b) non-controlling interests in the profit or loss of consolidated subsidiaries for the
reporting period are identified; and
(c) non-controlling interests in the net assets of consolidated subsidiaries are
identified separately from the parent’s ownership interests in them.
Non-controlling interests in the net assets consist of:
(i) the amount of those non-controlling interests at the date of the original
combination calculated in accordance with IFRS 3; and
(ii) the non-controlling interests’ share of changes in equity since the date of the
combination.

Non-controlling interests
Non-controlling interests must be presented in the consolidated statement of financial
position within equity, separately from the equity of the owners of the parent. Total
comprehensive income must be attributed to the owners of the parent and to the non-
controlling interests even if this results in the non-controlling interests having a deficit
balance.

Changes in the ownership interests


Changes in a parent’s ownership interest in a subsidiary that do not result in the loss
of control are accounted for within equity.
When an entity loses control of a subsidiary it derecognises the assets and liabilities
and related equity components of the former subsidiary. Any gain or loss is
recognised in profit or loss. Any investment retained in the former subsidiary is
measured at its fair value at the date when control is lost.

Separate financial statements


When an entity elects, or is required by local regulations, to present separate financial
statements, investments in subsidiaries, jointly controlled entities and associates must
be accounted for at cost or in accordance with IAS 39 Financial Instruments:
Recognition and Measurement.

Disclosure
An entity must disclose information about the nature of the relationship between the
parent entity and its subsidiaries.

You might also like