pexels photo 374897

Conditions set by IFRS 10 to determine entities required to prepare consolidated financial statements

IFRS 10 requires that any entity that is the parent (control other entities) must prepare consolidated financial statements. An entity is a parent if it controls another entity.

Control exists when an 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.

Power is defined as the ability to direct relevant activities of the investee. The important point is that control is not determined by the percentage of holding in the investee, but by the ability to affect returns through the exercise of power.

According to IFRS 10, every parent company must prepare a consolidated financial statement except in the following situations. These are:

It is a wholly owned subsidiary or is partially owned subsidiary of another entity and all its other owners, including those not otherwise entitled to vote, have been informed about, and do not object to, the parent company not presenting consolidated financial statements.

The parent company debt or equity instrument are not traded in the in the public market (domestic or foreign stock exchange or an over the counter market including the local and regional market)

Parent company did not file, nor i in the process of filing, its financial statements with the security commission or other regulatory organization for the purpose of issuing any class of instrument in public market : and

Its ultimate or any intermediate parent produces consolidated financial statements that are available for public use and comply with IFRS.

I hope you have enjoyed reading this post, if you wish to know more please ask or share your ideas on the comment below. Also, if you want to build a blog like this to help solve problems for others check with Interserver they will help you with the domain name and web hosting.

5 thoughts on “Conditions set by IFRS 10 to determine entities required to prepare consolidated financial statements”

  1. Very good article! We are linking to this particularly great content on our site. Keep up the great writing.

Leave a Comment

Your email address will not be published. Required fields are marked *

%d bloggers like this: