About
IFRS 10 establishes principles for presenting and preparing consolidated financial statements when an entity controls one or more other entities. IFRS 10:
- requires an entity (the parent) that controls one or more other entities (subsidiaries) to present consolidated financial statements;
- defines the principle of control, and establishes control as the basis for consolidation;
- sets out how to apply the principle of control to identify whether an investor controls an investee and therefore must consolidate the investee;
- sets out the accounting requirements for the preparation of consolidated financial statements; and
- defines an investment entity and sets out an exception to consolidating particular subsidiaries of an investment entity.
Consolidated financial statements are financial statements that present the assets, liabilities, equity, income, expenses and cash flows of a parent and its subsidiaries as those of a single economic entity.
What you should know
- Know and apply the definition of control.
- Determine whether an investor controls an investee.
- Apply the principles of power, exposure to variable returns and the ability to affect returns.
- Prepare consolidated financial statements for a parent and its subsidiaries.
- Account for changes in ownership interests in subsidiaries.
- Apply the investment entity exception, where applicable.
- Present and disclose consolidated financial statements in accordance with IFRS Standards.
- Explain the need for making adjustments for intragroup transactions
- Prepare worksheet entries for intragroup transactions involving profits and losses in beginning and ending inventory
- Prepare worksheet entries for intragroup services such as management fees
- Prepare worksheet entries for intragroup dividends
- Prepare worksheet entries for intragroup borrowings.