IFRS Presentation of the consolidated financial statements

IFRS Presentation of the consolidated financial statements: Consolidated Financial Statements outlines the requirements for the preparation and presentation of consolidated financial statements, requiring entities to consolidate entities it controls. Control requires exposure or rights to variable returns and the ability to affect those returns through power over an investee.

Presentation of Financial Statements sets out the overall requirements for financial statements, including how they should be structured, the minimum requirements for their content and overriding concepts such as going concern, the accrual basis of accounting and the current/non-current distinction. The standard requires a complete set of financial statements to comprise a statement of financial position, a statement of profit or loss and other comprehensive income, a statement of changes in equity and a statement of cash flows.

IFRS Presentation of the consolidated financial statements: Definitions

The following terms are used in this Standard with the meanings specified: Consolidated financial statements are the financial statements of a group presented as those of a single economic entity. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. A group is a parent and all its subsidiaries.

Non-controlling interest is the equity in a subsidiary not attributable, directly or indirectly, to a parent. A parent is an entity that has one or more subsidiaries. Separate financial statements are those presented by a parent, an investor in an associate or a venturer in a jointly controlled entity, in which the investments are accounted for on the basis of the direct equity interest rather than on the basis of the reported results and net assets of the investees. A subsidiary is an entity, including an unincorporated entity such as a partnership, that is controlled by another entity (known as the parent).

A parent or its subsidiary may be an investor in an associate or a venture in a jointly controlled entity. In such cases, consolidated financial statements prepared and presented in accordance with this Standard are also prepared so as to comply with IAS 28 Investments in Associates and IAS 31 Interests in Joint Ventures.

For an entity described, separate financial statements are those prepared and presented in addition to the financial statements  Separate financial statements need not be appended to, or accompany, those statements.

The financial statements of an entity that does not have a subsidiary, associate or venturer’s interest in a jointly controlled entity are not separate financial statements.

A parent that is exempted from presenting consolidated financial statements may present separate financial statements as its only financial statements.

IFRS Presentation of the consolidated financial statements

International Accounting Standard 27 Separate Financial Statements (IAS 27) is set out in. All the paragraphs have equal authority but retain the IASC format of the Standard when it was adopted by the IASB. IAS 27 should be read in the context of its objective and the Basis for Conclusions, the Preface to International Financial Reporting Standards and the Conceptual Framework for Financial Reporting. IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors provides a basis for selecting and applying accounting policies in the absence of explicit guidance.

IFRS Presentation of the consolidated financial statements

IAS 27 Separate Financial Statements contains accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates when an entity prepares separate financial statements. The Standard requires an entity preparing separate financial statements to account for those investments either at cost, in accordance with IFRS 9 Financial Instruments, or using the equity method.

Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27), issued in October 2012, introduced an exception to the principle in IFRS 10 Consolidated Financial Statements that all subsidiaries shall be consolidated. The amendments define an investment entity and require a parent that is an investment entity to measure its investments in particular subsidiaries at fair value through profit or loss in accordance with IFRS 9 (or IAS 39 Financial Instruments: Recognition and Measurement, if IFRS 9 has not yet been adopted) instead of consolidating those subsidiaries in its consolidated and separate financial statements. Consequently, the amendments also introduced new disclosure requirements for investment entities in IFRS 12 Disclosure of Interests in Other Entities, with related disclosures introduced in this IFRS.

IFRS Presentation of the consolidated financial statements

Objective

The objective of this Standard is to prescribe the accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates when an entity prepares separate financial statements.

IFRS Presentation of the consolidated financial statements: Scope

This Standard shall be applied in accounting for investments in subsidiaries, joint ventures and associates when an entity elects, or is required by local regulations, to present separate financial statements. This Standard does not mandate which entities produce separate financial statements. It applies when an entity prepares separate financial statements that comply with International Financial Reporting Standards.

Defination

The following terms are used in this Standard with the meanings specified: Consolidated financial statements are the financial statements of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single
economic entity. Separate financial statements are those presented by an entity in which the entity could elect, subject to the requirements in this Standard, to account for its investments in subsidiaries, joint ventures and associates either at cost, in accordance with IFRS 9 Financial Instruments, or using
the equity method as described in IAS 28 Investments in Associates and Joint Ventures.

IFRS Presentation of the consolidated financial statements

The following terms are defined in Appendix A of IFRS 10 Consolidated Financial Statements, Appendix A of IFRS 11 Joint Arrangements and of IAS 28:

• associate
• control of an investee
• equity method
• group
• investment entity
• joint control
• joint venture
• joint venturer
• parent
• significant influence
• subsidiary.

financial statements or in addition to the financial statements of an investor that does not have investments in subsidiaries but has investments in associates or joint ventures in which the investments in associates or joint ventures are required by IAS 28 to be accounted for using the equity method, other than in the circumstances.

The financial statements of an entity that does not have a subsidiary, associate or joint venture’s interest in a joint venture are not separate financial statements.

An entity that is exempted in accordance of IFRS 10 from consolidation of IAS 28 (as amended in 2011) from applying the equity method may present separate financial statements as its only financial statements.

An investment entity that is required, throughout the current period and all comparative periods presented, to apply the exception to consolidation for all of its subsidiaries in accordance of IFRS 10 presents separate financial statements as its only financial statements.

IFRS Presentation of the consolidated financial statements

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