Ifrs 10 vs Ias 27

IFRS 10 VS. IAS 27

1

IFRS 10 - OBJECTIVE
 To

establish principles for the presentation and preparation of consolidated financial statements (CFS) when an entity controls one or more other entities.

2

IFRS 10 – OBJECTIVE(STANDARDS)
Requires a parent entity to present CFS

Defines the principle of control and establishes control as the basis for consolidation

Set out how to apply the principle of control to identify wheteher an investor controls an investee and therefore must consolidate the investee

Set out the accounting requirements for the preparation of CFS

3

KEY DEFINITIONS
CFS

• FS of a group of the parent and its subsidiaries presented as those of a single economic entity

CONTROL ON
INVESTEE

• Investor control an investee when the investor is exposed

PARENT

• An entity that controls one or more entities

POWER

• Existing rights

PROTECTIVE
RIGHTS

• Rights to protect the interest of the party holding the rights

RELEVANT
ACTIVITIES

• Activities of the investee that significantly affect the investee’s returns

4

IFRS 10 - CONTROL
 An

investor determines whether it is a parent by assessing whether it controls one or more investees.
 An investor considers all relevant facts and circumstances when assessing whether it controls an investee.
 An investor controls an investee when 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 5

IFRS 10 - CONTROL
 An investor controls investee if and only if the

investor has all the following elements:-

POWER OF
THE
INVESTEE

EXPOSURE
OR RIGHTS

ABILITY TO
USE ITS
POWER

6

IFRS 10 - CONTROL
Power arise from rights
 Rights can be straightforward (through voting rights) or complex (embedded in contractual agreement)
 Investor holds only protective rights cannot have