IAS-27 1 IAS-27 Consolidated and Separate Financial Statements.

IAS-27 1 IAS-27 Consolidated and Separate Financial Statements

IAS-27 2 Outline Introduction Definitions Accounting for Subsidiaries in separate financial statements Truth and fairness Inclusions Parent and Control

IAS-27 3 Outline Sundry provision of IAS-27 Results of intra-group trading Accounting year ends Accounting policies Date of acquisition or disposal Disclosure IAS-27 disclosure

IAS-27 4 Definitions Subsidiary: an entity that is controlled by another entity. Parent: an entity that has one or more subsidiary. Group: a parent and all its subsidiaries. Minority interest: the part of interest ,in a subsidiary, that is not owned by the parent. Control: the power to govern financial and operating policies of an entity to obtain benefits from its activities. Business combination: the bringing together of separate entities into one reporting entity.

IAS-27 5 Introduction Truth and fairness Present the control and ownership of the net assets of subsidiary companies Include all entities controlled by the parent company

IAS-27 6 Inclusions Parent and control control exist when company owns, directly or indirectly, more than one half of the voting power of another entity.

IAS-27 7 Inclusions Control also exist when: Over more than one half of the voting rights by virtue of an agreement with other investors. The power to govern the financial and operating policies of an entity under an agreement. To appoint or remove the majority of the members of the board of directors. To cast the majority of votes at meetings of the board of directors . Illustration On control

IAS-27 8 Sundry provision of IAS-27 Results of intra-group trading Intra group balances and intra-group transactions and resulting unrealized profits should be eliminated in full. Accounting year ends Co-terminus year ends The financial statements of the parent and subsidiaries are drawn up to the same date.

IAS-27 9 Sundry provision of IAS-27 Different reporting dates Either the subsidiary must prepare special statements as at the same date as the group. Or, if at different dates if : The difference is no longer than 3 months Adjustments are made for the effects of significant transactions or other events that occur between those dates and the date of the parent’s financial statements.

IAS-27 10 Sundry provision of IAS-27 Accounting policies Consolidated financial statements should be prepared using uniform accounting policies for similar transactions and events.

IAS-27 11 Sundry provision of IAS-27 Date of acquisition or disposal The results of operations of a subsidiary are included in the consolidated financial statement as from the date of acquisition. The date of acquisition is the date on which control of the acquired subsidiary is effectively transferred to the buyer.

IAS-27 12 Disclosure IAS-27 disclosure Consolidated Financial statement The nature of the relationship (voting power). Reporting dates Any significant restrictions on the subsidiary

IAS-27 13 IAS-27 Thank you for listening Any questions?