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

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

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

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

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

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

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

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

Sundry provision of IAS-27 o Results of intra-group trading n Intra group balances and intra-group transactions and resulting unrealized profits should be eliminated in full. o Accounting year ends 1. Co-terminus year ends o The financial statements of the parent and subsidiaries are drawn up to the same date. IAS-27 8

Sundry provision of IAS-27 2. Different reporting dates o Either the subsidiary must prepare special statements as at the same date as the group. o Or, if at different dates if : 1. The difference is no longer than 3 months 2. 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 9

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

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

Disclosure o IAS-27 disclosure n Consolidated Financial statement 1. The nature of the relationship (voting power). 2. Reporting dates 3. Any significant restrictions on the subsidiary IAS-27 12

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