- 6 Marks
Question
IFRS 10 states that, with certain exceptions, a parent must present consolidated financial statements in which it consolidates its investments in subsidiaries.
Required: State FOUR exceptions to the rule requiring a parent to prepare consolidated financial statements. (6 Marks)
Answer
The four exceptions to the requirement for a parent to prepare consolidated financial statements are:
- Wholly-Owned Subsidiary:
The parent is a wholly-owned subsidiary of another entity. - Partially-Owned Subsidiary:
The parent is a partially-owned subsidiary of another entity, and all the owners, including those not otherwise entitled to vote, have been informed about and do not object to the parent not presenting consolidated financial statements. - Not Publicly Traded:
The parent’s debt or equity instruments are not traded in a public market, such as a domestic or foreign stock exchange. - Not in the Process of Issuing Securities:
The parent does not file its financial statements with a securities commission or other regulatory organization for the purpose of issuing any class of instruments in a public market.
Additionally, it is required that the parent’s own ultimate parent (or any intermediate parent) prepares consolidated financial statements that are available for public use and comply with IFRS.
- Tags: Consolidation, Exceptions, Financial Reporting, Group Accounts, IFRS 10
- Level: Level 2
- Topic: Consolidated Financial Statements (IFRS 10)
- Series: MAY 2018
- Uploader: Kofi