Consolidation ASPE 1591 IFRS 10

Question 1

What is the definition of control what factors are
considered in determining if control exists?

Answer 1

ASPE 1591
* Control is the continuing power to determine its strategic operating, investing and financing policies without the co-operation of others.

• Similar factors would be considered

IFRS 10
* An investor has control when:

• Power over the investee
• Exposed to or has rights to variable returns
  from its involvement with the investee
• Has the ability to affect those returns
  through its power over the investee
• Factors to consider:
  ‒ Ability to direct the relevant activities
  ‒ Relative voting rights including options, conversion rights, etc.
  ‒ Composition of the board or governing body
  ‒ Ability to dominate the management
  ‒ Contractual arrangements

Question 2

How are controlled entities accounted for?

Answer 2

ASPE 1591
* Entities have policy choice to either prepare consolidated or non-consolidated financial statements

• If not consolidated, entities that are controlled through voting equity can be accounted for using cost or equity method* (policy choice must be
  applied consistently)

*When a subsidiaries equity securities are
quoted in an active market, the investment must be accounted for using the equity method or at the quoted amount (changes recognized in P&L)

IFRS 10
* Must be consolidated unless exemption
criteria in IFRS 10 paragraph 4 are met
(very limited circumstances)