IFRS 10 Flashcards
1
Q
Control
A
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
2
Q
Power
A
Existing rights that give the current ability to direct the relevant activities
3
Q
POWER arises from
A
- Voting rights from equity instruments
- Potential voting rights
- Appoint, reassign or remove members of investees key management personnel
- Appoint or remove another entity that directs relevant activities
- Ability to direct investee to enter into or change transactions for investors benefit
4
Q
EXPOSURE, OR RIGHTS TO, VARIABE RETURNS
A
- Investors returns from involvement with investee have potential to vary as result of investees performance. Can be positive, negative or both.
- Investor return examples include dividends, interest from debt instruments, remuneration
for services
5
Q
LINK BETWEEN POWER AND RETURNS
A
Investor determines whether it is an Agent or Principle
6
Q
Agent VS Principle
A
AGENT: a party engaged to act on behalf and for the benefit of ANOTHER party - no control
PRINCIPLE: investor engaged for its OWN behalf and benefit - determines control
7
Q
Presentation of consolidated financial statements
A
- Parent presents
- same reporting period
- prepared from date the investor obtains control
- ceases when lose control
- use uniform accounting policies for like transactions
8
Q
4 Conditions
A
- Wholly owned subsidiary with permission from owner
- Debt or Equity interests not publicly traded
- No application in process for public trading of debt or equity
- Ultimate parent prepares consolidated financials available for public use
9
Q
Basic consolidation procedure
A
- Eliminate common items;
- Consolidate non-common items
10
Q
Consolidation method
A
- Analysis of owners’ equity;
- Pro forma journals;
- Worksheet; and
- Consolidated SFP
