Page 16 - 2018 Finac2 Test 3 Slides - Change In Degree Of Control

CHANGES IN DEGREE OF CONTROL

EXAMPLE 1: PART A (SUBSIDIARY BECOMES AN IFRS 9
INVESTMENT)

• It is very important to understand that there is a loss of

control when a subsidiary becomes an IFRS 9 investment.

• At year end, the parent is not required to consolidate the

investment as control is no longer present.

• In practice, the parent will start with its separate financial

information only and then add the information from the

investment while it was still a subsidiary (i.e. the parent's

portion of the retained earnings and reserves, 100% of the

current year profits and NCI's share therein, etc.).

• The consolidated profit or loss is calculated using the steps

set out in IFRS 10.B98 - .B99. These steps are as follows:

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