Page 196 - Microsoft Word - 00 IWB ACCA F7.docx

Chapter 16

1.4 Alternative sources of power

Within F7 consolidation questions the most likely source of power will be the
ownership by the parent of the majority of voting shares within the subsidiary. Other
sources of power include:

 contractual arrangements between the parent and other parties

 holding a minority shareholding but with the remaining equity held by a large,
dispersed and unconnected group of shareholders

 potential voting rights (e.g. share options) resulting in control being gained at a
specific date.

1.5 Uniform accounting policies

It is essential that consolidated financial statements are produced with uniform
accounting policies throughout the group. Where the subsidiary has policies that
differ from that of the group, adjustments will be necessary as part of the
consolidation process to ensure consistency.

190