Page 300 - F1 Integrated Workbook STUDENT 2018

Chapter 18

In accordance with IFRS 10 Consolidated Financial Statements, an investor controls
an investee if and only if the investor has all of the following elements:

 'power over the investee (see definition of power above)

 exposure, or rights, to variable returns from its involvement with the
investee and

 the ability to use its power over the investee to affect the amount of the
investor's returns' (IFRS 10, para 7).

Consolidated financial statements should be prepared when the parent has control
over the subsidiary.

In order to determine whether there is control we need to consider management
involvement, access to voting rights, the rights of power of other investors as well as
the percentage of shares held. Usually control occurs when an entity holds more than
50% of the voting rights, however control could be achieved at less than this
depending on Board representation and how many other investors there are in the
business.

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