Page 13 - Finac2 Test 1 Slides - 1. Consolidated And Separate Financial Statements

CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

Theory - Control: IFRS 10.5 – .8

• “An investor controls an investee when it 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.

• It is important to note that an investor (parent) may control an
investee (subsidiary) regardless of the percentage interest

held by the investor in that investee.

• An investor controls an investee when it has all three of the

following (IFRS 10.7):

• power over the investee

• exposure (or rights) to variable returns through its

relationship with the investee

• the ability to use its power over the investee to affect

the amount of returns to which it is exposed

• NOTE: Only one investor can control an investee at any given
time.

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