Page 15 - Finac2 Test 1 Slides - 1. Consolidated And Separate Financial Statements

CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

Power over Investee: IFRS 10.10 - .14

• Consider only substantive rights (B22)

• Holder must have practical ability to exercise

• Consider factors in B23
• Rights must be currently exercisable (B24)

• Even if not yet exercised

• Ignore protective rights

• Protect interests without granting power

• Relate to fundamental changes or apply in exceptional circumstances
(B26)
• Examples (B28):

• Lender’s right to restrict borrower from activities which significantly change
credit risk
• Non Controlling Interest’s right to approve capital expenditure

• Lender’s right to seize assets if borrower fails to make repayments

• May have power even if others have ability to participate

• E.g. significant influence

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