Applying IFRS 10 Consolidated Financial Statements

Assessing when one entity controls another is essential to the preparation of financial statements in accordance with IFRS. The control assessment determines which entities are consolidated in a parent’s financial statements and therefore affects a group’s reported results, cash flows and financial position – and the activities that are ‘on’ and ‘off’ the group’s balance sheet. Under IFRS, this control assessment is accounted for in accordance with IFRS 10 ‘Consolidated financial statements’.

In this document we look at:

• summary of IFRS 10’s main requirements;
• areas where IFRS 10 can affect the scope of consolidation 9;
• IFRS 10 in the context of the overall ‘consolidation package’;
• effective date and Transition of IFRS 10;
• scope and consolidation exemptions;
• scope of IFRS 10;
• consolidation exceptions and exemptions;
• the control definition and guidance;
• the practical implications of the control definition;
• the three key elements of control in more detail;
• purpose and design of investee;
• situations where the control assessment is unclear; and
• summary of the control assessment process.