IFRS 10 sets out the requirements for the preparation and presentation of consolidated financial statements when an entity controls one or more other entities (subsidiaries). The standard defines control and establishes control as the basis for consolidation. It sets out how to determine control and the accounting requirements for the preparation of consolidated financial statements, including accounting for changes in control. The standard also provides an exception to consolidation for entities that meet the definition of an investment entity.

1. IFRS 10
Consolidated Financial
Statements

2. Labib M. Ansary
01
ID: 2121141030
Mahfuz-ul-Momen
Utso
02
ID: 2121141048
K.M. Kayser
Ahmed Rakib
03
ID: 2121141080
Dewan Rahabar
Ahmed
04
ID: 2121141106
Minara Akter
Mim
05
ID: 2121141130
Group Members

3. Contents
About IFRS 10 Objective Scope Control
Accounting
Requirements
Determination
of
Investment Entity
Investment entities:
Exception to consolidation
Power

4. About IFRS 10
“The Accounting standards IFRS 10 sets the
rules for preparing and presenting consolidated
financial statements when an entity controls one
or more other subsidiaries.”
IFRS 10

5. Background of IFRS 10
IAS 27 Consolidated Financial Statement and Accounting for
Investment in Subsidiaries. (Issued)
IAS 27 Consolidated and Separate Financial Statements
(Renamed)
IAS 27 Separate Financial
Statements
IFRS 10 Consolidated
Financial Statements
2001
2003
2011
 IFRS 10 was amended in 2012
and applied from 1 Jan 2013.

6. Objectives of IFRS 10
 To establish principles for the presentation & preparation of
consolidated financial statements when an entity controls one
or more other entities.
 In order to meet the objective;
 requires an entity (the parent) that controls one or more other entities
(subsidiaries);
 defines the principle of control, and establishes control as the basis for
consolidation;
 sets out how to apply the principle of control to identify whether an
investor controls an investee;
 sets out the accounting requirements for the preparation of CFS;

7. Scope of IFRS 10
 An entity that is a parent shall present consolidated financial statements
This IFRS applies to all entities except as follows:
 It is a wholly or partially-owned subsidiary of another entity and all its other owners, including those not otherwise
entitled to vote;
 Its debt or equity instruments are not traded in a public market;
 It did not file, nor is it in the process of filing, its financial statements with a securities commission or other regulatory
organization; and
 Its ultimate or any intermediate parent produces consolidated financial statements.

8. Control
 An investor controls an investee
if and only if the investor has the
following elements:
• Power over the investee
• Rights to variable returns
• Ability to use power over the
investee to affect the amount
of the investor’s return
 Power over an investee arise from rights,
which can be straightforward(i.e. Voting
rights, rights to appoint BOD) or complex
(e.g. per contractual arrangement)

9.  An investor must be exposed (or, has rights,) to variable returns from its involvement
with the investee in order to control it
• These returns must have the ability to vary as a result of the investee’s performance
and can be positive, negative or both.
• The investor’s power must be used to affect or influence the returns.
 There must be a clear ability of the parent to use its power to affect the returns of the investee.
Control Principles

10. Power
 An investor has the power over the
investee when the investor has exis-
ting rights that give it the current abi-
lity to direct the relevant activities.
• Must be substantive
• Protective rights do not provide power
• Potential voting rights needs to be
currently exercisable and must take
into account the economic reality

11.  Why protective rights do not provide power?
 E.g. when an entity entering into a contract, certain terms and conditions exists
that protects the party under certain conditions.
 These rights only apply under those conditions and are not substantive in all
circumstances, therefore not seen as a power.
 De factor control:
 Power that exists with less than 50% of voting rights
 Example:
ParentEntity own 20% of voting rights and the reminder of the voting rights
(80%) spread over 2000 shareholders worldwide.

12. Consolidating Financial Statements
 The Financial Statement of a group presented as those of a single economic entity.
Separate FS Separate FS
Parent Subsidiary Group
Consolidated FS
 Accounting Procedures and
Requirements Applied Here

13. Accounting
Requirements
 Consolidation Procedures:
• Combine like items of
the parent with those of subsidiaries
• Offset (eliminate):
o Carrying amount of parent’s investment
o Parent’s portion of equity of each subsidiary
o Items related to intragroup transaction
• The same reporting dates are required
o If not practicable- use the most recent
financial statement of the subsidiary and
adjust for significant events or transactions.

14.  Non-Controlling interests (NCI):
• Remains part of equity, separate from equity attributable to the owner’s of the parent
• Profit or loss and items of owner’s control interest are attributed to the owner’s of the parent and NCI
• Total comprehensive income to be attributed to the owner’s of the parent and NCI
 Loss of Control:
• It derecognizes the assets and liabilities of the subsidiary
• Recognizes any investment retained in the former subsidiary and subsequently accounts for it
• Recognizes the gain or loss associated with the loss of control
If a parent loses control of a subsidiary:

15. Determination of
Investment Entity
 What is an Investment Entity?
• It is an entity which:
o Obtains funds from investors-Investment
management services
o Its business purpose: It invests funds for
returns
o Measure performance of investments on
a fair value basis

16. How an entity is an Investment Entity?
 It has more than one investment
 It has more than one investor
 It has investors that are not related to the parties of the entity
 It has ownership interests in the form of equity or similar interests

17. Exceptions to Consolidation in IFRS 10
 An investment entity shall not consolidate its subsidiaries or apply IFRS 3 when it obtains
control of another entity.
 If an investment entity has a subsidiary that is not itself an investment entity and whose main
purpose and activities are providing services, it shall consolidate that subsidiary by applying
the requirements of IFRS 3 to the acquisition of any such subsidiary
 A parent of an investment entity shall consolidate all entities that it controls, including those
controlled through an investment entity subsidiary, unless the parent itself is an investment
entity