(Summary) Ind AS 110

Consolidated Financial Statements (CFS)

is to establish principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities.

  • A parent need not present CFS if it meets all the following conditions:
    1. it is a wholly-owned/ partially-owned subsidiary of another entity and all its other owners have been informed about, and do not object to, the parent not presenting CFS;
    2. its debt or equity instruments are not traded in a public market;
    3. it did not file, nor is it in the process of filing, its FS with a securities commission or other regulatory organisation; and
    4. its ultimate or any intermediate parent produces CFS that are available for public use and comply with Ind ASs.
  • post-employment benefit plans or other long-term employee benefit plans.
  • if it is required, in accordance with para 31 of this Ind AS, to measure all of its subsidiaries at FVTPL.
  1. CFS
  2. Investment entity
  3. Control
  4. Power

Consolidated FS: The FS of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single economic entity.

Control of an investee: An investor controls an investee when the investor 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.

Power: Existing rights that give the current ability to direct the relevant activities.

Investor shall determine whether it is a parent by assessing whether it controls the investee.

An investor controls investee when

  • it is exposed, or
  • it has rights, to variable returns from its involvement with investee and
  • it has the ability to affect those returns through its power over investee.

Investor controls an investee if and only if the investor has:

  1. Power over investee;
  2. Exposure, or rights, to variable returns from its involvement with investee;
  3. Ability to use its power over investee to affect the amount of investor’s returns

Power arises from rights. Such rights can be straightforward (e.g. through voting rights) or be complex (e.g. embedded in contractual arrangements).

An investor that holds only protective rights cannot have power over an investee and so cannot control an investee.

An investor has rights to variable returns when the investor’s returns from its involvement with investee have the potential to vary as a result of investee’s performance and returns can be positive, negative or both positive and negative

Preparation of CFS:

A parent prepares CFS using uniform accounting policies for like transactions and other events in similar circumstances.

Non-controlling interests (NCIs):

A parent presents NCI in the Consolidated BS within equity, separately from the equity of the owners of the parent.

Loss of control:

If a parent loses control of a subsidiary, the parent:

  • Recognises any investment retained in the former subsidiary at its fair value when control is lost and subsequently accounts for it and for any amounts owed by or to the former subsidiary in accordance with relevant Ind ASs.

That fair value shall be regarded as the fair value on initial recognition of a financial asset or, when appropriate, the cost on initial recognition of an investment in an Asso. or JV

  • Recognises the gain or loss associated with the loss of control attributable to the former controlling interest.
  • Derecognises the assets and liabilities of the former subsidiary from the Consolidated BS.
  • Except as described in para 32, an investment entity shall not consolidate its subsidiaries or apply Ind AS 103 when it obtains control of another entity.
  • Instead, it shall measure an investment in a subsidiary at FVTPL in accordance with Ind AS 109.

 

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