International Financial Reporting Standards_guide.pdf

Chapter 7 Consolidated and Separate Financial Statements (IAS 27) 83
TABLE 7.2 Main Differences between Previous IAS 27 and the Revised IAS 27 (effective July 1, 2009)
Item Previous standard Revised standard Effect
Loss of control over a
subsidiary
No specific requirements.
Deemed disposal of entire
investment at fair value and
acquisition of new investment
at fair value.
Gain or loss may be bigger
or smaller due to effect
of recognizing deemed
disposal at fair value.
Change in interest with
no loss of control in a
subsidiary
No specific guidance but
general practice to recognize
transactions through profit or
loss.
Equity transactions between
owners recognized directly in
equity. This is applicable for
any change in interest where
control is not lost, including
where the parent initially holds
100% interest in the subsidiary.
No effect on profit or loss.
Losses of subsidiaries
Non-controlling interests only
participate in losses until zero
carrying value, unless the noncontrolling
interests guaranteed
certain losses.
Losses are carried in proportion
to interests held, even if this
results in a deficit carrying value
of the non-controlling interest.
Can have negative noncontrolling
interest balance
in equity. Less losses
recognized by parent but
previous excess losses
carried cannot be reversed.
7.4.7 A parent need not present consolidated financial statements if:
■ the parent is a wholly owned subsidiary or if its owners, including non-controlling
interests, have been informed and do not object;
■ the parent’s debt or equity instruments are not traded in a public market;
■ the parent did not file, or is not in the process of filing, financial statements with a
securities commission or other regulatory body for purposes of issuing instruments in
the public market; and
■ the ultimate parent publishes IFRS-compliant consolidated financial statements that are
available for public use.
7.4.8 Investments in subsidiaries, associates, and joint ventures should be accounted for in
a parent entity’s separate financial statements either:
■ at cost; or
■ as financial assets in accordance with IAS 39.
The parent should recognize any dividends from these investments in profit or loss of its
separate financial statements when the right to receive the dividend is established.
7.5 PRESENTATION AND DISCLOSURE
7.5.1 Consolidated financial statements should include the following disclosures:
■ the nature of the relationship when the parent does not own (directly or indirectly)
more than 50 percent of the voting power;
■ the reason why the ownership of more than 50 percent of the voting power (directly or
indirectly) of an investee does not constitute control.
■ the reporting date of the subsidiary if this is different to that of the parent and the
reason for the difference;