Ias 27 Case Study

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Summary IAS 27 IAS 27 provides guidance to corporate sector about preparing and presenting consolidated financial statements for a group of different entities under parent control. The standard also guides about presentation of investments in subsidiaries and associates as well as jointly controlled entities. IAS 27 shall be applied while preparing and presenting consolidated financial statements of a group consisting different entities under single control. In addition, when an entity presents separate financial statements the standard must be applied while presenting investments in subsidiaries and associates and jointly controlled entities. Definitions :- Consolidated financial statements are set of financial statements of a group which are presented in such a form to treat…show more content…
4).In case subsidarys right to transfer surplus funds to parent is restricted than a notice of this fact is also stated. 5). The detail about gain or loss in case the control over subsidiary is lost. 6).A schedule describing equity attributable to parents owners about ownership change in case such change doesnot relate loss of control. Illustration Blue Co owns the following investments in other companies: Equity shares held Non equity shares held Yellow Co 80% Nil Red Co 25% 80% Black Co 45% 25% Blue Co also has appointed five of the seven directors of Black Co. Which of the following are accounted for as investment in subsidiaries in the consolidated accounts of Blue Co Group? A Yellow only B Red only C Yellow and Black D All of them Answer: We shall consider each investments in turn to determine whether control exists and whether they should be accounted for as a subsidiary. • Yellow Co – by looking at the equity shares, Blue Co has more than 50% of the voting shares – ie an 80% equity holding which gives them control and therefore Yellow Co is a

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