«AASB Standard AASB 10 August 2011 Consolidated Financial Statements Obtaining a Copy of this Accounting Standard This Standard is available on the ...»
AASB Standard AASB 10
Consolidated Financial Statements
Obtaining a Copy of this Accounting Standard
This Standard is available on the AASB website: www.aasb.gov.au.
Alternatively, printed copies of this Standard are available for purchase by
The Customer Service Officer
Australian Accounting Standards Board
Level 7 PO Box 204 600 Bourke Street Collins Street West Melbourne Victoria Victoria 8007
AUSTRALIA AUSTRALIAPhone: (03) 9617 7637 Fax: (03) 9617 7608 E-mail: firstname.lastname@example.org Website: www.aasb.gov.au Other Enquiries Phone: (03) 9617 7600 Fax: (03) 9617 7608 E-mail: email@example.com COPYRIGHT © Commonwealth of Australia 2011 This AASB Standard contains IFRS Foundation copyright material.
Reproduction within Australia in unaltered form (retaining this notice) is permitted for personal and non-commercial use subject to the inclusion of an acknowledgment of the source. Requests and enquiries concerning reproduction and rights for commercial purposes within Australia should be addressed to The Director of Finance and Administration, Australian Accounting Standards Board, PO Box 204, Collins Street West, Victoria 8007.
All existing rights in this material are reserved outside Australia.
Reproduction outside Australia in unaltered form (retaining this notice) is permitted for personal and non-commercial use only. Further information and requests for authorisation to reproduce for commercial purposes outside Australia should be addressed to the IFRS Foundation at www.ifrs.org.
ISSN 1036-4803 AASB 10 COPYRIGHT CONTENTS PREFACE COMPARISON WITH IFRS 10 INTRODUCTION TO IFRS 10 (available on the AASB website)
AASB 10 CONSOLIDATED FINANCIAL STATEMENTSParagraphs Objective 1 Meeting the objective 2–3 Application Aus3.1 – Aus3.5 Scope 4 – Aus4.2 Control 5–9 Power 10 – 14 Returns 15 – 16 Link between power and returns 17 – 18 Accounting requirements 19 – 21 Non-controlling interests
BASIS FOR CONCLUSIONS ON PARAGRAPH Aus4.1 (see Basis for Conclusions on AASB 2011-5)
BASIS FOR CONCLUSIONS ON IFRS 10(available on the AASB website) Australian Accounting Standard AASB 10 Consolidated Financial Statements is set out in paragraphs 1 – 26 and Appendices A – C. All the paragraphs have equal authority. Paragraphs in bold type state the main principles. Terms defined in Appendix A are in italics the first time they appear in the Standard. AASB 10 is to be read in the context of other Australian Accounting Standards, including AASB 1048 Interpretation of Standards, which identifies the Australian Accounting Interpretations. In the absence of explicit guidance, AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors provides a basis for selecting and applying accounting policies.
entities required by the Corporations Act 2001 to prepare financial (a) reports;
(b) governments in preparing financial statements for the whole of government and the General Government Sector (GGS); and (c) entities in the private or public for-profit or not-for-profit sectors that are reporting entities or that prepare general purpose financial statements.
AASB 1053 Application of Tiers of Australian Accounting Standards establishes a differential reporting framework consisting of two tiers of
reporting requirements for preparing general purpose financial statements:
(a) Tier 1: Australian Accounting Standards; and (b) Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements.
Tier 1 requirements incorporate International Financial Reporting Standards (IFRSs), including Interpretations, issued by the International Accounting Standards Board (IASB), with the addition of paragraphs on the applicability of each Standard in the Australian environment.
Publicly accountable for-profit private sector entities are required to adopt Tier 1 requirements, and therefore are required to comply with IFRSs.
Furthermore, other for-profit private sector entities complying with Tier 1 requirements will simultaneously comply with IFRSs. Some other entities complying with Tier 1 requirements will also simultaneously comply with IFRSs.
Tier 2 requirements comprise the recognition, measurement and presentation requirements of Tier 1 but substantially reduced disclosure requirements in comparison to Tier 1.
Australian Accounting Standards also include requirements that are specific to Australian entities. These requirements may be located in Australian Accounting Standards that incorporate IFRSs or in other Australian Accounting Standards. In most instances, these requirements are either
AASB 10 PREFACErestricted to the not-for-profit or public sectors or include additional disclosures that address domestic, regulatory or other issues. These requirements do not prevent publicly accountable for-profit private sector entities from complying with IFRSs. In developing requirements for public sector entities, the AASB considers the requirements of International Public Sector Accounting Standards (IPSASs), as issued by the International Public Sector Accounting Standards Board (IPSASB) of the International Federation of Accountants.
Differences between this Standard and superseded requirements under AASB 127 and Interpretation 112 Differences between this Standard and the superseded requirements under AASB 127 Consolidated and Separate Financial Statements and Interpretation 112 Consolidation – Special Purpose Entities are the same as the differences between IFRS 10 Consolidated Financial Statements and the superseded requirements under IAS 27 Consolidated and Separate Financial Statements and Interpretation SIC-12 Consolidation – Special Purpose Entities. The main differences are summarised in the project summary and feedback statement in relation to IFRS 10 and IFRS 12 Disclosure of Interests in Other Entities, which is available on the IASB’s website at www.ifrs.org.
Implications for not-for-profit entities This Standard applies to both for-profit and not-for-profit entities. However, prior to the 1 January 2013 mandatory application date of this Standard, the AASB will consider whether this Standard should be modified for application by not-for-profit entities having regard to its Process for Modifying IFRSs for PBE/NFP. In light of this, not-for-profit entities are not permitted to apply this Standard prior to the mandatory application date.
AASB 10 PREFACECOMPARISON WITH IFRS 10 AASB 10 Consolidated Financial Statements incorporates IFRS 10 Consolidated Financial Statements issued by the International Accounting Standards Board (IASB). Paragraphs that have been added to this Standard (and do not appear in the text of IFRS 10) are identified with the prefix “Aus”, followed by the number of the preceding IASB paragraph and decimal numbering.
For-profit entities that comply with AASB 10 will simultaneously be in compliance with IFRS 10.
Not-for-profit entities using the added “Aus” paragraphs in the Standard that specifically apply to not-for-profit entities may not be simultaneously complying with IFRS 10.
ACCOUNTING STANDARD AASB 10
CONSOLIDATED FINANCIAL STATEMENTSObjective 1 The objective of this Standard is to establish principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities.
Meeting the objective 2 To meet the objective in paragraph 1, this Standard:
(d) sets out the accounting requirements for the preparation of consolidated financial statements.
3 This Standard does not deal with the accounting requirements for business combinations and their effect on consolidation, including goodwill arising on a business combination (see AASB 3 Business Combinations).
Aus3.2 This Standard applies to annual reporting periods beginning on or after 1 January 2013.
Aus3.3 This Standard may be applied by for-profit entities, but not by not-for-profit entities, to annual reporting periods beginning on or after 1 January 2005 but before 1 January 2013. If a for-profit entity applies this Standard to such an annual reporting period, it shall disclose that fact and apply AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests in Other Entities, AASB 127 Separate Financial Statements (August 2011) and AASB 128 Investments in Associates and Joint Ventures (August 2011), at the same time.
Aus3.4 The requirements specified in this Standard apply to the financial statements where information resulting from their application is material in accordance with AASB 1031 Materiality.
Aus3.5 When applied or operative, this Standard supersedes:
Scope 4 An entity that is a parent shall present consolidated financial
statements. This Standard applies to all entities, except as follows:
(b) post-employment benefit plans or other long-term employee benefit plans to which AASB 119 Employee Benefits applies.
Aus4.1 Notwithstanding paragraph 4(a)(iv), a parent that meets the criteria in paragraphs 4(a)(i), 4(a)(ii) and 4(a)(iii) need not present consolidated financial statements if its ultimate or any intermediate parent produces consolidated financial statements available for public use and the parent and its ultimate or intermediate parent are both not-for-profit entities complying with Australian Accounting Standards.
Aus4.2 Notwithstanding paragraphs 4 and Aus4.1, the ultimate Australian parent shall present consolidated financial statements that consolidate its investments in subsidiaries in accordance with this Standard when either the parent or the group is a reporting entity or both the parent and the group are reporting entities.
Control 5 An investor, regardless of the nature of its involvement with an entity (the investee), shall determine whether it is a parent by assessing whether it controls the investee.
7 Thus, an investor controls an investee if and only if the investor
has all the following:
(a) power over the investee (see paragraphs 10–14);
(b) exposure, or rights, to variable returns from its involvement with the investee (see paragraphs 15 and 16); and (c) the ability to use its power over the investee to affect the amount of the investor’s returns (see paragraphs 17 and 18).
8 An investor shall consider all facts and circumstances when assessing whether it controls an investee. The investor shall reassess whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed in paragraph 7 (see paragraphs B80–B85).
9 Two or more investors collectively control an investee when they must act together to direct the relevant activities. In such cases, because no investor can direct the activities without the co-operation of the others, no investor individually controls the investee. Each investor would account for its interest in the investee in accordance with the relevant Standards, such as AASB 11 Joint Arrangements, AASB 128 Investments in Associates and Joint Ventures or AASB 9 Financial Instruments.
Power 10 An investor has power over an investee when the investor has existing rights that give it the current ability to direct the relevant activities, ie the activities that significantly affect the investee’s returns.
11 Power arises from rights. Sometimes assessing power is straightforward, such as when power over an investee is obtained directly and solely from the voting rights granted by equity instruments such as shares, and can be assessed by considering the voting rights from those shareholdings. In other cases, the assessment will be more complex and require more than one factor to be considered, for example when power results from one or more contractual arrangements.
AASB 10 STANDARD 12 An investor with the current ability to direct the relevant activities has power even if its rights to direct have yet to be exercised. Evidence that the investor has been directing relevant activities can help determine whether the investor has power, but such evidence is not, in itself, conclusive in determining whether the investor has power over an investee.
13 If two or more investors each have existing rights that give them the unilateral ability to direct different relevant activities, the investor that has the current ability to direct the activities that most significantly affect the returns of the investee has power over the investee.
14 An investor can have power over an investee even if other entities have existing rights that give them the current ability to participate in the direction of the relevant activities, for example when another entity has significant influence. However, an investor that holds only protective rights does not have power over an investee (see paragraphs B26–B28), and consequently does not control the investee.
Returns 15 An investor is exposed, or has rights, to variable returns from its involvement with the investee when the investor’s returns from its involvement have the potential to vary as a result of the investee’s performance. The investor’s returns can be only positive, only negative or both positive and negative.
16 Although only one investor can control an investee, more than one party can share in the returns of an investee. For example, holders of non-controlling interests can share in the profits or distributions of an investee.
Link between power and returns 17 An investor controls an investee if the investor not only has power over the investee and exposure or rights to variable returns from its involvement with the investee, but also has the ability to use its power to affect the investor’s returns from its involvement with the investee.