HKFRS10 guidance on control (student)

HKFRS10 guidance on control (student) - HKAS27(old Hold...

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1 1 HKFRS10 Consolidated Financial statement (guidance on control and consolidation) 2 HKAS27 (old) Hold over 50% of voting rights Presume control exists Power over >50% of voting rights (by agreement) Power to govern financial and operating policies Power to appoint or remove the majority of Board of members Power to cast a majority of votes at Board meetings Inadequate, lack of transparency - (HKFRS10) 3 HKFRS10 Key changes More extensive Disclosures New guidance on control over a portion of a legal entities Control of specified assets Incorporated into concept of “control” Principal-agent relationships Not just concept of ownership benefits Returns Incorporated into consideration De facto power Substantive rights as opposed to currently exercisable rights in HKAS27 Potential voting rights Apply to all entities Single control model 4 Control (HKFRS10) General consideration: Some kind of involvement with the investee Control is the investor’s rights (gains) or exposure (losses) to variable returns which (may) result from its involvement with the investee 5 Control (HKFRS10) An investor controls the investee if and only if the investor has the following three elements of control: Power over the investee Exposure, or rights, to variable returns from its involvement with the investee The ability to use its power over the investee to affect the amount of the investor’s return. 6 Control Power Exposure to variability in returns Current ability to direct relevant activities: Substantial rights, not protective rights Dividends, remuneration, tax benefit, economies of scale , cost saving Vary according to investee performance Ability to use power over investee to affect investor’s return Create PDF files without this message by purchasing novaPDF printer ( http://www.novapdf.com )
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HKFRS10 guidance on control (student) - HKAS27(old Hold...

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