Unit 11 - Grp Rep - Consol Fin Stat

Unit 11 - Grp Rep - Consol Fin Stat - Unit 11 Group...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Unit 11 Group Reporting - Introduction to Consolidated Financial Statements HKFRS 10 Consolidated Financial Statements HKFRS 11 Joint Arrangements HKFRS 12 Disclosure of Interests in Other Entities HKAS 28 (2011) Investments in Associates & Joint Ventures
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
2 (I) Investments in Equities for an Economic Group of Entities Accounting for investments in equities depends on the control in the investments. With reference to the degree of control , investments can be classified into four categories, namely, subsidiary, joint venture, associate and financial instrument. Subsidiary is an investee being controlled by an investor. Control means an investor being exposed or has rights to variable returns from its involvement with that investee and has the ability to affect those returns through its power over the investee. Accounting and reporting should be in accordance with HKFRS 10 & HKFRS 12. A parent has subsidiaries (a group of entities) can be regarded as a single economic entity as a whole and thus requires to prepare consolidated financial statements (a group financial report) for its economic group (HKFRS 10); and separate financial statements for the parent entity itself [HKAS 27 (2011)].
Background image of page 2
The requirement of HKFRS 10 to consolidate a subsidiary will continue effective until control is lost . It has no exception even though the subsidiary is acquired and held exclusively for resale. An investor controls an investee must have all the followings : (a) power over the investee; (b) exposure, or rights , to variable returns from its involvement with the investee; and (c) the ability to use its power over the investee to affect the amount of the investor’s returns . Power means existing rights that give the current ability to direct the relevant activities . Relevant activities are activities of the investee that significantly 3 (I) Investments in Equities for an Economic Group of Entities
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
4 If two or more investors collectively control an investee so that they must act together to direct the relevant activities of investee . 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 should account for its interest in the investee in accordance with the relevant HKFRSs , such as HKFRS 11 Joint Arrangements, HKAS 28 (2011) Investments in Associates and Joint Ventures or HKFRS 9 Financial Instruments. Joint Venture is an investee being jointly controlled by two or more investors. Joint control means two or more parties contractually agreed sharing of control in a joint arrangement. Joint control exists only when decisions about the investee’s relevant activities , i.e. those that significantly affect the returns of the arrangement, require the unanimous consent of the parties sharing the control of the arrangement. Accounting and reporting should be in accordance with HKFRS 11 & HKFRS 12.
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 41

Unit 11 - Grp Rep - Consol Fin Stat - Unit 11 Group...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online