IAS 27

CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS

05/24/2025 IAS 27 CONSOLIDATED AND SEPARATE 1

FINANCIAL STATEMENTS
SCOPE
Preparation and presentation of
consolidated financial statements for a group
of entities under the control of a parent
company
Accounting for investments in subsidiaries
Accounting for jointly controlled entities and
associates in separate financial statements
IFRS 3 business combinations deals with
methods of accounting for consolidated
accounts

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FINANCIAL STATEMENTS
Definitions
Consolidated
financial •Group of FS presented as
statements a single economic entity
(FS)

Contro •Govern financial and

operating policies

l
•Obtain benefits from activities

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FINANCIAL STATEMENTS
Definitions
Cost •Investment recognised at cost
•Recognise distributions from accumulated profit as income
•Recognise distribution out of accumulated losses as

method reduction in cost of investment

•Parent company and all

Group its subsidiaries

Minority •Portion of equity of subsidiary

not owned by the parent
interest
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FINANCIAL STATEMENTS
Definitions
•Entity with one or more
Parent subsidiaries

Subsidiar •Incorporated and unincorporated

entities controlled by a parent
y
Separate •Presented by parent/investor
financial •Direct equity interest reported rather
than interest in results and net assets
statements
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FINANCIAL STATEMENTS
Presentation of consolidated financial
statements
A parent must produce consolidated financial statements
unless:
 The parent is a subsidiary
 Wholly owned subsidiary, or

 Partially owned subsidiary and

 Other owners do not object, and

 Debt or equity instruments are not traded in a public

market, and
 Parent not in the process of issuing instruments in a public
market, and
 Ultimate or intermediate parent produces consolidated FS
 Available for public use
 Comply with IFRS

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FINANCIAL STATEMENTS
Presentation of consolidated FS
Parent
Consolidated FS

Partly owned
Wholly owned
subsidiary
parent/subsidiary
80%
Separate FS unless publicly traded shares or debt

Subsid Joint
Subsidiary
iary Venture
75% 50% 100%

Separate FS

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FINANCIAL STATEMENTS
Scope of consolidated FS
 Consolidated FS include all subsidiaries of the parent
 >50% of voting power owned by the parent
 In exceptional cases ownership ≠ control
 Do not exclude a subsidiary from consolidation because activities are
dissimilar to parent’s
 Use IAS 14 Segment reporting to explain dissimilar activities
 Do not include a subsidiary when parent loses control to government
or another contract
 <50% of voting power through shares where shareholder
agreement gives
 Power over > 50% of voting rights
 Power to govern financial and operating policies
 Power to appoint/remove majority board members
 Power to cast majority vote at meetings of the board of directors
 Do not include unexercised convertible shares until they allow control
over financial and operating policies
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FINANCIAL STATEMENTS
Consolidation procedures
Combine FS
line by line

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FINANCIAL STATEMENTS
Consolidation procedures
Combine FS of parent and subsidiaries line by line
Add together similar assets, liabilities, equity, income and
expenses
Eliminate
 Carrying amount of each investment by parent in subsidiary
 Parent’s portion of equity in each subsidiary
 Disclose resulting goodwill according to IFRS3
Identify separately
 Minority interests in net assets of consolidated subsidiaries
 Amount of minority interest at date of original combination
(IFRS3)
 Minority share of changes in equity since that date
 Reflect only present ownership (not potential conversion to equity)

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FINANCIAL STATEMENTS
Consolidation procedures
Eliminate intra-group balances, transactions,
income and expenses
Eliminate profits and losses of intra-group
transactions recognised in assets
Recognise deferred tax on temporary
differences that arise from elimination of
profits and losses above
Recognise impairment of investment in
consolidated accounts if subsidiaries suffered
losses
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FINANCIAL STATEMENTS
Consolidation procedures
Prepare separate FS for each consolidated
entity at the reporting date of the parent
unless impracticable to do so
When subsidiary reporting date is different,
adjust for significant transactions between
reporting date of the sub and the parent
Difference not > 3 months
Length of reporting periods must be the same
Difference in reporting dates shall be the same
from period to period

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FINANCIAL STATEMENTS
Consolidation procedures
 Use uniform accounting policies for parent and subsidiaries (make
appropriate adjustments to align accounting policies)
 Include subsidiary income and expenses from the date of acquisition
to the date on which the parent ceases to control the subsidiary
 Show gain or loss on disposal of subsidiaries in the consolidated
income statement
 Present minority interests separately:
 Consolidated balance sheet within equity, separately from parent
shareholder’s equity
 Minority interest in profit or loss in consolidated income statement
 Allocate minority loss > minority interest in equity to majority interest
unless minority will increase its investment
 Allocate future profit to majority until minority loss allocated to majority
interest has been recovered
 Adjust majority share of profits or losses for minority dividends due on
cumulative preference shares whether or not they have been declared

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FINANCIAL STATEMENTS
Accounting for investments in subsidiaries, jointly
controlled entities and associates in separate FS
Either at cost or in accordance with IAS 39
If held for sale, in accordance with IFRS5
Use same method in separate and
consolidated FS of the parent

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FINANCIAL STATEMENTS
Disclosure
Consolidated FS
Nature of control if not via >50% voting power
Reason why >50% voting power via ownership
does not constitute control
Reporting date of subsidiary if different from
parent
Nature and extent of significant restrictions on
control

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FINANCIAL STATEMENTS
Disclosure
 Separate FS for parent who elects not to prepare
consolidated accounts
 Statement that the FS are separate FS (not consolidated)
 The exemption has been used

 Name of country of incorporation of ultimate parent who

produces consolidated FS
 Residence of entity if different
 Address where publically available FS can be obtained
 List of investments in subsidiaries, jointly controlled entities
and associates
 Name
 Country of incorporation or residence
 Ownership interest
 Voting power if different from ownership interest
 Description of the method used to account for investments
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FINANCIAL STATEMENTS
Disclosure
Separate FS of parent, venturer in jointly
controlled entity or investor in associate
 State that the statements are separate FS
 Reason why prepared if not required by law
 List of significant investment in
 Subsidiaries

 Jointly controlled entities

 Associates
 Name

 Country of incorporation or residence

 Proportion of ownership interest

 Voting power if different to ownership interest

 Description of accounting methods used

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FINANCIAL STATEMENTS
Summary
A parent company must produce consolidated
financial statements including all subsidiary
companies under its control
Control is determined by power to control operating
and financial policies rather than legal ownership
In a large group, only the ultimate controlling parent
needs to produce consolidated FS if strict conditions
are met
Follow consolidation procedures, eliminating all intra-
group transactions and investments
Follow accounting methods set out in IFRS 3
Present disclosures of all interests in group entities
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FINANCIAL STATEMENTS