Abstract of IAS 27
Firstly, the aim of IAS 27 was to provide standards on and presentation of consolidated financial statements for a group of entities under the control of a parent. In other words, a parent shall present consolidated financial statements in which it consolidates its investments in subsidiaries in accordance with this Standard. The consolidation of an investment is determined by control, not merely by ownership. According IAS 27 (Para 4), “Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.”
IAS 27 requires that an entity that has one or more subsidiaries must present consolidated financial statements, unless all four of the following conditions are met”.
• The parent is itself a wholly owned subsidiary, or is a partially owned subsidiary of another entity and its other owners do not object to the entity presenting non-consolidated financial statements
• The parent's debt or equity instruments are not traded publicly
• The parent is not filing its statements with a securities commission or other regulatory organization for issuing any class of instrument in a public market.
• The ultimate parent (or any intermediate parent) of the entity produces publicly available consolidated financial statements that are IFRS compliant
If a parent meets these criteria, consolidated financial information is provided at a higher level by either the ultimate parent or an intermediate parent; consequently, it is not needed at the entity's level and the reporting entity can elect not to present consolidated financial statements. The entity would then present only separate financial statements in accordance with the guidance for separate statements discussed later in the standard.
It also list down the points of view constitute the identification of a subsidiary as following:
Item 13, IAS 27 stated that control is presumed when the parent acquires more than half of the voting...