Reasons for not consolidating subsidiaries
Below there are statements of financial positions of both Mommy and Baby at 31 December 20X4.Prepare consolidated statement of financial position of Mommy Group as at 31 December 20X4.If you take action today and subscribe to the IFRS Kit, you’ll get it at discount! But when you need to deal with more complex situations, then you can forget or omit the things very easily. However, to make you happy, you can find the same case study solved “by the exam-style” in the attached excel file that you can download in the end of this article. But in most cases, there is lots of issues or circumstances that you need to take into account and exactly their significance and amount makes it all difficult. For example: I can go on and on, but I don’t want to discourage you.However, if you need to know more about all these issues, I have covered them fully in my premium learning package the IFRS Kit, so please check out if interested.DOWNLOAD EXCEL FILE HERE Please watch the video here: Here’s the example of consolidation where a subsidiary has different functional currency than its parent.
If you’d like to learn more about goodwill, please refer to the article about IFRS 3 Business Combinations. Please don’t forget that I have transferred this journal entry into our consolidation worksheet and it looks as follows: Parents and subsidiaries trade with each other very often.
Therefore, when a group controller calls you every five minutes to remind you the consolidation package, you’ll know why!
In our case study, combined numbers looks as follows: Of course, there are some strange and redundant numbers, for example both Mommy’s and Baby’s share capital, but we haven’t finished yet!
If you’d like to revise a theory first, then please read my summary of IFRS 3 Business Combinations and IFRS 10 Consolidated Financial Statements, both of them contain video in the end.