Reasons for not consolidating subsidiaries dating texting calling rules
Since 1995 she has written many articles for e-zines and was a regular columnist for "Digital Coast Reporter" and "Developments Magazine." She holds a Bachelor of Arts in public administration from the University of California at Berkeley.
In my previous article I introduced the world of group accounts and consolidation to you.
The FASB (Financial Accounting Standards Board) regularly visits this subject to correct definitions and requirements that might serve as loopholes for companies wishing to hide losses and liabilities.
The IASB (International Accounting Standards Board) is also working to create definitions and rules that will make evaluation easier and more reliable when examining the financial reports of foreign companies and companies with offshore subsidiaries.
In both cases, investor obtains joint control over some business with some other investor.
Before 2013, IAS 28 included the rules for joint arrangements, but now, we should look to IFRS 11.
It would be difficult for an investor or financial analyst to gather together all the accounting reports of a parent company and its many subsidiaries in order to get an idea of the financial health of the total enterprise, so parent companies are now required to report their finances on a consolidated basis.
Occasionally the parent will make a separate report of its own finances, but that cannot stand alone and must be accompanied by the consolidated report.
Here, I’d like to summarize the first “consolidation” standard dealing with the consolidated financial statements: IFRS 10.The objective of IFRS 10 Consolidated Financial Statements is to establish principles for the Remember 3 basic elements inherent in control: power, ability to use this power and variable returns.Power is the existing rights that give the current ability to direct the relevant activities.Without consolidated financial statements the process of evaluating a company for investment or financing purposes would be a long complex affair that might altogether miss important assets or liabilities.
In fact, many of the arguments that occur between company management, accounting and auditing at year end involve how the consolidation of reports should be done in order to give the most accurate picture of the company's financial health.
Growing a company often involves buying out the competition to acquire their customers and expanding business through adding new products, services and technology.