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That portion of an investee should be consolidated as if it were a separate entity or a \u2018silo\u2019. Maintaining consolidated financial statements is crucial and it expects businesses to comply with the rules and regulation put forth by the International Financial Reporting Standards (IFRS) and generally accepted accounting principles (GAAP). The compliance factor, however, is more strictly applicable to the public companies than the private ones.<\/p>\n<\/p>\n
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Generally, 50% or more ownership in another company defines it as a subsidiary and gives the parent company the opportunity to include the subsidiary in a consolidated financial statement. In some cases, less than 50% ownership may be allowed if the parent company shows that the subsidiary\u2019s management is heavily aligned with the decision-making processes of the parent company. The Interpretations Committee noted that when IFRS 10 is applied for the first time, it must be applied retrospectively, except for the specific https:\/\/golosiyiv.kiev.ua\/ru\/2017\/09\/asya-mxitaryan-i-dima-evenko-v-spiske-samyx-vliyatelnyx-lyudej-v-mire-mody\/<\/a> circumstances for which exemptions from retrospective application are given. It also noted that when IFRS 10 is applied retrospectively, there may be consequential accounting requirements arising from other Standards (such as IAS 21, IAS 23 and IAS 36). These requirements must also be applied retrospectively in order to measure the investee\u2019s assets, liabilities and non-controlling interests, as described in paragraph C4 of IFRS 10, or the interest in the investee, as described in paragraph C5 of IFRS 10.<\/p>\n<\/p>\n A decision maker is not an agent simply because other parties can benefit from the decisions that it makes. Investor A holds 40 per cent of the voting rights of an investee and twelve other investors each hold 5 per cent of the voting rights of the investee. A shareholder agreement grants investor A the right to appoint, remove and set the remuneration of management responsible for directing the relevant activities. In this case, investor A concludes that the absolute size of the investor\u2019s holding and the relative size of the other shareholdings alone are not conclusive in determining whether the investor has rights sufficient to give it power.<\/p>\n<\/p>\n The presence of protective rights held by external parties does not preclude an investor from having control over an investee. For instance, if the veto pertains to modifications in relevant activities that significantly affect investee returns for the investor\u2019s benefit, http:\/\/eempc.org\/hierarchy-of-ecosystem-function\/<\/a> it could be considered as a source of power over the investee (IFRS 10.B15(d)). This concept also applies to scenarios involving bankruptcy proceedings or covenant breaches. When assessing control, the purpose and design of the investee should be taken into account.<\/p>\n<\/p>\nSummary of IAS 27<\/h2>\n<\/p>\n
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IFRIC 17 \u2014 Distributions of Non-cash Assets to Owners<\/h2>\n<\/p>\n