The requirement to present consolidated statements

Learning objectives

• Explain that a parent presents consolidated financial statements that present the group as a single economic entity, and that parent status results from the assessment of control.L1
• Identify, from the facts of a case, the entity that must present consolidated financial statements.L1

Normative references

• IFRS 10 §2To meet its objective, the Standard requires an entity that controls one or more other entities (the parent) to present consolidated financial statements, establishes control as the basis for consolidation and explains how to apply it, sets out the requirements for preparing consolidated financial statements, and defines an investment entity together with its exception to consolidation. The presentation of the group as a single economic entity derives from the definition of consolidated financial statements (Appendix A).
• IFRS 10 §5An investor determines whether it is a parent by assessing whether it controls the investee, regardless of the nature of its involvement with it.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

2 questions

• A company becomes a parent, and so must present consolidated financial statements, as soon as it holds a percentage of capital set in advance, without any need to assess control of the investee.L1
• Cèdre SA holds securities in several entities with which it has very different kinds of relationship (equity, loans, management contracts). What determines whether Cèdre SA is a parent?L1