Article on consolidation process part two

Article on Consolidation of Parent, Subsidiary and Associate

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Article on Consolidation of Parent, Subsidiary and Associate
Hello and welcome to the second part of the series on Consolidation of Group Accounts. In this part, we will consider the necessary principles needed in the preparation of consolidated financial statements when an associate is involved. Consolidated financial statements are prepared based on the principles contained in the following standards
a. IAS 27, Consolidated and Separate Financial Statements
b. IAS 28, Investments in Associates
c. IFRS 3, Business Combinations (Revised)
d. IFRS 10, Consolidated Financial Statements
e. IFRS 11, Joint Arrangements
f. IFRS 12, Disclosure of Interests in Other Entities
This article focuses on extending on the main principles introduced in the Part One of this series and gives examples of how they maybe tested. It does not attempt to cover every technical aspect of consolidation, but to give candidates the tools they need to prepare for the style and level of testing, they can expect to see inmost group questions in Papers 2.1 and 3.1. Here, we are going to illustrate consolidated financial statement by working through a comprehensive question designed by Augustine Addo, updated to incorporate issues raised by IFRS 10 The discussion will follow a question and answer (QA) format. The curious student is known as JAY while the knowledgeable tutor is KO.

KO Where have you been all this while Anyways, welcome once again to my office. JAY Errmm…KO. You know. I am glad to see you again. I’ve been spreading the good news
about consolidation abroad in the minds of my colleagues. KO I am all ears. However, I will attempt to answer each of your questions following certain steps. JAY How is an associate different from a subsidiary? KO Your question is most aptly answerable using Step 1.

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