IFRS PRACTICAL IMPLEMENTATION GUIDE AND WORKBOOK

Chapter 20

Consolidated and Separate Financial Statements (lAS 27)

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5.3 All intergroup transactions, balances, income, and expenditures should be eliminated in full.

Any intergroup losses on items may be indicative of an impairment loss and may require recogni–

tion in the consolidated financial statements.

5.4 The financial statements of the parent and its subsidiaries should be prepared using the same

reporting date. If the reporting dates are different, the subsidiary should prepare additional financial

statements for consolidation purposes as of the same date of the parent entity, unless it is impracti–

cable to do so. In this case, adjustments must be made for the effects of significant transactions that

have occurred between the date of the subsidiary's and the date of the parent entity's financial

statements . The difference between these dates should never be more than three months .

Practical Insight

Agrana Beteiligung AG, an Austrian entity , states that those subsidiaries ' financial statements

with different year-ends all fell within the three-month window. In the year to February 28,

2003, the balance sheets of all subsidiaries have been harmonized to the end of February. A

note in the financial statements cautions that this should be taken into account for comparability

purposes and discloses an increase in revenue of €40 million and an increase in profit after tax

of €2 million .

5.5 If the loss that is applicable to the minority exceeds the minority interest in the equity of the

subsidiary, then the excess and any further losses attributable to the minority are charged to the

group, unless the minority has a binding obligation to make good the losses .

5.6 When such a subsidiary subsequently reports profits, all such profits will be attributable to the

group until the minority 's share of losses, which have been absorbed by the group, have been re–

covered.

5.7 In the separate financial statements of the parent entity, investments in subsidiaries, associ–

ates, and jointly controlled entities should be accounted for by either measuring the investments at

cost or in accordance with lAS 39. Any such items that are classified as held for sale should be ac–

counted for in accordance with IFRS 5.

5.8 Investments in jointly controlled entities and associates that are accounted for in accordance

with lAS 39 in the consolidated financial statements (i.e., when a subsidiary ceases to be a subsidi–

ary, associate, or joint venture) must be accounted for in the same way in the investor's separate

financial statements.

6. DISCLOSURES

6.1 Disclosure requirements under this Standard are quite extensive. These disclosures must be

made in consolidated financial statements:

(a) The nature of the relationship between the parent and a subsidiary when the parent does not

own, directly or indirectly through subsidiaries, more than half of the voting power

(b) The reasons why the ownership, directly or indirectly through subsidiaries, of more than

half of the voting or potential voting power of an investee does not constitute control

ments are used to prepare consolidated financial statements and are as of a reporting date

or for the period that is different from that of the parent, and the reason for using a different

reporting date or period

(d) The nature and extent of any significant restrictions on the ability of subsidiaries to transfer

funds to the parent in the form of cash dividends or to repay loans or advances

6.2 These disclosures are required where separate financial statements are prepared for a parent

that elects not to prepare consolidated financial statements:

(a) The fact that the financial statements are separate financial statements and that the exemp–

tion from consolidation has been used ; the name and country of incorporation or residence

of the entity whose consolidated financial statements that comply with IFRS have been