Need to Know: IFRS 10 - Consolidated Financial ... - BDO Canada

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44 IFRS 10 Consolidated Financial StatementsConsolidation conclusion reached is unchanged when IFRS 10 is adoptedIf the conclusion at the date of initial application about whether or not an investee is to be consolidated isunchanged following the adoption of IFRS 10, there is no change to amounts presented in comparative periods. Thismeans that comparative information will not be restated where, at 1 January 2013, an investee was consolidatedunder IAS 27(2008)/SIC-12 and is still consolidated after the adoption of IFRS 10, or where the investee was notconsolidated under IAS 27(2008)/SIC-12 and is still not consolidated after the adoption of IFRS 10.This relief also applies to a subsidiary that was disposed of (that is, the parent lost control of) during the comparativeperiod in such a way that it would not be consolidated under either IAS 27(2008)/SIC-12 or under the new controlmodel in IFRS 10 at the date of initial application.Consolidation conclusion reached is changed when IFRS 10 is adoptedIf the conclusion at the date of initial application about whether an investee is to be consolidated changes followingthe adoption of IFRS 10, amounts presented for comparative periods are restated by the investor to conform with therequirements in IFRS 10.IFRS 10 requires consolidation where this was not required by IAS 27(2008)/SIC-12The approach to be followed differs, depending on whether or not the investee meets the definition of a business inIFRS 3.If an investee that meets the definition of a business is required to be consolidated at the date of initial applicationunder IFRS 10 and was not consolidated in accordance with IAS 27(2008)/SIC-12, the investor applies IFRS 3 fromthe date it obtained control over the investee on the basis of the requirements of IFRS 10. The immediately precedingperiod is adjusted retrospectively.If the investee does not meet the definition of a business, the investor is also required to apply the acquisitionmethod as described in IFRS 3 from the date it obtained control over the investee on the basis of the requirements ofIFRS 10, but without recognising any goodwill for the investee. That is, the starting values for the assets and liabilitiesof the investee are their fair values at the date on which control was obtained.Depending on when control was obtained, a different version of IFRS 3(2004) or IFRS 3(2008) and of IAS 27(2003)or IAS 27(2008) is applied:––If the date that control was obtained in accordance with IFRS 10 is later than the effective date of IFRS (2008) thenIFRS 3(2008) is applicable––If control was obtained before the effective date of IFRS 3(2008) an investor can apply either IFRS 3(2008) orIFRS 3(2004)––If control was obtained (as defined in IFRS 10) later than the effective date of IAS 27(2008), an investor is requiredto apply IFRS 10 for all periods that the investee is retrospectively consolidated in accordance with the transitionalguidance in IFRS 10––If control was obtained before the effective date of IAS 27(2008), an investor can either apply IFRS 10 for allperiods; or apply IAS 27(2003) to periods prior to the effective date of IAS 27(2008) and thereafter IFRS 10 forsubsequent periods.Regardless of whether the investee meets the definition of a business, when control was obtained at a date earlierthan the beginning of the immediately preceding period, equity is adjusted at the beginning of the immediatelypreceding period by the difference between the amount of assets, liabilities and non-controlling interests recognisedand the previous carrying amount of the investor’s involvement with the investee.If fully retrospective measurement is impracticable, then the investor is required to apply the requirements of IFRS 3from a deemed acquisition date. The deemed acquisition date is the beginning of the earliest period for whichapplication of IFRS 3 is practicable. The amendments to IFRS 10 note that this may be the current period.
IFRS 10 Consolidated Financial Statements45IFRS 10 does not require consolidation where this was required by IAS 27(2008)/SIC-12If an investee was consolidated under IAS 27(2008)/SIC-12 and, as at the date of initial application, it is notrequired to be consolidated under IFRS 10, the investor measures its carrying amount in the investee on the basis ofretrospective application of IFRS 10.For example, at the date of initial application, an investor might conclude that it is no longer required to consolidatean investee that was consolidated under IAS 27(2008)/SIC-12. In this case, the investor measures its retained interestin the investee at the amount at which it would have been measured if the requirements of IFRS 10 had beeneffective when the investor:––Became involved with (but did not obtain control) of the investee; or––Lost control of the investee.The immediately preceding period is adjusted retrospectively. If the date at which the loss of control occurred isearlier than the beginning of the immediately preceding period, then any difference between the previous amount ofassets, liabilities and non-controlling interest recognised, and the carrying amount of the investor’s retained interestin the investee, is recognised as an adjustment to equity at the beginning of the immediately preceding period. Forentities that present comparative information for more than one period, this means that the earlier period(s) canremain unchanged (together with an explanation that the information has not been adjusted together with the basison which it has been prepared), although an entity can choose to restate earlier periods.If measurement of the retained interest on a fully retrospective basis is impracticable, an investor applies therequirements set out above at the beginning of the earliest period for which application of IFRS 10 is practicable. Theamendments to IFRS 10 state that this may be the current period.Adjustment as a result of transition (IAS 8.28(f))An entity is only required to provide information about the adjustment that resulted from the transition for theannual period immediately preceding the date of initial application (the immediately preceding period). An entityis permitted to provide this information for the current or earlier periods but is not required to do so (e.g. if thedate of initial application is 1 January 2013, as in the example above, the entity would need to quantify the effectof the adjustment for the calendar year 2012 in accordance with IAS 8 Accounting Policies, Estimates, and Errorsparagraph 28(f). However it would not need to give the information in respect of the current period (2013) or anyother prior periods presented).If an entity chooses to present adjusted comparatives for a period before the immediately preceding period then allreferences to the ‘immediately preceding period’ are required to be read as the ‘earliest adjusted comparative periodpresented’.An entity is also required clearly to identify any unadjusted comparative information for earlier periods presented, tostate that it has been prepared under a different basis and to explain that basis (e.g. IAS 27(2008)).Comparative information required by IAS 1 Presentation of Financial StatementsIf retrospective adjustments made on the initial application of IFRS 10 result in a material change to informationincluded in the statement of financial position at the start of the preceding period, a third statement of financialposition is required to be presented.
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Need to Know: IFRS 10 - Consolidated Financial ... - BDO Canada

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