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Scope
1. This Standard
shall be applied in the preparation and presentation of
consolidated financial statements for a group of entities
under the control of a parent.
2. This Standard
does not deal with methods of accounting for business
combinations and their effects on consolidation, including
goodwill arising on a business combination (see IAS 22 Business
Combinations).
3. This Standard
shall also be applied in accounting for investments in
subsidiaries, jointly controlled entities and associates
when an entity elects, or is required by local
regulations, to present separate financial
statements.
Definitions
4. The following
terms are used in this Standard with the meanings specified:
Consolidated
financial statements are the financial statements of a
group presented as those of a single economic entity.
Control is
the power to govern the financial and operating policies
of an entity so as to obtain benefits from its
activities.
The cost method
is a method of accounting for an investment whereby
the investment is recognised at cost. The investor recognises
income from the investment only to the extent that the
investor receives distributions from accumulated profits
of the investee arising after the date of
acquisition. Distributions received in excess of
such profits are regarded as a recovery of investment and
are recognised as a reduction of the cost of the investment.
A group is a
parent and all its subsidiaries.
Minority interest
is that portion of the profit or loss and net assets of
a subsidiary attributable to equity interests that are
not owned, directly or indirectly through
subsidiaries, by the parent.
A parent is
an entity that has one or more subsidiaries.
Separate
financial statements are those presented by a parent, an
investor in an associate or a venturer in a jointly
controlled entity, in which the investments are
accounted for on the basis of the direct equity
interest rather than on the basis of the reported results and
net assets of the investees.
A subsidiary
is an entity, including an unincorporated entity such as
a partnership, that is controlled by another entity (known
as the parent).
5. A parent or its
subsidiary may be an investor in an associate or a venturer in
a jointly controlled entity. In such cases, consolidated
financial statements prepared and presented in accordance with
this Standard are also prepared so as to comply with IAS 28 Investments
in Associates and IAS 31 Interests in Joint Ventures.
6. For an entity
described in paragraph 5, separate financial statements are
those prepared and presented in addition to the financial
statements referred to in paragraph 5. Separate financial
statements need not be appended to, or accompany, those
statements.
7. The financial
statements of an entity that does not have a subsidiary,
associate or venturer’s interest in a jointly controlled
entity are not separate financial statements.
8. A parent that is
exempted in accordance with paragraph 10 from presenting
consolidated financial statements may present separate
financial statements as its only financial statements.
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