Consolidated versus consolidating financial statements validating form c
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Even when more than one half of the voting rights is not acquired, control may be evidenced by power: [IAS 27.13] SIC-12 provides other indicators of control (based on risks and rewards) for Special Purpose Entities (SPEs).[IAS 27.33] Where losses applicable to the minority exceed the minority interest in the equity of the relevant subsidiary, the excess, and any further losses attributable to the minority, are charged to the group unless the minority has a binding obligation to, and is able to, make good the losses.Where excess losses have been taken up by the group, if the subsidiary in question subsequently reports profits, all such profits are attributed to the group until the minority's share of losses previously absorbed by the group has been recovered.When valuing a company, is it better to use stand-alone parent company financial statements or should we use consolidated financial statements?
More generally, which of these two should you focus on as an investor/manager/regulator?[SIC-12] A parent is required to present consolidated financial statements in which it consolidates its investments in subsidiaries [IAS 27.9] – with the following exception: A parent is not required to (but may) present consolidated financial statements if and only if all of the following four conditions are met: [IAS 27.10] Special purpose entities (SPEs) should be consolidated where the substance of the relationship indicates that the SPE is controlled by the reporting entity.