What are variable returns IFRS 10?
Variable returns. Ability to use power to. affect returns. 10. An investor has power over an investee when the investor has existing substantive rights that give it the current ability to direct the relevant activities (IFRS 10.10, IFRS 10.
What is an investment entity IFRS 10?
The IASB uses the term ‘investment entity’ to refer to an entity whose business purpose is to invest funds solely for returns from capital appreciation, investment income or both. An investment entity must also evaluate the performance of its investments on a fair value basis.
Which entities are required to prepare consolidated financial statements?
IFRS 10 Consolidated Financial Statements
- requires an entity (the parent) that controls one or more other entities (subsidiaries) to present consolidated financial statements;
- defines the principle of control, and establishes control as the basis for consolidation;
What are variable returns?
Variable returns are returns that are not fixed and have the potential to vary as a result of the performance of an investee.
What is the purpose of IFRS 10?
The objective of IFRS 10 as set out in the standard is to establish principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities.
What is a investment entity?
An investment entity is permitted to provide investment-related services or activities, either directly or through a subsidiary. If an investment entity provides investment-related services or activities through a subsidiary, the investment entity shall consolidate that subsidiary.
Is an example of variable return?
Examples of variable returns include dividends and interest, servicing fees, changes in the fair value of an investment, access to future liquidity, economies of scale, cost savings and gaining proprietary knowledge, exposures arising from credit or liquidity support, tax benefits, etc.
What does IFRS 10 mean for structured entities?
IFRS 10 does not refer to SPEs, but instead refers to entities that have been designed so that voting or similar rights are not the dominant factor in assessing control. These are described as ‘structured entities’ in IFRS 12. IFRS 10 includes application guidance for assessing control over such entities.
How are variable interest entities treated in accounting?
For accounting purposes, a public company may need to treat such entities as variable interest entities (“VIEs”) and consolidate their results into its financial statements as appropriate.
What is the objective of IFRS 10 for consolidated financial statements?
The objective of IFRS 10 is to establish principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities. defines an investment entity and sets out an exception to consolidating particular subsidiaries of an investment entity*.
When did IFRS 10 change the definition of control?
IFRS 10 was issued in May 2011, and was part of a package of changes addressing different levels of involvement with other entities. IFRS 10 redefines ‘control’ and provides extensive guidance on applying the definition.