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Vertical group

For example, a parent controls a subsidiary that in turn controls another entity. Determine control and economic interests at each level, and consolidate controlled entities under IFRS 10 subject to its requirements. Distinguish a horizontal structure in which the parent owns separate subsidiaries directly. Ownership percentages help compute economic interests but do not alone replace the control assessment.

Worked example

P controls S, and S controls T. The P–S–T chain is a vertical group structure; T is an indirect subsidiary of P if P controls the group’s relevant rights and returns.

Common mistake

Calling several subsidiaries held directly by one parent a vertical chain, or assuming every indirect ownership interest proves control.

Where it appears in your exams

QualificationExamRelationshipPeriod
ACCA FR Supporting September 2026–June 2027
ACCA SBR Supporting September 2026–June 2027