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Dear sir,
I refer to Question 24.13 page 123 of the BPP reversion kit, “Clementine owned 21% of the ordinary shares of Tangerine for several years and does not has any investments in any other companies, the answer to the question stated that Clementine has no other investments in other companies, it will not produce consolidated accounts”
I have read the relevant IFRS and don’t seems to find this exemption granted under the IFRS. Would appreciate if you could enlighten me on where I can find the relevant clauses for this exeption.
It is not because there is an exemption – I do not think that you have read the IFRS carefully enough!
We are only required to produce consolidated accounts if we have a subsidiary. We have a subsidiary if we control another company (which normally means holding more than 50% of the shares).
Here, Clementine only owns 21% of Tangerine and so Tangerine is not a subsidiary.
What you may be thinking of is that Tangerine is an associate because we own more than 20% (and therefore have significant influence). However dealing with associates (equity accounting) is only relevant if we are producing consolidated accounts and we only produce consolidated accounts if we have a subsidiary. If we do not have a subsidiary then we do not produce consolidated accounts, even if there is an associate.
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