ACCA FA · Chapter 13 · Question 1 of 12
Under IFRS 10 Consolidated Financial Statements, which combination of elements must an investor have to control an investee?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Power over the investee, exposure or rights to variable returns, and the ability to use its power to affect those returns
Explanation
IFRS 10 defines control by three elements: power over the investee, exposure or rights to variable returns from involvement with it, and the ability to use that power to affect the amount of the returns. Control does not require 100% ownership. Significant influence (often 20% to 50%) indicates an associate, not a subsidiary.
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