IFRS10 the choice to not consolidate

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Leo
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IFRS10 the choice to not consolidate

Post by Leo »

Hi,

Our group has acquired a group of companies for 20M€ (paid full in cash) in early 2020, which is 80% of the shares, only us have the control. There are at least 20 small companies within the group. It's very onerous to create 20 reporting packages and consolidate them and this group had never applied IFRS before and had never produced consolidated statements.

We made the choice to not consolidate it, we are just showing it in our consolidated balance sheet in "No consolidated Investments into subsidiaries". Our total assets are 2 Billion.

We are not an investment company, we cannot apply the exceptions from IFRS10.27. So, is it ok to leave it in our balance sheet like this? In case that the auditors ask us, which argument should I give?
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exIFRS
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Re: IFRS10 the choice to not consolidate

Post by exIFRS »

There is no choice I am afraid. IFRS 10 is clear a parent shall (read must) prepare consolidated financial statements incorporating all controlled entities, with the one exception of investment entities.
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Marek Muc
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Re: IFRS10 the choice to not consolidate

Post by Marek Muc »

The only option is to say that the non consolidation has immaterial impact on parent's financial statements. But I would show those investments as other financial assets or something like this, if they are immaterial why show them in separate line
Leo
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Re: IFRS10 the choice to not consolidate

Post by Leo »

Thank you exIFRS!

good point Marek, thank you!
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Marek Muc
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Re: IFRS10 the choice to not consolidate

Post by Marek Muc »

But remember that the materiality is not judged based on what you paid, but on what 'inside' those subsidiaries, including their P&L and off-balance sheet items
Leo
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Re: IFRS10 the choice to not consolidate

Post by Leo »

Very clear Marek.

True that we've paid 20M€ in October to acquire the group.

This group has +/- 20M€ of revenue (based on a estimation) and a total assets of 7M€ for FY19.

These are below the legal threshold of our country to establish consolidated statements.
JRSB
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Re: IFRS10 the choice to not consolidate

Post by JRSB »

Even if your group is small, sounds like it could be useful for your own purposes to understand how those 20+ companies operate on a consol basis.
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