Question

1. 1) Which of the following statements is not true with respect to consolidated financial statements?

   1. A) Consolidated financial statements should be prepared using uniform accounting policies.

   2. B) Consolidated statements should include the consolidated cash flow statement.

   3. C) Investment in an associate company is accounted for using the equity method of

      accounting.

   4. D) During a financial year if a parent company loses ‘control’ of a subsidiary company, the

      consolidated statement of comprehensive income should not include the profit or loss of the subsidiary company for the period of the same financial year when the parent companyhad ‘control’ of the subsidiary company.

Answer 1

(AASB 10) requires that If control is lost during a period, Income and expenses of a subsidiary are to be included in the consolidated financial statements until the date on which the parent ceases to control the subsidiary

Hence, Option D is False i.e

D) During a financial year if a parent company loses ‘control’ of a subsidiary company, the consolidated statement of comprehensive income should not include the profit or loss of the subsidiary company for the period of the same financial year when the parent company had ‘control’ of the subsidiary company.