Group Accounting Exemptions
Who needs to prepare consolidated accounts?
Basically a parent company, one with a subsidiary
However there are exceptions to this rule:
The parent is itself a wholly owned subsidiary
The parent is a partially (e.g. 80%) owned sub and the other 20% owners allow it to not prepare consolidated accounts
The parents shares are not publicly traded
The parents own parent produces consolidated accounts
Sometimes a sub is purchased with a view to it being sold.
In this case it is an IFRS 5 discontinued operation
The group share of its profits are shown on the income statement and all of its assets and liabilities shown separately on the SFP
Not Valid reasons for exemption
A subsidiary whose business is of a different nature from the parent’s.
A subsidiary that operates under severe long-term restrictions impairing the subsidiary’s ability to transfer funds to the parent.
A subsidiary that had previously been consolidated and that is now being held for sale.