I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

group as a whole. 

IFRS 10 requires that, when a parent issues consolidated financial statements, it should consolidate all 

subsidiaries, both foreign and domestic, except in certain circumstances, but this is beyond the scope of 

the FFA/FA syllabus. 

We will consider the mechanics of preparing consolidated accounts in the next two chapters. 

QUESTION 

Subsidiaries

 

Socket Co has 100,000 shares of $1 each. On 1 January 20X3, Power Co acquired 45,000 of these 

shares. In addition, Power Co is able to appoint 4 out of the 5 directors of Socket Co, thus exercising 

control over their activities. 

How should Socket Co be treated in the consolidated financial statements of Power Co?