1 Groups and consolidation: an overview

Power
. Existing rights that give the current ability to direct the relevant activities.'
 

'
Subsidiary
. An entity that is controlled by another entity (known as the parent).'
 

'
Parent
. An entity that controls one or more entities.'
 

'
Group
. A parent and all its subsidiaries.'
 

'
Consolidated financial statements
. The financial statements of a group in which the assets, 
liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are 
presented as those of a single economic entity.'

'
Non-controlling interest
. The equity in a subsidiary not attributable, directly or indirectly, to a 
parent.' 
(IFRS 10, Appendix A)
 

A 
trade
 
(or 'simple')
 
investment
. An investment in the shares of another entity, that is held for 
the accretion of wealth, and is not an associate or a subsidiary. 
2.2 Investments in subsidiaries 
You should be able to tell from the definitions given above that the important point here is 
control
. In 
most cases, this will involve the holding company or parent owning a majority of the ordinary shares in 
the subsidiary (to which normal voting rights are attached). There are circumstances, however, when the 
parent may own only a minority of the voting power in the subsidiary, 
but
 
the parent still has control. 
Control can usually be assumed to exist when the parent 
owns more than half (ie over 50%) of the 
voting power 
of an entity 
unless
 
it can be clearly shown that 
such ownership does not constitute control 
(these situations will be very rare).