Under IFRS 10 Consolidated Financial Statements, which of the following is the primary criterion for determining whether a parent-subsidiary relationship exists?

Answer options:

Ownership of more than 50% of the equity shares

Significant influence

Control

Joint control

How to approach this question

Recall the core principle of IFRS 10.

Full Answer

C.Control✓ Correct

IFRS 10 states that an investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Control is the sole basis for consolidation.

Common mistakes

Assuming 50% ownership is the absolute rule, ignoring de facto control.

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