Quick question. Under IFRS, do companies simply have the choice of whether to show proportionate earnings or account for as equity method subs when they own <50% of the company? Or are there criteria that force one or the other (historical accountin, % owned, substantive control, etc). Thanks.
USA IFRS Consolidation
- Thread starter rwf2110
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For the Parent doing the consolidation the option is there to use either proportionate method or full method. But whether or not to consolidate an interest of < 50% comes down to the fundamental concept of substance over form: overall control regardless of the < 50% ownership. It's that that determines whether or not an interest needs to be consolidated.
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Under IFRS, subsidiary should be consolidated using the full consolidation method (see IFRS 10.4) even though the percentage held is less than 50%