IFRS consolidation suite
The IFRS consolidation suite is a group of accounting standards that define how companies report their relationships with subsidiaries, joint arrangements, and other investees. It consists of three specific standards: IFRS 10, IFRS 11, and IFRS 12. These standards, namely IFRS 10, IFRS 11, and IFRS 12, were introduced to harmonize international reporting and address transparency issues that emerged during the financial turmoil of the late 2000s.
Overview
IFRS 10, IFRS 11 and IFRS 12 are three International Financial Reporting Standards promulgated by the International Accounting Standards Board providing accounting guidance related to consolidation and joint ventures. The standards IFRS 10, IFRS 11, and IFRS 12 were issued in 2011 and became effective in 2013. Within this suite, IFRS 10 addresses consolidated financial statements, IFRS 11 addresses joint ventures and IFRS 12 addresses disclosures of interests in other entities. The standards IFRS 10, IFRS 11, and IFRS 12 were developed in part due to the 2008 financial crisis. During the crisis, accounting rules—later replaced or supplemented by IFRS 10, IFRS 11, and IFRS 12—were criticized for permitting certain risky arrangements to be excluded from company balance sheets.IFRS 10 and 11: Control and Joint Arrangements
IFRS 10 revised the definition of having "control" of another entity, requiring that entity to be consolidated onto the controlling entity's balance sheet. The revised definition in IFRS 10—comprising power, exposure to variable returns, and the ability to use power to affect those returns—is expected to increase the likelihood that an entity is deemed to have control over another.IFRS 11 largely retained previous accounting guidance for joint ventures, but adopted the IFRS 10 definition of "control" to establish "joint control," meaning that joint arrangements under IFRS 11 would be deemed to exist in some circumstances where they weren't previously, and vice versa.
Acquisition of an Interest in a Joint Operation
As an illustrative disclosure for IFRS 11.21A, this example demonstrates the acquisition of an interest in a joint operation that constitutes a business. Under IFRS 11.IE53–IE57, the acquirer applies IFRS 3 principles to recognize its contractually agreed share of identifiable assets and liabilities at fair value. Any excess of consideration over the net fair value is recognized as goodwill, while acquisition-related costs are expensed per IFRS 3.53.
| Identifiable Assets and Liabilities | Fair Value |
| Property, plant and equipment | 138 |
| Intangible assets | 72 |
| Accounts receivable & Inventory | 154 |
| Retirement benefit obligations & Contingent liabilities | |
| Accounts payable & Deferred tax liability | |
| Net identifiable assets | 228 |
| Item | Amount |
| Consideration transferred | 300 |
| Less: Net identifiable assets acquired | |
| Goodwill | 72 |