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ASPE 1601 Consolidated Financial Statements and
ASPE 1602 Non-controlling Interests
Last updated: August 2015
A
SCOPE
DEFINITIONS
 ASPE 1601 applies to:
 Consolidation accounting following a business combination involving a purchase of an equity interest by one entity in another.
 May also be applied as general guidance for combinations or consolidations achieved other than through purchase of an equity
interest or involving unincorporated businesses.
 Consolidated FS: FS produced by aggregating the FS of one
or more subsidiaries on a line-by-line basis (i.e., adding
together corresponding items of assets, liabilities, revenues
and expenses) with the parent’s FS.
 Combined FS: FS produced by aggregating the FS of a group
of subsidiaries, or companies under common management,
on a line-by-line basis without the parent’s FS.
 NCI: the equity in a subsidiary not attributable, directly or
indirectly, to a parent.
 Reciprocal shareholdings: When a subsidiary owns shares of
the parent or when two or more subsidiaries of a parent
own shares in each other.
 ASPE 1602 applies to:
 Accounting for a non-controlling interest (NCI) in a subsidiary subsequent to a business combination.
 Related Sections:
 ASPE 1582 Business Combinations – sets out the basis of accounting for transactions by which subsidiaries are acquired.
 ASPE 1590/1591 Subsidiaries – describes accounting for subsidiaries in general purpose financial
statements (FS). FS
Non-consolidated
 ASPE 3051 Investments – deals with circumstances whereby the equity method of accounting is used.
 ASPE 3064 Goodwill and Intangible Assets - addresses accounting for goodwill subsequent to a business combination.
PREPARATION OF CONSOLIDATED FS
Date of
acquisition
Subsequent to
acquisition
Miscellaneous
transactions
or
relationships
 Aggregate parent’s and subsidiaries’ FS on a line-by-line basis.
 Parent’s investment in subsidiary is replaced by identifiable assets and liabilities of subsidiary, NCI and goodwill arising
from the investment.
 Eliminate intercompany balances and exclude retained earnings of subsidiary.
 Do NOT eliminate gains or losses incurred between the entities prior to acquisition date.
 EXCEPTION: Eliminate if gains and losses relate to transactions made in contemplation of acquisition.
 Consolidated FS prepared subsequent to acquisition are based on the amount assigned to assets, liabilities and NCI at
acquisition + the effects of transactions subsequent to that date.
 Adjustments required for normal operating transactions:
o Eliminate post-acquisition unrealized intercompany gains or losses on assets remaining within the consolidated group
and adjust the related income taxes and depreciation, if any, on such gains and losses.
o Eliminate intercompany balances and post-acquisition transactions.
o Calculate depreciation, depletion and amortization of subsidiary’s assets based on amounts determined at acquisition.
 Adjustments required for shareholders' equity transactions with parties outside the consolidated group:
o Refer to guidance in the Change in Ownership Interest in a Consolidated Subsidiary and Loss of Control of a
Consolidated Subsidiary sections below.
o Declaration of a stock dividend by a subsidiary does not change the parent’s interest in the consolidated group.
 Reciprocal shareholdings in consolidated group:
 Difference from elimination of reciprocal shareholdings is allocated to parent and NCIs proportionately.
 Dividends received on reciprocal shareholdings are excluded from consolidated net income (NI) and offset against
dividends distributed.
 If a subsidiary holds shares in the parent, the parent’s issued share capital is presented in full, with the cost of the shares
held by the subsidiary shown as a deduction from shareholders’ equity.
 Statements at different dates due to difference in year-ends:
 Normally the subsidiary can prepare FS for a period that exactly, or nearly, coincides with the parent’s fiscal period.
NCIs
 In preparing consolidated FS, an entity
identifies:
 NCIs in NI of consolidated subsidiaries
for the reporting period.
 NCIs in the net assets of consolidated
subsidiaries separately from the
parent's ownership interests in them.
NCIs in net assets consist of:
o Amount of those NCIs at date of
original combination calculated in
accordance with ASPE 1582.
o NCIs’ share of changes in equity
since the date of combination.
 Allocation of NI and changes in equity
to the parent and NCIs do not reflect
possible exercise or conversion of any
potential voting rights.
This communication contains a general overview of the topic and is current as of August 14, 2015. The application of the principles addressed will depend upon the particular facts and circumstances of each individual case. Accordingly, this
publication is not a substitute for professional advice and we recommend that any decisions you take about the application or not of any of the information presented be made in consultation with a qualified professional, who can address any
variance that may be required to reflect your circumstances. Please contact your local MNP representative for customized assistance with the application of this material. MNP LLP accepts no responsibility or liability for any loss related to
any person's use of or reliance upon this material. © MNP LLP 2015. All rights reserved.
ASPE 1601 Consolidated Financial Statements and
ASPE 1602 Non-controlling Interests
CHANGE IN OWNERSHIP INTEREST IN A CONSOLIDATED SUBSIDIARY
 Changes in the parent's ownership interest in a consolidated subsidiary that do not result in
loss of control can arise from, for example:
 The purchase of additional shares of a subsidiary by the parent.
 A sale by the parent of some of its holdings in the subsidiary to outside interests.
 The issuance of new shares by the subsidiary to parties outside the consolidated group.
 The repurchase by a subsidiary of its own shares.
 Account for as equity transactions (i.e., transactions with owners in their capacity as owners).
 Adjust carrying amount of parent’s interest and NCI to reflect the changes.
 Difference between adjustment to NCI and fair value of the consideration paid or received is
recognized directly in equity and attributed to the parent.
 Any taxes related to the repurchase of shares by a subsidiary is included as part of cost of
shares acquired.
DISPOSAL OF A SUBSIDIARY
 Investment is classified as held for sale subsequent to decision to dispose and prior to
disposal date if criteria in ASPE 3475 Disposal of Long-lived Assets and Discontinued
Operations are met.
 Does not result in cessation of consolidation.
COMBINED FS
 Useful when one individual owns a controlling interest
in several corporations.
 May be used to present the financial position and
results of operations of a group of subsidiaries, or to
combine FS of companies under common
management.
 Similar principles to those used in preparing
consolidated FS apply.
Last updated: August 2015
LOSS OF CONTROL OF A CONSOLIDATED SUBSIDIARY
 Loss of control of a consolidated subsidiary can occur:
 With or without a change in absolute or relative ownership levels (e.g. when subsidiary
becomes subject to control of a government, court, administrator or regulator).
 In two or more arrangements (transactions) unless circumstances indicate that they should be
accounted for as a single transaction (refer to ASPE 1602.08 for indicators).
 At date when control is lost:
 Cease to consolidate and derecognize the carrying amounts of:
o Assets (including any goodwill) and liabilities of subsidiary.
o NCIs in former subsidiary, including portion of equity attributable to them.
 Recognize:
o Fair value of consideration received, if any.
o Distribution of shares of the subsidiary to owners, if any.
o Any investment retained in the former subsidiary at its carrying amount based on the type
of investment held (e.g. investment subject to significant influence (refer to ASPE 3051),
financial assets (refer to ASPE 3856 Financial Instruments), other rights and obligations
(such as a lease under ASPE 3065 Leases), etc.).
o Any difference as a gain or loss in NI attributable to the parent.
 Any investment retained in, and any amounts owed by or to, the former subsidiary are
accounted for in accordance with other Sections from the date when control is lost.
PRESENTATION AND DISCLOSURE
 Presentation:
 Consolidated FS adhere to the disclosure and presentation requirements for all FS as noted in other Sections.
 Each statement must be labelled as consolidated.
 NCI is separately presented in the consolidated statement of financial position within equity.
 NI is attributed to the parent and NCIs even if it results in the NCIs having a deficit balance.
 Disclosure:
 When period covered in subsidiary’s FS does not substantially coincide with that of the parent’s FS, disclose this fact and the period
covered by the FS used.
 When the fiscal periods of a parent and subsidiary differ, events relating to, or transactions of, the subsidiary that have occurred
during the intervening period that significantly affect the financial position or results of operations of the group are recorded or
disclosed, as appropriate.
This communication contains a general overview of the topic and is current as of August 14, 2015. The application of the principles addressed will depend upon the particular facts and circumstances of each individual case. Accordingly, this
publication is not a substitute for professional advice and we recommend that any decisions you take about the application or not of any of the information presented be made in consultation with a qualified professional, who can address any
variance that may be required to reflect your circumstances. Please contact your local MNP representative for customized assistance with the application of this material. MNP LLP accepts no responsibility or liability for any loss related to
any person's use of or reliance upon this material. © MNP LLP 2015. All rights reserved.