IAS 27 vs. IFRS 10: What's the Difference?
Edited by Aimie Carlson || By Janet White || Published on February 11, 2024
IAS 27 focuses on separate financial statements. IFRS 10 addresses consolidated financial statements.
Key Differences
IAS 27, titled "Separate Financial Statements," guides the accounting and disclosure requirements for an entity's separate financial statements. Conversely, IFRS 10, named "Consolidated Financial Statements," focuses on the preparation and presentation of consolidated financial statements, detailing how to account for controlled entities.
IAS 27 is applied when an entity prepares separate financial statements that present investments in subsidiaries, joint ventures, and associates. In contrast, IFRS 10 is utilized when determining whether control exists in a parent-subsidiary relationship, guiding the consolidation process.
Under IAS 27, entities have the option to account for investments in subsidiaries, joint ventures, and associates either at cost or in accordance with IFRS 9. IFRS 10, however, requires entities to consolidate all subsidiaries and provides guidance on how to apply the control principle.
IAS 27 requires disclosures about investments in subsidiaries, associates, and joint ventures, along with any separate financial statements presented. IFRS 10 mandates disclosures that enable users to evaluate the nature of, and risks associated with, an entity's interests in other entities and the effects of those interests on its financial position.
The key aspect of IAS 27 is its focus on the financial statements of the parent company alone, not including its subsidiaries. On the other hand, IFRS 10 mandates a group perspective, considering the economic entity as a whole, including all subsidiaries.
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Comparison Chart
Scope
Separate financial statements
Consolidated financial statements
Focus
Investments in subsidiaries, joint ventures
Control over subsidiaries
Accounting for Investments
At cost or in accordance with IFRS 9
Consolidation required
Required Disclosures
Information about investments in other entities
Nature and risks of interests in other entities
Perspective
Parent company alone
Economic entity as a whole
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IAS 27 and IFRS 10 Definitions
IAS 27
IAS 27 allows entities to prepare financial statements that are not consolidated.
Our separate financial statements, as per IAS 27, show investments in associates at fair value.
IFRS 10
IFRS 10 establishes principles for the presentation and preparation of consolidated financial statements.
Under IFRS 10, we consolidate the financial statements of all our controlled entities.
IAS 27
IAS 27 pertains to the accounting for investments in subsidiaries, joint ventures, and associates in separate financial statements.
Under IAS 27, our company accounts for its investment in the subsidiary at cost.
IFRS 10
IFRS 10 requires disclosures about the nature of, and risks associated with, interests in other entities.
Our IFRS 10 disclosures include information on the risks involved with our interests in subsidiaries.
IAS 27
IAS 27 provides a choice between the cost model and the equity method for investments in subsidiaries, joint ventures, and associates.
According to IAS 27, we use the equity method for accounting our joint venture.
IFRS 10
IFRS 10 provides guidance on the accounting of subsidiaries, including potential voting rights and de facto control.
IFRS 10 directs us to consider potential voting rights when assessing control over an entity.
IAS 27
IAS 27 requires disclosures about investments and any separate financial statements presented.
IAS 27 mandates disclosure of our investment in the associate company in our separate financial statements.
IFRS 10
IFRS 10 defines control as the basis for consolidation and sets the criteria for determining control.
IFRS 10 requires us to assess control over our subsidiaries to determine consolidation requirements.
IAS 27
IAS 27 focuses on the financial statements of the parent company, excluding its subsidiaries.
IAS 27 guides us in preparing our parent company's financial statements, independent of our subsidiaries.
IFRS 10
IFRS 10 mandates consolidation of all entities that are controlled by a parent.
According to IFRS 10, our financial statements include the results of all subsidiaries we control.
FAQs
What is the main focus of IFRS 10?
IFRS 10 focuses on consolidated financial statements and the principle of control in determining whether consolidation is required.
Can an entity apply both IAS 27 and IFRS 10?
Yes, an entity can apply both, with IAS 27 for its separate financial statements and IFRS 10 for consolidated statements.
What are the disclosure requirements under IAS 27?
IAS 27 requires disclosures about investments in other entities and any separate financial statements.
What is IAS 27?
IAS 27 is a standard for accounting and disclosures in separate financial statements, focusing on investments in subsidiaries, joint ventures, and associates.
Does IFRS 10 mandate disclosures about control?
Yes, IFRS 10 mandates disclosures that enable evaluation of the nature of control over subsidiaries.
Does IAS 27 allow for fair value measurement of investments?
Yes, IAS 27 permits investments to be measured at fair value through profit or loss.
How does IAS 27 differ from IFRS 10 in terms of consolidation?
IAS 27 deals with separate financial statements without consolidation, while IFRS 10 requires consolidation of all controlled entities.
Can an entity under IFRS 10 avoid consolidating a subsidiary?
No, under IFRS 10, all controlled entities must be consolidated.
How does IAS 27 address joint ventures?
IAS 27 allows entities to account for joint ventures either at cost or using the equity method.
What defines 'control' under IFRS 10?
Control under IFRS 10 is the power to govern the financial and operating policies of an entity to obtain benefits.
Does IAS 27 apply to the preparation of consolidated financial statements?
No, IAS 27 applies to separate financial statements, not consolidated ones.
How does IAS 27 treat investments in subsidiaries?
IAS 27 allows accounting for such investments at cost or in accordance with IFRS 9.
How does IFRS 10 handle potential voting rights?
IFRS 10 considers potential voting rights when assessing control over an entity.
Can a company have control without majority ownership under IFRS 10?
Yes, control can exist even without majority ownership if the entity has the power to govern the financial and operating policies.
What is the key principle for consolidation in IFRS 10?
The key principle in IFRS 10 is control, determining whether an entity should be consolidated.
Are disclosures under IAS 27 and IFRS 10 similar?
No, IAS 27 focuses on disclosures in separate financial statements, while IFRS 10 requires disclosures on the nature and risks of control over other entities.
What are the main differences in the scope of IAS 27 and IFRS 10?
IAS 27 covers separate financial statements, while IFRS 10 is about consolidated financial statements.
Are separate financial statements mandatory under IAS 27?
No, IAS 27 provides the option but does not mandate separate financial statements.
Does IAS 27 require the equity method for subsidiaries?
IAS 27 offers a choice between the cost model and the equity method for subsidiaries.
Under IFRS 10, how is a subsidiary defined?
A subsidiary is an entity controlled by another entity, often called the parent.
About Author
Written by
Janet WhiteJanet White has been an esteemed writer and blogger for Difference Wiki. Holding a Master's degree in Science and Medical Journalism from the prestigious Boston University, she has consistently demonstrated her expertise and passion for her field. When she's not immersed in her work, Janet relishes her time exercising, delving into a good book, and cherishing moments with friends and family.
Edited by
Aimie CarlsonAimie Carlson, holding a master's degree in English literature, is a fervent English language enthusiast. She lends her writing talents to Difference Wiki, a prominent website that specializes in comparisons, offering readers insightful analyses that both captivate and inform.
