IFRS are the accounting standards used by organization to prepare their financial statements, especially if

we consider listed companies, who are forced to use IFRS ignorer to guarantee the protection of investors
and creditors.
The production of IFRS is a consequence of a process of harmonization and convergence, because, before
the terrorization of them, every country had its own financial standards. But after globalization there is the
need of a common language usable to produce financial statements comparable each other.
Especially for investors, is important to guarantee comparability: most of the investment are made between
different countries, so it is important to have the same measures and the same accounting standards in order
to produce a financial statement understandable by different investors.
Globalization have created a common market in which the flow of goods and services is not strictly related
to a single country, but the relationships are constructed by different entities, operating all over the world.
So, in order to ensure a correct degree of transparency is necessary to have a common language based on
IFRS and so the same accounting standards.
Moreover, the creation of common accounting standards should, in some ways, contribute to the removal
of barriers and obstacles to cross-border acquisitions. The spread of global accounting standards makes it
easier to compare investments options, so that the investors are safeguarded.
Over this, using a single set of accounting standards removes the necessity to adjust the financial statements
in the case of different countries firms, so that the job of financial analysts is simplified.
We can also consider that utilizing the same set of accounting standards is possible to reduce all the costs
related to the reprocessing of the information but would also decrease the costs related to the preparation
of reconciliation accounts.
So, in few words: a single set of higher quality standards can decrease the information asymmetries, making
easier the life of the investors and of the creditors.
In fact, we have also to consider that there are two points of view:
- Investors: who need high quality standards in order to compare different investments
- Creditors: in order to understand the financial position of the debtor and safeguard himself.
But what is important to understand is that IFRS can reduce information asymmetries, because the quantity
and the quality of information owned by investors (and creditors) should help to remove barriers, increase
credibility, increase efficiency and make easier comparisons of the investments. The reduction of
asymmetries can so reduce the costs and improve the comparability of the financial reports.
PRINCIPLE BASED VS RULE-BASED STANDARDS
IAS/IFRS are principle-based standard since their primary role to provide sensible principles to which all
applying entities must conform, which aim to be as universal as possible and therefore independent of the
actual contractual form chosen by
 principle based: a “principle” is a general statement which is intended to support the true and fair
presentation of the economic consequences of business transaction and act as a guide to action. So,
it is not a strict rule to follow, it is a guideline useful to represent in a true and fair way the financial
statement in order to guarantee comparability and transparency.
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  Ruled based: on the other side we have rules, which attempt to rule all the actual situations that
applying entities might face.
 The major difference is the rule must be followed, the principle is only
a general statement used to have a true and fair representation of the economic situation.
For example, IFRS are principle-based standards, US GAAP are rule based standards. IFRS do not provide
any fixed rule, but they only provide a general statement from which the reader can distinguish between
different classifications, giving examples or solve any residual doubts.
The IFRS provide a great discretion, instead of the US GAAP, which are rule based standards, so they provide
the way in which the financial information must be reported, limiting opportunistic behaviours.
The choice of the IASB to create principle-based standards is that there are many potentials applying entities
who can use IFRS, so there is the need of such a flexibility of the standards themselves in order to adapt
them in different situations.
The main actors in the convergence process is:
 European union with the Accounting directive, Regulation 1606/2002 and New accounting directive
of 34/2013;
 IASB (International Accounting standards Board) with IAS and IFRS

CONCEPTUAL FRAMEWORK
The Conceptual Framework sets out the concepts that underlie the preparation and presentation of financial
statements for external users.
The purpose of the Conceptual Framework is:
- To assist the Board in the development of future IFRSs and its review of existing IFRS
- Promoting harmonisation of regulation, accounting standards and procedures relating to the
presentation of financial statement
- Assist national standard-setters, preparers, auditors, users and interested parties
Scope: They deal with:
- The objective
- The quantitative characteristic
- The elements
Remember  the IFRS conceptual Framework is not an IFRS. Nothing in the conceptual Framework overrides
any specific IFRS.
The Conceptual Framework is composed of three main parts:
1. OBJECTIVE OF FINANCIAL REPORING/STATEMNET: is to provide financial information about
reporting entity that is useful to existing and potential investors, lenders and other creditors in
making decisions about providing resources to the entity. Those decisions involve buying, selling or
holding equity and debt instrument in making decisions
2. QUALITATIVE CARATERISTIC OR USEFUL INFORMATION:
a. Fundamental characteristic is RELEVANCE (MATERIALITY) and Faithful representation
(COMPLETENESS, NEUTRALITY AND FREE FROM ERRORS)
3. RECOGNITION OF ELEMENTS OF FINANCIAL STATEMENTS:
a. Probability of future economic benefit
b. Reliability of cost or value measurements
c. Measurement of the elements

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 Historical cost: the amount paid for getting it ready for use (price, delivery charges, …);
Current cost: the amount that would have to be expended to acquire a similar asset…;
realisable value: the amount the firm would receive (net of expenses) if it were to sell the
asset in an orderly disposal;
Present value: the present v. (discounted) of the expected net cash flows from the asset/l.
Fair value: the amount at which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm’s length legal transaction)
The most important elements of Financial statements are:

 Asset: resource controlled by the entity, resulting from the past & giving future benefits.
 Liability: present obligation arising from the past, yielding future outflows of benefits
 Equity: residual interest in the assets of the entity after deducting liabilities
 Income: increases in equity not contributed by stockholders (Revenues Gains)
 Expenses: decreases in equity not distributed to stockholders (include Losses)

Each of these three main parts is carefully detailed in the framework with the idea of providing IFRS users
with the larger guidance possible to maximise a proper application of the standards. So, for any deeper
analysis of the conceptual framework or other issues concerning IFRS and their application it is important to
referred on them.
ARTICLE OF LEUZ: REGULATION CHOICE:

 Who do we regulate?
We must regulate Listed company and Public companies, which use the public markets;
 What is the goal of reporting regulation?
The main role of reporting regulation is to protect the interest of the small investors, keeping the
stability in the market and protecting the investors.
 What should regulate? And at what level?
IASB should regulate at the level of public interest. IFRS regulation is international, so it is applied
wold wide, this to avoid that company can decide to move in order to elude certain regulation rules,
 What information need to be reported?

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THE MEANING OF CONSOLIDATION
First, we must distinguish between the entities involved in the consolidation process: when we speak about the
PARENT COMPANY, we are considering the firm who is buying or has bought the subsidiary. The controlling entity is
the one who needs to create a consolidated financial statement, in order to register and inform the readers about the
financial position of the group as a whole.

Why we create consolidated financial statements? From the point of view of the investor, is important to understand
if the investment in a firm can be profitable or not. It may be that a firm (part of a group) performs good, but considering
the group, the performances could be not the same.

In fact, if a company who appertains to the group performs good, it does not mean that all the group is performing as
the single firm. Looking at the single entity financial statements is not sufficient for taking financial decisions about an
investment on the group.

The consolidation process creates a single financial report starting from the single financial statements of the
entities of the group, eliminating all the infra-group transactions and the equities of the subsidiaries.
What we must underline is that the individual financial reports are important, but not sufficient. When it
comes to groups, the information given by a single entity financial statement do not give a clear picture of
the company and the current situation of the group.
The role of consolidated financial statement is to inform user on the group performance in order to allow
wise economic decision.
We have two differente sets of accounting report :

1. Individual financial statement  which are interest in the situation of each individual legal entity
2. Consolidated financial statement

The mecahanism of consolidation have a similar structure in different sets of accounting standars , but there are a
few specific issues ,like the definition of control we use to decide when we have to prepare consolidated financial
statement or the recognition value of the consolidated assets and liabilities , that change according to the set of
standards applied .

IFRS

The main accounting standars within IFRS dealing with the issue of consolidation are :

- IFRS 10 – Consolidated Financial Statement : that tell us when we need to preparet consolidate financial
statement . It ‘s the main reference for consolidation accounting and here there is a descriptions of the
concept of control , subsidiary and consolidate financial statement .
- IFRS 3 – Business Combination : dealing with the main step to preparete a companies’ financial statement ,
by stablishing principles and requirements for how to recognise and measure asset, liabilities and other
items involved in the consolidation process .
- IAS 28 – Investment in Associates
- IFRS 11 : Joint arrangements
- IAS 27 – Separete Financial Statements

Those standards (considering also IAS 28, IFRS 11, IAS 27) are the result of the “consolidation process”, undertaken by
the IASB in order to obtain accounting standards usable to create the consolidated financial statements.

What we are going to study in depth are IFRS 10, who explains when we should consolidate, and IFRS 3, who explains
how should we consolidate (so the operation we should do to have a clear and transparent representation of the
group).

 IFRS 10 establishes the principles for the preparation and the presentation of consolidated financial
statements when an entity controls other entities. In few words, it tells us when we should consolidate.

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  IFRS 3 provides the indications on how should we consolidate, establishing the principles and requirements
for how to recognize and measure assets, liabilities and other items involved in the consolidation process.

General considerations: Let’s suppose that the company A, who is established in the USA, wants to acquire the
company B in Russia.When should the company A prepare the consolidated financial statement?We have to distinguish
when the company A has the power of take decision on the company B.

It is not easy to understand when we are dealing with a group of companies and also it is deciding when an entity
belongs to a group.For example there is the possibility in which a company owns the 60% of shares of another
company, but can not exercise the power of taking decision for company B. In this case it is only an investment and
nothing more.

For a variety of legal, fiscal an other reasons, enterprises, generally, do not decide to operate only thru a single entity,
but they split the company in several entities and create a complex structure under the control of the parent company.
We can understand, so, why the single financial statements of the entities part of the group are not enough to draw a
precise financial situation of the overall economic group.

We have also to underline that there is a close connection between the notion of “control” and the notion of “group”.
First of all we can affirm that:

- we can talk about group of entities when one entity controls another one from the acquisition of its shares
- In each group, the controlling entity (the parent company) has the obligation to prepare the consolidated
financial statement according to IFRS
- The controlled entity do not sto to exist, but still remain a firm with its assets, liabilities and so on.

IFRS 10 sets out when the controlling entity has to prepare the consolidated financial statements, defines “control” and
explains how the parent company have to prepare the consolidated financials statement.

Definitions:

 CONSOLIDATED FINANCIAL STATEMENTS = Consolidated financial statements are the financial statements of
a group in which assets, liabilities, equity, income, expenses and cash flows of the parent and the subsidiaries
are presented as a single economic entity.

Consolidated financial statements are the result of the consolidation of the individual financial statements.

 GROUP
Is a parent with its subsidiaries NON CONTROLLING INTEREST (NCI)
Is the equity of a subsidiary not attributable (directly or indirectly) to the parent PARENT
Is the entity who has one or more subsidiaries SUBSIDIARY Is an entity controlled by another entity

IFRS 10 tells us when we should consolidate: whenever a company controls another entity in order to gain benefits
from the control.

The main concept in this statement is the notion of control.

IFRS 10 define control as “ the power to govern the financial and operating policies of that entity so as to obtain benefits
from its activities”

Key points:

- power to govern the financial and operating policies of an entity

- gain of benefits from its activities

Every time that a company can “use” another entity in order to gain a benefit from the activity of the controlled entity
we can consider that there is a form of control.

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But the control is not related only on the power to use an entity to gain profits. IFRS assume that control exits when
the investor :

 Possesses power over the investee

 The presence of variable returns from his involvement with the investee
 The ability to use its power to affect the amount of the returns

We can consider a situation of control firm the investor over the investee only if this three points are satisfied
simultaneously. We have also to consider that IFRS 10 is principle-based, so it provides only a general principle and
not a rule and it aims to identify all the situations in which any form of control is exerted (according to the substance
over form principle).

So the three elements characteristic of control are .

 POWER
An entity ( called “investor”) has power over another entity (called “investee”) when it has a current ability to
direct the relevant activities of the latter. So, any time company A can effectively direct another company’s B
relevant activity , we caoul said that A has the power over B .
IFRS defines “relevant activities “ as the investee’s are all the activities able to affect the investee economic
return, like
o selling and purchasing goods and services;
o managing financial assets during their life;
o Researching and developing new products or processes

But power arises from a series of rights that the investor have over the investee and those rights give to the
investor the ability to affect the relevant activities and the economic return.

It’s not easy to assess power, because we can consider the possibility in which the power is obtained directly
and comprehend the voting rights (e.g. guaranteed from the possession of shares), but there could also be
different situations in which it is not easy to define power, because there are less rights, but the investor has
the ability to affect the investee decisions.

In terms of power, what we have to remember is that rights must be substantive, which means that the holder
can actually exercise them without obstacles and that they are exercisable when a decision related to a
relevant activity has to be taken.We can not consider substantive rights when:

I. There are any barriers that do not allow to the investor to exercise his rights
II. There are more parties required to agree in order to exercise rights. The more are the parties
the less the rights are substantive
III. Whether the party holing the rights would benefit form the exercise of those rights.

So there is no power if the investor has only protective rights.

We can speak about de facto control when the investor holds less than the majority of the shares but the rest
of shareholders have less shares than him, so he has de facto the full control of the company.

 Variables RETURNS  An investor is exposed to variable returns when, from its involvement with the investee, the
period return depends strictly from the investee performance. The returns could be positive or negative.
Retourns over the investee are normally rapresentated by divdends, intetest, changes in the value of the investor’s
investment, synergies, liquidity support, tax benefits and similar items .

 LINKS BETWEEN POWER AND RETURNS  there is control whenever the investor can use the power to affect
the variable returns. An investor, in order to consider his control over the investee, must have the power to
affect the variable returns. So there must be a factor of “decision-making” and the power is exercised starting
form the rights that the investor has over the investee.

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The importance of consolidated financial report is recognized in IFRS regulation, and so according to IFRS
every group of entities shall present the consolidated financial report.
We do a consolidation when our investment is in a subsidiary. We can have different type according to the
size of the investment and how much control or influence the investor have over the investee.
The possible situation is:

A B
PARENT SUBSIDARY

 SIMPLE INVESTMENT (lower than < 20%)  if the investors does not exercise significant influence or control
over the other entity, and in this case not require the preparation of consolidated financial report. In this case
A have the 20% in B and it will be represented in A financial report where that investment is represented ta
fair value. Into A balance sheet you will find the investment in B evaluated at the fair value.  consolidation
inside the parent company (pure proprietary theory)

 ASSOCIETED ENTITY (from over 20% and below 50%) To evaluate the investment into the A financial report
you must use the equity method (method del patrimony netto)

 SUBSIDARIS (normally holding of more than 50 %) in this case the investors have the power to control the
other entity, so the investment is consolidated in full as a subsidiary and any controlled interest are recognized.
You must do a full consolidation and consider A and B together.

JOIN VENTURE (JV)  there is a proportional consolidation

IFRS deals specifically with the last of three situations, when the investors have control over the investee. In this case
we talk about “consolidation accounting for subsidiaries”.

When an entity has control over another, IFRS 10 established that “the parent entity prepares consolidated financial
stamen using uniform accounting policies for like transactions and other events in similar circumstances.

IFRS 10 provides only limited operative indications on how to proceed with the preparation of consolidated financial
statement, but we will use the IFRS 3 which deals with business combinations.

The most important issue that we have to deal in the consolifation is :

- Define the group to be represented

- State which are
- Which are the entities exempted  means that
- Define subsidiaries through control
- Which subsidery could be escuded on the consolidation
EXEMPED  a group can avoid to be represented as a group . Do not prepare a consolidated financial report

ESCLUSION : when a subsidiary is not rapresentaed in a consolidated financial report .

According to Internation regulation (IFRS) :

- Group definition : is given

- Parent entities obliged to present consolidated reports : all of them

- Parent entities exempted (‘existing’ group reports)

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 - Subsidiaries definition through control (form vs, substance): more concentratd on the substantant of the
relation

- Subsidiaries excluded is forbbeten  not escude the subsidery from the consolidation . Which is not the
same for the European regulation .

Indested for the Eurpoan regulation

- Group definition : is not given

- Not al parent are oblied to present consolidated reports

- The

- European regulation are focus on the form not on the substancias

- There are some subsidery , according to the regulation , that can be escluded

The objective of IFRS 10 is to establish principles for the presentation and preparation of consolidated financial
statements when an entity controls one or more other entities.

To meet the objective IFRS 10:

- requires an entity (the parent) that controls one or more other entities (subsidiaries) to present
consolidated financial statements;

- defines the principle of control, and establishes control as the basis for consolidation;

- sets out how to apply the principle of control to identify whether an investor controls an investee and
therefore must consolidate the investee.

IFRS 10 applied to ALL ENTITIES, EXCEPT to :

- a parent need to not present consolidated financial statements if it meet all the following conditions :

The company in the middle can be excepted (parent company) to present that subgrupo consolidated financial report
because the mother parent have to present consolidated financial report for the full group . In this case it is not a duty
for the partent but the mother parent will prepare consolidate financial statement for the conplite group .

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CONSOLIDATED FINANCIAL STATEMENTS

We have to remind that IFRS are not ruled based standards, but principle based standards, so they provide
only general statements useful to provide a transparent representation of the financial situation. They are
guide lines, not rules that the company must follow.
IFRS used the ACQUISITION METHOD  it is method to present consolided financial statement report and
means that using this method you have to used the view of the ACQUIRER . So you have to present the asset
and Liabilities owned taking into consideration the FAIR VALUE .
IFRS 3 preparation of a consolidated financial statement
Now that we have described the situations in which a company has to provide a consolidated financial
statement (listed company, when there is a form of substantive control or if the company decides to follow
IFRS instead of the local regulation), we can describe the passages that we have to consider in the
consolidation process.
It will provide a list of steps to follow (like a check list) in order to schematize the whole process:
1. Collect the individual companies financial statements. The single entities financial statements are
fundamental in the consolidation process, but in order to evaluate the financial position of a group
they are not enough, so we must consider the consolidated FS.
2. Make them uniform.

uniformity is essential in the consolidation process. Uniformity starts form the accounting period the
single entities financial statements refer, the accounting policies, the reporting currencies and the
layout.
If there isn’t uniformity, it is necessary to proceed with a harmonization process, because without
uniformity we cannot consolidate.
3. Combine assets, liabilities, equity, income, expenses and revenues and all the cash flows of the parent
and the subsidiary
4. Elimination of the parent investment against equity and recognize the revaluations. This is the most
important step and the most delicate. We have to analyse which are the revaluation of assets and
liabilities, but also, we have to calculate the goodwill as the difference between the Investment of
the parent company minus the evaluated equity.
All the scripture in partita doppia (I don’t know how to say it in English and I am too lazy to search it
on google) will be provided in a following section.
5. Recognition of the non-controlling interests
6. Elimination of the infra group transactions
7. Preparation of the consolidated FS.
The most important step is the 4th, because we must consider not only the elimination of the investment
and of the equity of the subsidiary, but also the goodwill.
GOODWILL: is an intangible asset associated with the purchase of company by another. This intangible asset
is given from all the activities that the purchased company have developed during the years, but that is not
possible to recognize, like the position on the market, customer portfolio, position on the territory. It’s a
value related to the company which crate a higher value in the moment of the sale. The company A, which
purchase company B, if there is a positive goodwill will pay more than the fair value.
The discrepancies on the price are not related only to the goodwill, but also to a good/bad negotiation. In
fact, we could have different situation comparing the COST OF INVESTMENT and the REVALUATION OF
EQUITY:

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 • COST > REV. EQUITY
o Goodwill we aspect that the firm in which we invest will produce positive profit;
o Bad Deal we paid to much for something which value is lower. This means that have a
“goodwill” is no always a good thing. In this case the goodwill is treated as a loss in the income
statement.
IFRS/IAS regulation doesn’t consider this case. C > REV.EQ is always a goodwill

• COST = REV.EQUITY (FAIR VALUE): there is no goodwill and the price reflects the market values
• COST < REV.EQUITY
o Negative Goodwill (Bad Deal): in the future, the company in which we invested is likely to
produce a loss. This generate a liability (IFRS regulation), a bad will can derive from a bad
administration of the entity of form other different factors. Negative goodwill is not
considered by IFRS.
o Good deal/negotiation: we paid a price lower than the real value of the company. The
difference is treated as a profit that going into the income statement or can be embedded in
the reserves into the balance sheet. So negative goodwill is not always a bad thing.

 For the EU regulation the goodwill has to be amortize in 5 years;

 For the IFRS regulation, there is no amortization of the goodwill, but the impairment test, which
means that periodically the value of the goodwill must be recalculated in order to inscribe in the
financial statement the fair value of the goodwill.
Faire value = is define in IFRS 3 as the amount for which an asset could be exchange or a liability settled in
an arm’s length . This evaluation method ofter entails the emergence of positive or negative surpluses
compared with the book values of the assetsand liabilities as reported in the individual financial statements
of the subsidiaries.
We have also to consider the FISCAL EFFECT that occurs in the consolidation: the revaluation of assets and
liabilities cannot simply be recognized as a major/minor value of them, but there is the fiscal effect (generally
from 30% from 50%) that must be applied to them. That’s because, for example, we recognize a revaluation
of an asset, we will pay more/less taxes than we should do, so the recognition of deferred taxes is necessary
to “stabilize” the movements.
In particular:
- When there is a revaluation of the asses there will be deferred tax liabilities;
- When there is a revaluation of the liabilities, there will be deferred tax assets.
This deferred tax will affect also the recognition of the goodwill, because the revaluation considers also this
fiscal effect. The general formula to calculate the goodwill is:
Goodwill = Investment in B - x% [ (Equity of B) + (rev of assets - def tax liab) + (- rev of liab + def tax assets)]
Where x% represent the percentage of shares purchased by the parent company.
Now we will see all the double-entry movements:

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The NCI is the part of Equity of B which is not owned by the parent, but according to parent company theory
and modified Parent company theory, in the consolidated BS we must recognize it.
DIFFERENT THEORY OF CONSOLIDATION

 Pure propriety theory

In this theory we recognize only the percentage purchased by the parent entity.
 from the scheme we
can see that the blue rectangle considers only part of the three “items” (equity, revaluations and
goodwill).

 Parent company theory:

The parent company theory is the one used by the EU regulation.
We consider only the percentage of revaluation and goodwill but the full
amount of equity, paying attention to the division between the Equity the
group and the NCI. Revaluation is for Asset and Liabilities.
In particular the goodwill is calculated as seen before, but:
- The equity of the group is equal to the equity the parent company
- The equity of the NCI is equal to the remaining percentage of the equity of
the subsidiary NOT REVALUED.
E.g. A purchases 80% of B. equity of the group = equity of An NCI = 20% equity of B NOT REVALUED

 Modified parent company theory

Is the one used by IFRS for the consolidation process.
We consider the full equity and the full revaluation.
We consider the normal goodwill. The goodwill is calculated as before.
This means that we must distinguish between the equity of the group and the equity the NCI, but in
this case, we have to consider the remaining percentage Revalued Equity (as before if A purchases
80%of B, the equity of the NC will be the 20% of the Revalued Equity).
 Entity Theory:
for IFRS we can use the Modified PCT or the Entity Theory, but usually companies use the MPCT
because of prudence. We have to:
- calculate the hypothetical cost of the purchase of the subsidiary starting from a proportion
that allows us to estimate the cost necessary to purchase the 100% of the subsidiary instead
part of them.
- consider the full amount of everything, and for the consolidation we sum every single item
without discrimination or recognition of the NCI.

FULL GOODWILL = Hypothetical Cost - (full equity B + full revaluation - def taxes)
Or we could write that
GOODWILL= ( Consideration Paid + fair value of NCI ) – 100% fair value of A and L
What changes in this case is the calculation of the goodwill that is higher because of the full recognition of
the revaluation and not only the percentage expressed form the purchase of the stocks.

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CONSOLITATION IN PILLS:
- Uniformity between the entities’ FS
- Elimination of the investment
- Recognition of the goodwill as seen before
- Elimination of the intra-group transactions.

DEFINITION OF INTRA-GROUP TRANSACTIONS the transaction that happen between the entities of a
group. The purpose of consolidation is to create a financial statement of a group as is is a single entity. This
means that every movement that happens inside the entity should not be recognized. All the transactions
insured in the consolidated FS must happen between the group and third parties and not between entities
of the group. So, every cash flow, receivables, payables, cost, revenue, profit/losses, and dividends that
happen inside the group must be eliminated from the consolidated financial statement.
Imagine that, for various motivations, a company have to create different division and so different companies
all owned by the parent entity.
If one subsidiary entity sells some items to the parent (or vice versa) that movement should not be
recognized in the consolidated financial statement, but only in the entity financial statement.
The same is for inventory. If there is a variation on the value of the inventory, there is the need to rettificate
the value inside it, because it can’t be recognized two times.

PROPRIETORY ENTITY
All the group so it is based on
Owner possession
GROUP the independent entity we
Consider only the proportional part
consider the all group A+B

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CONSOLIDATION Situation of the group. An
REPORT Representation of the owner wealth objective representation of the
entity
NCI
Non-controlled Exclude into the representation because Considered they are treated as
interest this part is not owed by the proprietary part of the owner

VALUATION
Historical cost  the cost of investment
Unified management/ effective
SCOPE(PRINCIPAL) Legal power  there is a legal relation substantial control. Not legal
relation

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