Particulars | IFRS | US GAAP | Indian GAAP |
Consolidation Model | Based on voting control power to govern. Control is presumed to exist when parent owns, directly or indirectly through subsidiaries, more than one half of an entity’s voting power. Control also exists when the parent owns half or less of the voting power but has legal or contractual rights to control, or de facto control (rare circumstances). The existence of currently exercisable potential voting rights is also taken into consideration.Special purpose entities (SPEs) controlled by an entity are also consolidated. | A bipolar consolidation model is used, which distinguishes between a variable interest model and a voting interest model.Control can be direct or indirect and may exist with a lesser percentage of – ownership. (voting , interest model). ‘Effective control’, which is a similar notion to de facto control under IFRS, is very rare if ever employed in practice. | Based on voting control or control over the composition of the board of directors or the governing body.Control exists when (a)parent owns, directly or indirectly through subsidiaries more than one half of an entity’s voting power or (b) it controls composition of an entity’s board of directors so as to obtain economic benefits from its activities.The existence of currently exercisable potential voting rights is not taken into consideration. |
Special purposes entity (SPE) | Consolidated where the substance of the relationship indicates control. | Variable interest entities (VIEs) are consolidated when the entity has a variable interest that will absorb the majority of the expected losses, receive a majority of the expected returns, or both. A voting interest entity in which the entity holds a controlling financial interest is consolidated.If a SPE meets the definition of a qualified SPE (QSPE), the transferor does not consolidate the QSPE. | No specific guidance. |
No consolidation of subsidiaries | If control, as defined under ‘definition of a subsidiary’ above, does not rest with the entity or’ on acquisition a subsidiary is held-for sale, the entity does not consolidate the subsidiary. | Similar to IFRS, but also if the owner is not the primary beneficiary of a VIE.A Subsidiary held- for – sale will be consolidated until sold | If the entity is acquired and held for resale (Temporary controls) or if it operates in severe long-term restrictions which impair its ability to transfer funds to the parent. |
Select Page
agree with your thought. thank you for your sharing.
this article gives the light in which we can observe the reality. this is particularly a nice one and gives in-depth information. thanks for this nice article.