In the situation in which a subsidiary is only controlled temporarily,AASB 10 requires:
A) the investment be recorded at fair market value and any gain or loss on acquisition recognised immediately in the statement of comprehensive income.
B) the subsidiary to be treated as an associate and equity accounting applied.
C) the results of the subsidiary for the period of time that it was controlled to be included in the consolidated accounts.
D) the investment to be reported at cost and dividends be accrued when declared.

Question

Quizplus · Accepted Answer

AASB 10 requires that when a subsidiary is only controlled temporarily, the results of the subsidiary for the period of time that it was controlled should be included in the consolidated accounts. Therefore, option C is the correct answer. Option A is not correct because fair market value accounting is not appropriate for a subsidiary that is controlled temporarily. Option B is not correct because equity accounting is not appropriate for a subsidiary that is controlled temporarily. Option D is not correct because accruing dividends when declared is not appropriate for a subsidiary that is controlled temporarily.

In the Situation in Which a Subsidiary Is Only Controlled