In the situation in which a subsidiary is only controlled temporarily,AASB 127 requires:
A) The investment be recorded at fair market value and any gain or loss on acquisition recognised immediately in the income statement.
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 should be included in the consolidated accounts.
D) The investment to be reported at cost and dividends be accrued when declared.
E) None of the given answers.

Question

Quizplus · Accepted Answer

AASB 127 requires that in the situation where a subsidiary is only controlled temporarily, the results of the subsidiary for the period of time it was controlled should be included in the consolidated financial statements. This means that the operations, assets and liabilities of the subsidiary should be consolidated for the period in which it was under control. The other options (A, B, D, E) are not relevant to this scenario.

In the Situation in Which a Subsidiary Is Only Controlled