ASBE No. 33
Active
Consolidated Financial Statements
Consolidated Financial Statements is part of the Chinese Accounting Standards for Business Enterprises (ASBE).
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Conceptual Framework Linkage
Presenting a group of entities as a single economic unit
ASBE No. 33 governs the PREPARATION of CONSOLIDATED financial STATEMENTS – PRESENTING a PARENT and ITS subsidiaries AS IF they WERE a SINGLE economic ENTITY. The Standard APPLIES a CONTROL-based consolidation MODEL closely CONVERGED with IFRS 10 internationally.
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Scope – the Group as a Single Reporting Entity
Parents controlling one or more subsidiaries
This Standard applies to a PARENT company CONTROLLING one or MORE subsidiaries, REQUIRING the PREPARATION of CONSOLIDATED financial STATEMENTS COMBINING the PARENT'S and SUBSIDIARIES' individual FINANCIAL statements INTO a SINGLE set of GROUP-level statements.
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The Control-Based Consolidation Model
Consolidation determined by control, not simply ownership percentage
AN investee is CONSOLIDATED WHERE the INVESTOR has CONTROL over it – CONTROL being the DETERMINING factor, RATHER than SIMPLY the PERCENTAGE of VOTING rights HELD – CONSISTENT with IFRS 10'S own control-BASED consolidation MODEL internationally.
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The Three Elements of Control
Power, exposure to variable returns, and the ability to use power to affect returns
POWER over the INVESTEE (existing RIGHTS giving the CURRENT ability to DIRECT relevant ACTIVITIES)EXPOSURE, or RIGHTS, to VARIABLE returns FROM involvement WITH the investeeThe ABILITY to USE power OVER the investee to AFFECT the AMOUNT of the INVESTOR'S returns
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Structured Entities and De Facto Control
Control assessed even without majority voting rights
AN investor MAY control an INVESTEE EVEN WITHOUT holding a MAJORITY of VOTING rights – THROUGH "DE FACTO" control INDICATORS (e.g. a LARGE, dispersed SHAREHOLDER base LEAVING the LARGEST minority HOLDER with PRACTICAL control), OR through STRUCTURED entities DESIGNED so that VOTING rights are NOT the DOMINANT factor in DETERMINING control – CONSISTENT with IFRS 10'S own broadened CONTROL assessment internationally.
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Uniform Accounting Policies Across the Group
Adjusting subsidiary statements to match group policy
CONSOLIDATED financial STATEMENTS are PREPARED using UNIFORM accounting POLICIES for LIKE transactions and EVENTS across the ENTIRE group – WHERE a SUBSIDIARY applies DIFFERENT accounting POLICIES from the GROUP'S own, APPROPRIATE adjustments are MADE to that SUBSIDIARY'S financial STATEMENTS when PREPARING the CONSOLIDATED statements.
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Non-Controlling Interests – Presented Within Equity
Separately from the parent's own equity
NON-CONTROLLING interests (the EQUITY in a SUBSIDIARY NOT attributable, DIRECTLY or INDIRECTLY, to the PARENT) are PRESENTED WITHIN the CONSOLIDATED Balance SHEET'S owners' EQUITY section, SEPARATELY from the PARENT'S own EQUITY – CONSISTENT with IFRS 10'S own presentation REQUIREMENT internationally.
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Elimination of Intragroup Transactions and Balances
Removing transactions within the group entirely
INTRAGROUP balances, TRANSACTIONS, income, and EXPENSES (INCLUDING unrealised PROFITS and losses ARISING from intragroup TRANSACTIONS) are ELIMINATED IN FULL when PREPARING the CONSOLIDATED financial STATEMENTS – ENSURING the GROUP'S consolidated RESULTS reflect ONLY transactions with PARTIES OUTSIDE the group.
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Worked Example – Assessing Control Through De Facto Indicators
Control without a majority voting stake
Example: The largest shareholder in a widely dispersed company
A company holds 35% of the voting shares in an investee, with the remaining 65% dispersed among thousands of small shareholders who rarely attend or vote at shareholder meetings.
GIVEN the DISPERSED nature of the REMAINING shareholding, the 35% holder MAY, in PRACTICE, have DE FACTO control OVER the investee'S relevant ACTIVITIES – REQUIRING consolidation EVEN WITHOUT a MAJORITY voting STAKE.
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Worked Example – Presenting Non-Controlling Interests
Separating the minority shareholders' share within equity
Example: An 80%-owned subsidiary
A parent owns 80% of a subsidiary with net assets of RMB 100,000,000.
The CONSOLIDATED Balance Sheet PRESENTS the SUBSIDIARY'S net ASSETS in FULL (RMB 100,000,000), with NON-CONTROLLING interests of RMB 100,000,000 × 20% = RMB 20,000,000 presented SEPARATELY WITHIN owners' EQUITY, distinguishing it from the PARENT'S OWN 80% share.
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Disclosure Requirements
What ASBE No. 33 requires
Significant judgements made in determining control over an investeeNon-controlling interests, presented separately within equityNature and extent of significant restrictions on a subsidiary's ability to transfer funds to the parent
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Critical Judgments & Estimates
Where judgement matters most
SIGNIFICANT JUDGEMENTS
Whether de facto control exists absent a majority voting interestWhether a structured entity should be consolidated
SIGNIFICANT ESTIMATES
Fair value of consideration and non-controlling interests at acquisition (see the companion ASBE No. 20 poster)
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Relationship to IFRS 10
Comparison – ASBE 33 vs IFRS 10
FeatureASBE 33IFRS 10
Control definitionPower, exposure, ability to use powerPower, exposure, ability to use power – converged
Non-controlling interests presentationWithin equity, separatelyWithin equity, separately – converged
A GENUINELY thoroughly CONVERGED standard – CHINA'S own DISTINCTIVE consolidation FEATURE remains the SEPARATE common-CONTROL business COMBINATION treatment (see the COMPANION ASBE No. 2 poster), RATHER than the CONSOLIDATION model ITSELF.
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Statement Mapping
Where every consolidation event lands
EventStatement(s) affectedNotes
Non-controlling interestsSCOEPresented separately within owners' equity
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Related Standards
Cross-reference map
StandardConnection
ASBE No. 20Business Combinations – supplies the initial measurement principles this Standard's ongoing consolidation builds upon
ASBE No. 2Long-term Equity Investments – governs the separate-statement cost method that complements full consolidation
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Quick-Reference Glossary
De facto control
Practical control over an investee arising from circumstances such as a dispersed remaining shareholder base, even absent a majority voting interest.
Non-controlling interest
The equity in a subsidiary not attributable, directly or indirectly, to the parent, presented within consolidated equity.
Financial statement key (Chinese GAAP / ASBE terminology)
BS Balance Sheet (资产负债表)
IS Income Statement (利润表)
SCOE Statement of Changes in Owners' Equity (所有者权益变动表)
CFS Cash Flow Statement (现金流量表)
History & Development
2006-02
ASBE No. 33 Consolidated Financial Statements issued
Operative for periods beginning on or after 1 February 2007