Which of the following is not one of the three elements of control according to AASB 10 Consolidated Financial Statements?Group of answer choicesThe ability to use power over the investee to affect the amount of the investor’s returns.Dominating the decision making of the investee.Power over the investee.Exposure, or rights, to variable returns from involvement with the investee.
Question
Which of the following is not one of the three elements of control according to AASB 10 Consolidated Financial Statements?Group of answer choicesThe ability to use power over the investee to affect the amount of the investor’s returns.Dominating the decision making of the investee.Power over the investee.Exposure, or rights, to variable returns from involvement with the investee.
Solution
The option that is not one of the three elements of control according to AASB 10 Consolidated Financial Statements is:
Dominating the decision making of the investee.
Here are the steps to understand this:
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AASB 10 Consolidated Financial Statements: This is a standard that sets out the requirements for the preparation and presentation of consolidated financial statements, requiring entities to consolidate entities it controls.
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Control: According to AASB 10, an investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
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The Three Elements of Control: The three elements of control according to AASB 10 are:
- Power over the investee.
- Exposure, or rights, to variable returns from involvement with the investee.
- The ability to use power over the investee to affect the amount of the investor’s returns.
The option "Dominating the decision making of the investee" is not listed as one of the three elements of control in AASB 10. While it might be a sign of control, it is not a defined element of control according to this standard.
Similar Questions
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