Q1.3 Consolidated financial statements (Section 1.4.1)
The objective of consolidated financial statements is to show the operating results and financial position of a cluster of business entities related by control (i.e., a group) as if they were operating as a single accounting entity controlled by the same management (the parent of the group). The consolidated statement of comprehensive income reports the profit or loss that arises from transactions with parties that are external to the group. Similarly, the consolidated statement of financial position shows the assets controlled by the group, the liabilities the group owes to external parties and the equity of the collective owners of the group. The consolidated statement of changes in equity explains the change in consolidated equity between the end of the previous period and the end of the current period, while the consolidated cash flow statement reports the cash flows that have occurred between the group and parties external to the group.
Consolidated financial statements provide financial information based on the group¡¯s point of view. The parent entity and other non-controlling interests in subsidiaries are both regarded as stakeholders in the group and consolidated financial statements are not slanted towards any specific ownership interest within the group. The group concept of consolidation adopts a global perspective and, for accounting purposes, there is no distinction between the parent interest and non-controlling interest. However, for disclosure purposes, AASB 10 requires an allocation of total consolidated equity between the parent entity interest and non-controlling interest.
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