Conceptual Framework for Financial Reporting

Consolidated and unconsolidated financial statements
Consolidated financial statements provide information about the assets,
liabilities, equity, income and expenses of both the parent and its subsidiaries
as a single reporting entity. That information is useful for existing and
potential investors, lenders and other creditors of the parent in their
assessment of the prospects for future net cash inflows to the parent. This is
because net cash inflows to the parent include distributions to the parent
from its subsidiaries, and those distributions depend on net cash inflows to
the subsidiaries.
3.10
3.11
3.12
3.13
3.14
3.15
Conceptual Framework
© IFRS Foundation
A35

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Consolidated financial statements are not designed to provide separate
information about the assets, liabilities, equity, income and expenses of any
particular subsidiary. A subsidiary’s own financial statements are designed to
provide that information.
Unconsolidated financial statements are designed to provide information
about the parent’s assets, liabilities, equity, income and expenses, and not
about those of its subsidiaries. That information can be useful to existing and
potential investors, lenders and other creditors of the parent because:
(a)
a claim against the parent typically does not give the holder of that
claim a claim against subsidiaries; and
(b)
in some jurisdictions, the amounts that can be legally distributed to
holders of equity claims against the parent depend on the distributable
reserves of the parent.
Another way to provide information about some or all assets, liabilities,
equity, income and expenses of the parent alone is in consolidated financial
statements, in the notes.
Information provided in unconsolidated financial statements is typically not
sufficient to meet the information needs of existing and potential investors,
lenders and other creditors of the parent. Accordingly, when consolidated
financial statements are required, unconsolidated financial statements cannot
serve as a substitute for consolidated financial statements. Nevertheless, a
parent may be required, or choose, to prepare unconsolidated financial
statements in addition to consolidated financial statements.
3.16
3.17
3.18
Conceptual Framework
A36
© IFRS Foundation

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C
ONTENTS
from paragraph