AASB 10 Consolidated Financial Statements
Assessing control: power, returns and the link between them (paragraphs 5 to 18, B2 to B85) – AASB 10 Consolidated Financial Statements

AASB 10 Consolidated Financial Statements B22-B33: Substantive versus protective rights: count only rights their holder can in practice use when decisions are due, disregard rights that only protect the holder's interests (including typical franchisor rights), and remember removal rights of other parties

What does B22-B33 require?

Only substantive rights are taken into account. A right is substantive if its holder can actually exercise it, judged by barriers such as financial penalties, exercise prices that deter use, narrow exercise windows, missing mechanisms, lack of information, operational obstacles or legal constraints, and by whether several parties must agree. A right usually needs to be exercisable when relevant decisions are made, though a right exercisable later can still be substantive if it can be used before the decisions take effect. Rights of other parties, including removal rights, may stop an investor having power. Protective rights apply to fundamental changes or exceptional circumstances (such as lender covenants, minority approval of capital expenditure beyond the ordinary course, or seizure on default) and neither give nor prevent power. A franchise agreement's rights for the franchisor are generally protective, so the franchisee's own decision-makers usually hold power.

Maintained by Gerard Blokdyk

Other controls in Assessing control: power, returns and the link between them (paragraphs 5 to 18, B2 to B85) – AASB 10 Consolidated Financial Statements

Query this from an agent

The graph holds this control, the 0 it maps to, and the evidence behind each claim, over MCP and REST.