exclusion of subsidiaries from consolidation


exclusion of subsidiaries from consolidation
Subsidiary undertakings may be excluded from consolidation on the following grounds:
(1) an individual subsidiary may be excluded from consolidation if its inclusion is not material for the purpose of giving a true and fair view;
(2) an individual subsidiary may be excluded from consolidation for reasons of disproportionate expense in respect of its value (see disproportionate expense and undue delay);
(3) if severe long-term restrictions substantially hinder the exercise of the rights of a parent company over the assets or the management of an undertaking, it may be excluded from consolidation;
(4) if the interest in a subsidiary undertaking is held with a view to resale, and has not previously been included in the consolidated accounts prepared by the parent company, that subsidiary may be excluded from consolidation;
(5) a subsidiary undertaking may be excluded from consolidation if its activities are so different from those of the other group undertakings that its inclusion would be incompatible with the obligation to give a true and fair view. Such exclusion does not arise merely because some of the undertakings are industrial, some commercial, and some provide different services (see dissimilar activities).

Accounting dictionary. 2014.

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