Prepare a discussion around the need to prepare consolidated financial statements.

Question

Great Western Manufacturing Inc. ("GWM") was acquired by Great Eastern
Holding Ltd) ("GEH") in 2018. The Vice President, Finance of GWM has asked
you, the manager in charge of this year's audit, whether or not GWM has to
prepare consolidated financial statements for the year ended December 31, 2018.
GWM has about fifteen wholly owned subsidiaries and has in the past prepared
consolidated financial statements.

Answer 1

IAS 27 Separate Financial Statements states that a parent is not required to present consolidated financial
statements for external reporting purposes if and only if:
a) The parent itself is a wholly owned subsidiary, or a partially owned subsidiary, of another entity and its
owners, including those that are not otherwise entitled to vote, have been informed about, and do not
object to, the parent not presenting consolidated financial statements;
b) The parent's debt or equity instruments are not traded on a public market (a domestic or foreign stock
exchange or an over-the-counter market);
c) The parent did not file, nor is in the process of filing, its financial statements with a securities
commission or other regulatory organization for the purpose of issuing any class of instruments in a public
market;
d) The ultimate or intermediate parent of the parent produces consolidated financial statements available
for public use that comply with IFRSs.
If GWM meets these conditions, it can (but is not required to) present separate financial statements in
accordance with GAAP as its only financial statements to end users.