[SOLVED] AASB 10.

Define the entity concept of consolidation and explain how it has been incorporated into the provisions of AASB 10.
The entity concept of consolidation requires consolidated financial statements to be prepared from the perspective of the group and only includes transactions the group has undertaken with external parties. Accordingly, it will include/exclude:
1. All assets and liabilities of the parent and controlled entities as these are assets controlled and liabilities incurred respectively by the group;
2. All inter entity transactions are eliminated in full regardless of the level of parent entitys ownership in controlled entities. The purpose of this is so only transactions external to the group are disclosed in the consolidated financial statements;

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3. Non-controlling interest is disclosed as an equity item in the consolidated financial statements as it is seen as an external equity resource supplier to a group; and
4. Non-controlling interest is calculated on the contributed equity amount of a partly owned subsidiary. The contributed equity amount is not the amount recorded in the partly owned subsidiarys single entity financial statements. It is the amount the partly owned subsidiary contributes to the group financial performance and position.
Points 1 (by AASB 10 .B86(a) and 2 (by AASB 10 B86(c)) have been clearly incorporated in the provisions of AASB 10.
Point 3 is now required by AASB 101.54 (q).
Although Point 4 has not been directly incorporated into AASB 10, it is considered that through the adoption of the other 3 aspects of the entity concept of consolidation, it is very difficult not to apply Point 4 in practice.

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