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11.4 Disclosure Requirements for Group Structures

3 min readLast Updated on August 7, 2024

Financial reporting for group structures involves complex disclosure requirements. These rules ensure transparency about a company's organizational structure, ownership interests, and relationships with subsidiaries.

Companies must provide detailed information on consolidated financials, segment reporting, related party transactions, and business combinations. This helps investors understand the full picture of a company's operations and financial position.

Group Structure and Ownership

Consolidated Financial Statements and Ownership Interests

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  • Group structure refers to the organizational arrangement of a parent company and its subsidiaries
  • Ownership interests represent the proportion of a subsidiary's equity held by the parent company
  • Consolidated financial statements combine the financial results of the parent company and its subsidiaries as if they were a single economic entity
  • Non-controlling interests (minority interests) are equity ownership in a subsidiary not attributable to the parent company

Separate Financial Statements and Non-Controlling Interests Disclosures

  • Separate financial statements are the individual financial statements of the parent company or subsidiaries, not consolidated with the group
  • Non-controlling interests disclosures provide information about the portion of a subsidiary's equity and net income not owned by the parent company
  • Disclosures include the proportion of ownership interests and voting rights held by non-controlling interests
  • Changes in a parent's ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions (transactions with owners in their capacity as owners)

Disclosure Requirements

Segment Reporting

  • Segment reporting provides disaggregated financial information about different business activities or geographical areas of operation
  • Enables users to evaluate the nature and financial effects of the business activities and the economic environments in which the group operates
  • Operating segments are components of an entity that engage in business activities from which they may earn revenues and incur expenses
  • Reportable segments are operating segments or aggregations of operating segments that meet specified criteria (quantitative thresholds for revenue, profit or loss, or assets)
  • Related party disclosures provide information about transactions and outstanding balances with related parties
  • Related parties include entities with control, joint control, or significant influence over the reporting entity, key management personnel, and close family members
  • Disclosures include the nature of the related party relationship, information about transactions (amount, terms and conditions, guarantees), and outstanding balances (amounts due, terms and conditions, guarantees)
  • Related party transactions are transfers of resources, services, or obligations between related parties, regardless of whether a price is charged (sales, purchases, loans, management contracts)

Business Combinations Disclosures

  • Business combinations disclosures provide information about acquisitions of subsidiaries or other businesses
  • Disclosures include the name and description of the acquiree, acquisition date, percentage of voting equity interests acquired, primary reasons for the acquisition, and how control was obtained
  • Information about the amounts recognized for each major class of assets acquired and liabilities assumed at the acquisition date
  • Details of contingent consideration arrangements and indemnification assets recognized
  • Goodwill or gain from a bargain purchase recognized and the factors that contributed to its recognition (expected synergies, unrecognized assets)
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© 2025 Fiveable Inc. All rights reserved.
AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.

© 2025 Fiveable Inc. All rights reserved.
AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.
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