IFRS fundamentals

Consolidation obligation (IFRS 10)

Rule	Standard	Requirement
Control-based model	IFRS 10	Control requires three elements: power over the investee, exposure to variable returns, and ability to use power to affect those returns. All three must be present.
World-wide principle	IFRS 10.19	Consolidate all subsidiaries regardless of location or legal form.
Investment entities exception	IFRS 10.27	Investment entities measure subsidiaries at fair value through P&L rather than consolidating.

Business combinations and goodwill (IFRS 3 / IAS 36)

Acquisition method is mandatory — no pooling of interests.
All identifiable assets and liabilities of the acquiree measured at fair value at acquisition date (PPA).
Goodwill = Consideration transferred + NCI + Previously held interest − Fair value of net identifiable assets.
Goodwill is not amortized under IFRS — annual impairment testing required (IAS 36).
Negative goodwill (bargain purchase) — recognized immediately in profit or loss (IFRS 3.34).
Deferred tax on all PPA temporary differences is recognized (IAS 12) — no carve-out for goodwill-related items.

Note: Do not configure a scheduled goodwill amortization auto journal for IFRS entities. Goodwill impairment testing under IAS 36 is the required approach — fundamentally different from HGB.

NCI measurement options (IFRS 3)

Method	Description	Impact on goodwill
Full goodwill method	NCI measured at fair value at acquisition date.	Higher goodwill — includes NCI's share of goodwill.
Partial goodwill method	NCI measured at proportionate share of net identifiable assets.	Lower goodwill — only parent's share recognized.

Note: Confirm which NCI measurement method is used for DACH IFRS entities with Paul.

Currency translation (IAS 21)

Account type	Rate	IAS 21 reference
Assets and liabilities	END (closing rate)	IAS 21.39(a)
Income and expenses	AVG (average rate)	IAS 21.39(b)
Equity (except retained earnings from operations)	HISTAVG (historical rate) — rate at date each equity component originally arose. Not the opening rate.	IAS 21.39(c)
FCTR (Foreign Currency Translation Reserve)	CTR (plug) — posted to Other Comprehensive Income (OCI)	IAS 21.39(c), IAS 21.41

Note: Under IFRS, the translation difference is FCTR in OCI — not posted within equity as under HGB. On disposal of a foreign operation, the accumulated FCTR is reclassified from OCI to profit or loss (IAS 21.48).

Mandatory financial statements (IAS 1 / IAS 7)

Statement	Standard	Status in Lineos
Consolidated statement of financial position	IAS 1	Covered
Consolidated statement of P&L and OCI	IAS 1	Covered — confirm OCI presentation with Paul
Consolidated statement of changes in equity	IAS 1	Confirm with Paul
Consolidated statement of cash flows	IAS 7	Confirm with Paul
Notes to the consolidated financial statements	IAS 1	Outside engine — manual