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Covers share-based payment replacement awards on acquisition and considers how IFRS standards may apply in a pandemic context using Covid-19 as an example.",{"@graph":14,"@context":72},[15,34,55],{"@type":16,"itemListElement":17},"BreadcrumbList",[18,23,27,31],{"item":19,"name":20,"@type":21,"position":22},"https://docshare.wps.com","Home","ListItem",1,{"item":24,"name":25,"@type":21,"position":26},"https://docshare.wps.com/document/","Document",2,{"item":28,"name":29,"@type":21,"position":30},"https://docshare.wps.com/document/exam/","Exam",3,{"item":32,"name":10,"@type":21,"position":33},"https://docshare.wps.com/document/revising-for-your-strategic-business-reporting-sbr-exam-part-2-share-based-payment-and-control-assessment/661513/",4,{"url":32,"name":10,"@type":35,"image":36,"author":41,"headline":10,"publisher":44,"fileFormat":47,"inLanguage":8,"description":12,"dateModified":48,"datePublished":49,"encodingFormat":47,"isAccessibleForFree":50,"interactionStatistic":51},"DigitalDocument",{"url":37,"@type":38,"width":39,"height":40},"https://docshare.wps.com/thumbnails/revising-for-your-strategic-business-reporting-sbr-exam-part-2-share-based-payment-and-control-assessment/661513.png","ImageObject",300,407,{"name":42,"@type":43},"Alexandar","Person",{"url":19,"name":45,"@type":46},"DocShare","Organization","application/pdf","2026-10-29","2026-10-28",true,{"@type":52,"interactionType":53,"userInteractionCount":22},"InteractionCounter",{"@type":54},"ViewAction",{"@type":56,"mainEntity":57},"FAQPage",[58,64,68],{"name":59,"@type":60,"acceptedAnswer":61},"What are the three inter-related criteria for control under IFRS 10?","Question",{"text":62,"@type":63},"IFRS 10 requires: (1) power over the investee, (2) exposure or rights to variable returns, and (3) the ability to use power to affect the amount of returns.","Answer",{"name":65,"@type":60,"acceptedAnswer":66},"Why is owning more than 50% of voting rights not always enough to conclude control?",{"text":67,"@type":63},"Control depends on whether the investor’s power/rights are sufficient to unilaterally direct the relevant activities that most affect returns; 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Recent examiner reports have stated that SBR candidates often do not provide an effective consideration of whether or not control has been obtained by the acquirer in a business combination. This article therefore identifies the kinds of “control” issues that candidates should be considering when constructing their response to such exam questions. It also reflects upon how sharebased payments should be accounted for when they are made as part of the purchase consideration for a subsidiary in a business combination. Finally, it uses the Covid-19 pandemic as a context within which to consider what IFRS standards might be applicable to reporting entities and why.  \nBusiness combinations  \nRevision of the basic principles of consolidation  \nWhen answering SBR exam questions that test control, candidates don’t often focus on the inter-related principles of control despite the fact that the requirement asks them to do so. Control is not simply a matter of owning more than 50% of the voting share capital of an entity and consideration of the individual elements of control in isolation can give rise to the conclusion, incorrectly, that almost any ‘involvement’with another entity creates a controlling relationship. However, it is important to note that the three criteria that define control (considered below) are inter-related and that all three must be present to conclude that the acquirer (investor) has control of the subsidiary.  \nIFRS 10 Consolidated Financial Statements (para 7) states that an investor controlsan investee when the investor has all of the following:  \ni. Power over the investee  \nii. Exposure, or rights, to variable returns from its involvement with the investee; and  \niii. The ability to use its power over the investee to affect the amount of the investors returns  \nThe following table considers each of the control criteria and identifies issues that candidates need to apply to the SBR exam question scenario to identify whether (or not) control has been transferred to the acquirer:  \n\n| Control\u003Cbr>criteria\u003Cbr>(IFRS\u003Cbr>10) | Considerations to apply to the SBR exam question scenario: |\n| --- | --- |\n| Power over the\u003Cbr>investee | • owning a majority of the voting rights is not always necessary to have control. Instead, control requires that the investor’s\u003Cbr>power/rights are sufficient for it to unilaterally direct the relevant activities that most affect the investee’s returns. For example, SBR candidates should consider who makes the operating, financing and capital decisions, and who appoints key management personnel.\u003Cbr>• more analysis and judgement is required to determine wh","cbCaickbI2SBXyuM","https://ap.wps.com/l/cbCaickbI2SBXyuM","pdf",236505,12,"English","# Introduction\n# Business combinations\n## Revision of the basic principles of consolidation\n## Share based payment – replacement awards on acquisition\n## The accounting considerations of a pandemic or other natural disaster\n# Conclusion","[{\"question\":\"What are the three inter-related criteria for control under IFRS 10?\",\"answer\":\"IFRS 10 requires: (1) power over the investee, (2) exposure or rights to variable returns, and (3) the ability to use power to affect the amount of returns.\"},{\"question\":\"Why is owning more than 50% of voting rights not always enough to conclude control?\",\"answer\":\"Control depends on whether the investor’s power/rights are sufficient to unilaterally direct the relevant activities that most affect returns; a significant minority can still imply control depending on rights and practical direction of activities.\"},{\"question\":\"How should share-based payments be considered in a business combination purchase consideration?\",\"answer\":\"The article highlights that share-based payments, specifically replacement awards on acquisition, require accounting treatment as part of the purchase consideration for a subsidiary in the business combination.\"}]","Revising for your Strategic Business Reporting (SBR) exam - Part 2 - Share based payment and control assessment | PDF"]