Consolidation Exemptions under IFRS

International Financial Reporting Standards require entities to primarily present consolidated financial statements. When the relationship of control is identified, the investor consolidates all controlled entities and presents financial statements for the whole group as if it was a single economic unit. Since the process of preparation and issuance of consolidated financial statements imposes huge costs, there are certain reliefs to be applied both from consolidating every subsidiary and from obligatory presentation of consolidated financial statements. The article analyses the conditions under which consolidation exemption may be applied by the companies together with development this topic has undergone in recent years. Subsequently, it discusses reasoning of those exceptions and their impact on information needs of users of financial statements.