There Are a Number of Theories of How Financial Statements

question 14

Essay

There are a number of theories of how financial statements should be prepared for non-wholly owned subsidiaries. Briefly discuss each theory and provide your reasoning to support the theory that is being adopted under IFRSs.

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Definitions:

Deficiency Motive

A motivation that arises from the lack or deficit of some need or desire, driving behavior to fulfill that need.

Hierarchy

Hierarchy refers to a system or organization in which people or groups are ranked one above the other according to status or authority.

Possession

The act of owning or having control over an object, quality, or situation.

Psychologically Healthy

A state of well-being where an individual recognizes their abilities, can cope with the normal stresses of life, can work productively, and is able to contribute to their community.