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dissimilar activities


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A situation in which the activities of one undertaking in a group are so different from those of the other group undertakings that its inclusion in consolidated financial statements would be incompatible with the obligation to give a true and fair view of the activities of the group. This exclusion may not be used merely because some of the undertakings are industrial, some commercial, and some provide services, for example. Nor is exclusion permitted merely because the industrial or commercial activities involve different products or provide different services. Financial Reporting Standard 2, Accounting for Subsidiary Undertakings, states that it would be unusual for activities to be so different that the exclusion of the subsidiary undertakings would be appropriate. In the unlikely case that it were appropriate to use this exclusion, the excluded subsidiary should be recorded in the consolidated financial statements, using the equity method of accounting. UK listed companies must now comply with International Accounting Standard 27, which does not permit any exclusion on these grounds. See also exclusion of subsidiaries from consolidation.

Subjects: Accounting.


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