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Len Inn is the accountant for Wallaby Trucks Ltd. This entity has an 80% holding in the entity Tyres-R-Us Ltd. Len is concerned that the

Len Inn is the accountant for Wallaby Trucks Ltd. This entity has an 80% holding in the entity

Tyres-R-Us Ltd. Len is concerned that the consolidated financial statements prepared under

AASB 10 may be misleading. He believes that the main users of the consolidated financial statements are the shareholders of Wallaby Trucks Ltd. The key performance indicators are then the profit numbers relating to the interests of those shareholders. He therefore wants to prepare the consolidated financial statements showing the non-controlling interest in Tyres-R-Us Ltd in a category other than equity in the statement of financial performance, and for the statement of changes in equity to show the profit numbers relating to the parent shareholders only.

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Discuss the differences that would arise in the consolidated financial statements if the non- controlling interests were classified as debt rather than equity, and the reasons the standard setters have chosen the equity classification in AASB 10.

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