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CA Final · Financial Reporting · Ind AS 110 Consolidation Procedure for Subsidiaries

Alpha Funds Ltd, an investment entity under Ind AS 110, obtains control of Beta Realty Ltd, an investee that is not itself an investment entity and whose activities are not services relating to Alpha's investment activities. How should Alpha account for its investment in Beta in its financial statements?

Alpha measures its investment in Beta at fair value through profit or loss under Ind AS 109. An investment entity does not consolidate its subsidiaries or apply Ind AS 103 on obtaining control, and Beta provides no services related to Alpha's investment activities.

  1. AConsolidate Beta line by line and apply Ind AS 103 to the acquisition
  2. BMeasure the investment at fair value through profit or loss in accordance with Ind AS 109Correct
  3. CMeasure the investment at cost less impairment under Ind AS 27 only
  4. DMeasure the investment at fair value through other comprehensive income

Explanation

Paragraph 31 says an investment entity shall not consolidate its subsidiaries or apply Ind AS 103 on obtaining control. It measures the investment in the subsidiary at FVTPL under Ind AS 109. Consolidation applies only to a subsidiary providing services related to the investment activities (paragraph 32), which Beta is not.

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