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CS Executive · Corporate Accounting and Financial Management · Consolidation of Accounts

An investment entity holds a subsidiary that is not itself an investment entity and whose main purpose and activities are providing services relating to the investment entity's investment activities. Under Ind AS 110, the investment entity shall:

An investment entity must consolidate a subsidiary that is not itself an investment entity and whose main purpose is providing services related to the investment entity's investment activities. It applies the consolidation requirements and Ind AS 103 to the acquisition of that subsidiary, instead of measuring it at fair value.

  1. AMeasure that subsidiary at fair value like its other investments
  2. BConsolidate that subsidiary and apply Ind AS 103 to its acquisitionCorrect
  3. CTreat it as an associate and use the equity method
  4. DDisclose it only in the notes without consolidation

Explanation

The standard says an investment entity shall consolidate such a service subsidiary under paragraphs 19-26 and apply Ind AS 103 to its acquisition. Fair value measurement applies to its other subsidiaries, so option 1 is wrong.

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