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CA Final · Financial Reporting · Consolidated Financial Statements

Anand Ltd consolidates its subsidiary Bhavya Ltd using Bhavya's financial statements as at 31 January, while the consolidated reporting date is 31 March. In the following year, which statement is correct under Ind AS 110?

The length of reporting periods and the difference between the subsidiary's and the consolidated reporting dates must remain the same from period to period, and the difference can never exceed three months. Hence a varying gap is not allowed even within three months.

  1. AThe gap may be changed to four months if Bhavya's business is seasonal
  2. BThe length of reporting periods and the difference between the dates of the financial statements must be the same from period to periodCorrect
  3. CThe gap may differ each year provided it never exceeds three months
  4. DAdjustments for significant events between 31 January and 31 March are not needed because the gap is only two months

Explanation

Ind AS 110 requires the length of reporting periods and any difference in dates to be the same from period to period, and the gap must be no more than three months. Varying the gap each year breaches the consistency requirement even if it stays within three months. Adjustments for significant events are still required.

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