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CA Final · Financial Reporting · Ind AS 27 Separate Financial Statements

Arjun Holdings Ltd has investments in three subsidiaries and two associates. In its separate financial statements it accounts for the subsidiaries at cost. It proposes to measure the two associates in accordance with Ind AS 109 at fair value, while keeping subsidiaries at cost. Which is correct under Ind AS 27?

The proposal is acceptable. Ind AS 27 allows cost or Ind AS 109 for investments in subsidiaries, joint ventures and associates, but requires the same accounting for each category. Subsidiaries can stay at cost while associates are measured under Ind AS 109, provided each category is treated consistently.

  1. ANot allowed unless all five investments are on the same basis; the same accounting must be applied to every investment
  2. BAllowed, because the same accounting is required only within each category of investmentsCorrect
  3. CAllowed only if the associates are material
  4. DAllowed only if fair value changes go to profit or loss rather than OCI

Explanation

Ind AS 27 requires the entity to apply the same accounting for each category of investments, i.e. subsidiaries, joint ventures and associates. So subsidiaries may be at cost and associates under Ind AS 109. Option A wrongly demands uniformity across categories.

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