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CA Final · Financial Reporting · Consolidated Financial Statements

Arjun Pharma Ltd (parent) has a reporting date of 31 March 2026. Its subsidiary Bhima Labs Ltd, in a foreign jurisdiction, has a reporting date of 31 December 2025, and it is impracticable for Bhima to prepare additional statements as of 31 March 2026. Which treatment complies with Ind AS 110?

The parent consolidates the subsidiary's most recent statements adjusted for significant transactions or events between the two dates. The gap must be no more than three months and must stay consistent from period to period. Using the 31 December statements without adjustment is therefore not compliant.

  1. AConsolidate Bhima's 31 December 2025 statements without any adjustment, since the gap is under three months
  2. BConsolidate Bhima's latest statements adjusted for significant transactions or events between 31 December 2025 and 31 March 2026, with the gap not exceeding three monthsCorrect
  3. CExclude Bhima from consolidation until its reporting date is aligned
  4. DConsolidate Bhima's statements only if the gap is under six months, with no adjustments

Explanation

If it is impracticable to align dates, the parent uses the most recent statements of the subsidiary adjusted for the effects of significant transactions or events between the two dates. The gap must be no more than three months, and the gap and period lengths must be the same from period to period. The gap here is exactly three months, so it is permitted, but adjustments are still required, which rules out the no-adjustment option.

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