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

Arunachal Capital Ltd qualifies as an investment entity. It holds two subsidiaries: Brahma Ventures Ltd, a startup investee that is not an investment entity and does not provide investment-related services, and Chenab Advisory Ltd, which is not an investment entity and whose main purpose and activities are providing services related to Arunachal's investment activities. How should Arunachal Capital account for these under Ind AS 110?

Brahma Ventures is measured at fair value through profit or loss, and Chenab Advisory is consolidated. An investment entity does not consolidate its subsidiaries, but it must consolidate a non-investment-entity subsidiary whose main purpose and activities are providing services related to the entity's investment activities.

  1. AConsolidate both subsidiaries under Ind AS 103 and paragraphs 19-26
  2. BMeasure both at fair value through profit or loss under Ind AS 109
  3. CConsolidate Brahma Ventures and measure Chenab Advisory at fair value through profit or loss
  4. DMeasure Brahma Ventures at fair value through profit or loss and consolidate Chenab AdvisoryCorrect

Explanation

An investment entity does not consolidate its subsidiaries and measures them at fair value through profit or loss under Ind AS 109. The exception is a subsidiary that is not itself an investment entity and whose main purpose and activities are providing services related to the investment activities; that subsidiary is consolidated. So Brahma is at FVTPL and Chenab is consolidated.

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