CA Final · Integrated Business Solutions (Multidisciplinary Case Study with Strategic Management) · Financial Reporting

Case: Veda Industries Ltd. acquired 70% of Kiran Components Ltd. on 1 April 2024. Veda also holds 30% of Sagar Plastics Ltd. with significant influence only. Veda prepares consolidated financial statements under Ind AS and also presents separate financial statements. In its separate financial statements, how may Veda account for its investment in Kiran Components Ltd.?

In separate financial statements, Ind AS 27 allows investments in subsidiaries to be carried at cost, in accordance with Ind AS 109, or under the equity method. Line-by-line consolidation and non-controlling interest apply only to consolidated statements, and proportionate consolidation is not permitted for subsidiaries.

AAt cost, or in accordance with Ind AS 109, or using the equity method as per Ind AS 28Correct
BOnly by proportionate consolidation of Kiran's line items
COnly using the equity method, as it is a controlled entity
DBy full line-by-line consolidation with non-controlling interest shown

Explanation

Ind AS 27 permits an entity in separate financial statements to account for investments in subsidiaries, joint ventures and associates at cost, under Ind AS 109, or using the equity method. Line-by-line consolidation belongs to consolidated statements, and proportionate consolidation is not permitted for subsidiaries.

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