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

Case: Veda Industries Ltd. holds 30% of Taral Pvt Ltd., an associate, and applies equity accounting in its consolidated financial statements. Veda's separate financial statements are prepared under Ind AS 27. Which statement correctly describes the permitted accounting for the investment in Taral in Veda's separate financial statements?

In separate financial statements, Ind AS 27 allows an investment in an associate to be carried at cost, in accordance with Ind AS 109, or using the equity method described in Ind AS 28. The chosen policy is applied consistently to each category of investment.

AAt cost, or in accordance with Ind AS 109, or using the equity methodCorrect
BOnly using the equity method
COnly proportionate consolidation
DOnly at cost, since Ind AS 109 is barred for associates

Explanation

Ind AS 27 permits investments in subsidiaries, joint ventures and associates in separate financial statements at cost, in accordance with Ind AS 109, or using the equity method as per Ind AS 28. The same category must be applied to each category of investment. Options limiting it to one method ignore this choice.

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