Skip to content

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

Gamma Investments Ltd is an investment entity. It holds two subsidiaries: Delta Advisory Pvt Ltd, which is not an investment entity and whose main purpose and activities are providing investment-related services to Gamma, and Epsilon Tech Ltd, an operating company held for capital appreciation. What is the correct treatment in Gamma's financial statements?

Gamma consolidates Delta and measures Epsilon at fair value through profit or loss. Delta is a non-investment-entity subsidiary whose main activities are services relating to Gamma's investment activities, so it is consolidated. Epsilon is an ordinary investment and falls under the fair value rule.

  1. AConsolidate both Delta and Epsilon
  2. BMeasure both Delta and Epsilon at fair value through profit or loss
  3. CConsolidate Epsilon and measure Delta at fair value through profit or loss
  4. DConsolidate Delta and measure Epsilon at fair value through profit or lossCorrect

Explanation

Paragraph 31 requires fair value through profit or loss for subsidiaries of an investment entity. Paragraph 32 is an exception: a non-investment-entity subsidiary whose main purpose is providing services relating to the investment activities is consolidated, with Ind AS 103 applied. Delta is consolidated; Epsilon is at FVTPL. Measuring both at FVTPL ignores the paragraph 32 exception.

Did you get it right without looking?

One question tells you little. A timed set on Ind AS 110 Consolidation Procedure for Subsidiaries shows your real accuracy, how long you take and where you lose marks.

Practise Ind AS 110 Consolidation Procedure for SubsidiariesFree diagnostic mock

More Ind AS 110 Consolidation Procedure for Subsidiaries questions