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CA Final · Financial Reporting · Ind AS 27 Separate Financial Statements

Godavari Ltd, a parent, meets the conditions of an investment entity and is required under Ind AS 110 to measure its investment in a subsidiary at fair value through profit or loss under Ind AS 109. How must it account for that subsidiary in its separate financial statements under Ind AS 27?

Godavari must account for the subsidiary at fair value through profit or loss in its separate financial statements as well. Ind AS 27 requires the same treatment as that required under Ind AS 110, so the cost option is not available.

  1. AAt cost, as separate statements allow a free choice
  2. BAt fair value through profit or loss in the same wayCorrect
  3. CUnder the equity method
  4. DAt fair value through other comprehensive income

Explanation

Ind AS 27 states that if a parent is required by Ind AS 110 to measure its investment in a subsidiary at fair value through profit or loss under Ind AS 109, it shall account for the subsidiary the same way in its separate financial statements. The cost choice is therefore unavailable for that subsidiary.

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