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CA Final · Financial Reporting · Consolidated Financial Statements

Himalaya Ltd (parent) has a subsidiary, Nilgiri Ltd, whose reporting date is 31 December, while Himalaya's is 31 March. It is impracticable for Nilgiri to prepare additional statements as at 31 March. Which treatment follows Ind AS 110?

Himalaya should consolidate Nilgiri's latest 31 December statements, adjusted for significant transactions or events up to 31 March. The three-month gap is the maximum allowed. Adjustments are mandatory, and the subsidiary cannot be excluded merely because dates differ.

  1. AConsolidate Nilgiri's 31 December statements adjusted for significant transactions or events between 31 December and 31 March, since the gap is three monthsCorrect
  2. BExclude Nilgiri from consolidation until the dates are aligned
  3. CConsolidate Nilgiri's 31 December statements without any adjustment, because the gap is within the permitted limit
  4. DConsolidate Nilgiri's statements for the previous financial year ended 31 December of the earlier year

Explanation

Where impracticable, the parent uses the most recent subsidiary statements adjusted for significant transactions or events up to the consolidated date. The difference may be no more than three months, which is met here. Omitting the adjustments is wrong because they are required.

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