Skip to content

CA Intermediate · Corporate and Other Laws · Accounts of Companies

Kaveri Components Ltd has a subsidiary and an associate. The Board of Kaveri Components Ltd has prepared standalone financial statements for the year. Under the Companies Act, 2013, what is the legal position on consolidated financial statements?

A company with subsidiaries, associates or joint ventures must prepare consolidated financial statements in addition to its standalone statements, in the same form and manner, and place both before the annual general meeting. Consolidation is mandatory, and is not limited to listed companies or to foreign subsidiaries.

  1. AOnly standalone statements are required because consolidation is voluntary
  2. BConsolidated statements are required only if the subsidiary is a foreign company
  3. CConsolidated statements are required only for listed companies, never for unlisted ones
  4. DIn addition to standalone statements, the company must prepare consolidated financial statements including subsidiaries, associates and joint ventures, in the same form and manner as standalone statements, and lay them before the AGMCorrect

Explanation

A company having one or more subsidiaries, associates or joint ventures must, besides its own standalone statements, prepare a consolidated financial statement in the same form and manner, and lay it before the annual general meeting along with the standalone statements. It is not voluntary and not limited to listed companies or foreign subsidiaries. Limited exemptions exist only for certain intermediate wholly owned subsidiaries, not applicable here.

Did you get it right without looking?

One question tells you little. A timed set on Accounts of Companies shows your real accuracy, how long you take and where you lose marks.

Practise Accounts of CompaniesFree diagnostic mock

More Accounts of Companies questions