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

Kaveri Holdings Ltd holds investments in three subsidiaries (A, B, C) and two associates (X, Y). In its separate financial statements it wants to carry subsidiary A at cost, subsidiaries B and C at fair value under Ind AS 109, and both associates at cost. Under Ind AS 27, what is the position?

The treatment is not permitted. Ind AS 27 requires the same accounting, either cost or Ind AS 109, for each category of investments. Subsidiaries form one category, so carrying one at cost and others at fair value is inconsistent with the standard.

  1. APermitted, since the choice may be made investment by investment
  2. BNot permitted, since the same accounting must be applied for each category of investmentsCorrect
  3. CPermitted if the fair value investments are disclosed separately
  4. DNot permitted, since associates must be at fair value when subsidiaries are mixed

Explanation

Ind AS 27 says the entity shall apply the same accounting for each category of investments. Subsidiaries are one category, so mixing cost and Ind AS 109 within subsidiaries breaches this. Choosing cost for associates and another basis for subsidiaries would be fine, but not within a category.

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