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

Kaveri Ltd chooses to account for its investments in subsidiaries at cost in its separate financial statements. It holds investments in three subsidiaries, and in March the board commits to sell its entire holding in Subsidiary P, and the criteria for held for sale are met at the reporting date. How should the investment in P be accounted for in the separate financial statements?

The investment in P is accounted for under Ind AS 105 because Ind AS 27 says investments carried at cost follow Ind AS 105 once classified as held for sale. It is not moved to fair value or the equity method.

  1. AContinue at cost with no change, because Ind AS 27 prohibits reclassification
  2. BApply Ind AS 105, since investments carried at cost are accounted for under it when classified as held for saleCorrect
  3. CRemeasure to fair value through profit or loss under Ind AS 109
  4. DSwitch to the equity method until the sale is completed

Explanation

Ind AS 27 requires investments accounted for at cost to be accounted for under Ind AS 105 when classified as held for sale. Option A ignores this. Option C applies only to investments already measured under Ind AS 109, whose measurement does not change on held-for-sale classification.

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