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

Kaveri Ltd has three investments: a subsidiary, a joint venture and an associate. In its separate financial statements it accounts for the subsidiary at cost. It wants to measure the associate at fair value under Ind AS 109 and the joint venture at cost. Which statement is correct under Ind AS 27?

Ind AS 27 requires the same accounting, either cost or Ind AS 109, for each category of investments. A choice made investment by investment is not allowed, so the mixed approach described, with the associate at fair value and the others at cost, does not comply.

  1. APermitted, because the choice is made investment by investment
  2. BPermitted, because only subsidiaries need a single consistent policy
  3. CNot permitted, because the same accounting must be applied for each category of investmentsCorrect
  4. DNot permitted, because Ind AS 109 applies only to subsidiaries

Explanation

Ind AS 27 requires the entity to apply the same accounting for each category of investments, namely subsidiaries, joint ventures and associates, either at cost or in accordance with Ind AS 109. The policy is chosen per category, not per investment. Here the subsidiary and joint venture are at cost, which is consistent, but the associate is at fair value, which is a different treatment within the same category rule.

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