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CA Intermediate · Corporate and Other Laws · Accounts of Companies

Lakshya Infra Ltd has a subsidiary and an associate. The Board of Lakshya Infra Ltd is preparing the financial statements for the year. Under the Companies Act, 2013, which statement about consolidated financial statements is correct?

A company with subsidiaries, associates or joint ventures must prepare consolidated financial statements in addition to its own standalone statements, and both are placed before the annual general meeting. Listing is not a condition, and consolidation does not replace standalone statements.

  1. AA company having one or more subsidiaries or associate companies or joint ventures must, besides its own standalone statements, prepare a consolidated financial statement and lay it before the annual general meetingCorrect
  2. BConsolidated financial statements are required only if the company is listed on a stock exchange
  3. CConsolidated statements replace the standalone statements, which need not be prepared
  4. DConsolidation is required only for subsidiaries and never covers associates or joint ventures

Explanation

Where a company has subsidiaries, associates or joint ventures, it must prepare a consolidated financial statement in addition to its standalone statements, and both are laid before the AGM. Listing is not the test. Standalone statements are not replaced, and associates and joint ventures are covered.

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