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

Lotus Ltd is a parent and also has an associate, Neel Ltd, of which it holds 30%. In its consolidated financial statements, Lotus Ltd elects under Ind AS 28 to measure Neel Ltd at fair value through profit or loss under Ind AS 109. Separately, Lotus Ltd has a subsidiary, Om Ltd, and Lotus Ltd is not required by Ind AS 110 to measure Om Ltd at fair value. Lotus Ltd chooses cost as its separate-statements basis for subsidiaries. Which presentation in the separate financial statements is correct?

Neel Ltd must be at fair value through profit or loss and Om Ltd may be at cost. Ind AS 27 requires the Ind AS 28 fair value election for associates to carry into separate statements, while subsidiaries are a separate category where cost may be chosen.

  1. ANeel Ltd at fair value through profit or loss and Om Ltd at costCorrect
  2. BNeel Ltd at cost and Om Ltd at cost
  3. CNeel Ltd at equity method and Om Ltd at cost
  4. DBoth Neel Ltd and Om Ltd at fair value because one investment is at fair value

Explanation

Where an entity elects to measure associates or joint ventures at FVTPL under Ind AS 28, it must account for them the same way in separate statements. Om Ltd, a subsidiary, is a separate category and may be at cost. Neel Ltd at cost would contradict the election.

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