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

Meghna Ltd carries its investment in its subsidiary Pragati Ltd at cost in its separate financial statements, at ₹40 crore. At the reporting date the board commits to a plan to sell the entire stake and the criteria for held for sale classification under Ind AS 105 are met. Which treatment is correct in the separate financial statements?

The investment must be accounted for in accordance with Ind AS 105 once it is classified as held for sale. Ind AS 27 requires this for investments carried at cost, whereas investments measured under Ind AS 109 keep their measurement unchanged.

  1. AContinue at cost under Ind AS 27 with no change
  2. BAccount for the investment in accordance with Ind AS 105 as held for saleCorrect
  3. CSwitch the investment to the equity method
  4. DMeasure at fair value through profit or loss under Ind AS 109 only

Explanation

Investments accounted for at cost are accounted for in accordance with Ind AS 105 when classified as held for sale. Continuing at cost ignores this requirement. The equity method is not available in separate statements.

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