Skip to content

CA Final · Financial Reporting · Consolidated Financial Statements

Mehta Group's subsidiary has historically had a reporting date that differs by two months from the parent's consolidated reporting date. In the current year, management proposes to change the gap to four months because the subsidiary's accounting team is moving to a new location. Under Ind AS 110, how should this be assessed?

The proposal is not acceptable. Ind AS 110 caps the difference between the subsidiary's and consolidated reporting dates at three months and requires the gap and period lengths to stay the same from period to period. A four-month gap breaks both requirements, regardless of adjustments.

  1. AAcceptable, because any gap is allowed if disclosed
  2. BAcceptable, provided the subsidiary's statements are adjusted for significant events
  3. CNot acceptable, because the difference must be no more than three months and the gap should be the same from period to periodCorrect
  4. DAcceptable only if the gap is an even number of months

Explanation

Ind AS 110 requires that the difference between the dates be no more than three months, and that the length of reporting periods and the gap remain the same from period to period. A four-month gap breaches the three-month limit and changes the gap. Adjusting for significant events does not cure a breach of the limit.

Did you get it right without looking?

One question tells you little. A timed set on Consolidated Financial Statements shows your real accuracy, how long you take and where you lose marks.

Practise Consolidated Financial StatementsFree diagnostic mock

More Consolidated Financial Statements questions