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

Mehta Holdings Ltd measures its investments in subsidiaries at fair value through profit or loss under Ind AS 109 in its separate financial statements. It then holds one particular investment in a subsidiary, Nila Ltd, which is held for sale under Ind AS 105. What is the effect on the measurement of Nila Ltd investment?

The measurement under Ind AS 109 stays unchanged. Ind AS 27 applies Ind AS 105 only to investments accounted for at cost when they become held for sale; fair-value investments continue to be measured under Ind AS 109 despite the held-for-sale classification.

  1. AIt is remeasured to cost less costs to sell under Ind AS 105
  2. BIt is carried at cost, reversing earlier fair value changes
  3. CIt is measured at the lower of carrying amount and fair value less costs to sell, with the gain deferred
  4. DThe measurement under Ind AS 109 is not changed by the held-for-sale classificationCorrect

Explanation

Ind AS 27 says the measurement of investments accounted for in accordance with Ind AS 109 is not changed when they are classified as held for sale. Only cost-method investments move to Ind AS 105 measurement. Applying cost less costs to sell would wrongly treat the investment as cost-based.

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