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CS Executive · Corporate Accounting and Financial Management · Consolidation of Accounts

Mehta Ltd owned 75% of Nanda Ltd and sold its entire holding on 31 December 2025, losing control. The parent's financial year ends 31 March 2026. Nanda earned Rs 8,00,000 in the nine months to 31 December 2025 and Rs 4,00,000 in the last three months. Which statement is correct for Mehta's consolidated statement of profit and loss for the year ended 31 March 2026?

Nanda's results up to 31 December 2025, Rs 8,00,000, are included, and the profit or loss on disposal is shown separately. Results are consolidated until the relationship ceases; the post-disposal three months are not consolidated, and the disposal gain or loss is recognised.

  1. ANanda's results for the full year of Rs 12,00,000 are included with no gain or loss on disposal
  2. BNanda's results are excluded entirely because control was lost during the year
  3. CNanda's results up to 31 December 2025 (Rs 8,00,000) are included, and the profit or loss on disposal is recognised separatelyCorrect
  4. DNanda's results for the last three months of Rs 4,00,000 are included, with the disposal gain ignored

Explanation

AS 21 includes the results of a subsidiary in the consolidated statement of profit and loss until the date of cessation of the relationship. The difference between disposal proceeds and the carrying amount of net assets is recognised as profit or loss on disposal. Including the full year or excluding the nine months misapplies this rule.

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