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CA Final · Financial Reporting · Consolidated Financial Statements

Meridian Ltd (31 March year-end) consolidates three subsidiaries for the year ended 31 March 2026. Subsidiary P's latest statements are to 31 December 2025. Subsidiary Q's are to 31 January 2026. Subsidiary R's are to 31 October 2025. It is impracticable for any of them to prepare statements as at 31 March 2026. Which statement is correct under Ind AS 110?

P (three months) and Q (two months) can be consolidated using their latest statements adjusted for significant transactions or events. R's statements cannot be used because the five-month gap exceeds the three-month maximum permitted. Consistency from period to period does not override this limit.

  1. AAll three may be used, adjusted for significant transactions, as there is no fixed limit
  2. BP and Q may be used after adjustment, but R's statements cannot be used because the gap of five months exceeds the three-month maximumCorrect
  3. COnly Q may be used, because the gap must be no more than one month
  4. DAll three may be used, but R only if the gap is the same as in the previous year

Explanation

The gaps are P 3 months, Q 2 months and R 5 months. B93 permits the most recent statements, adjusted for significant transactions or events, but in any case the gap cannot exceed three months. R breaches that limit, whatever its prior-year gap. P and Q are within the limit. The length of reporting periods and gaps must also be consistent from period to period.

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