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CA Intermediate · Corporate and Other Laws · Accounts of Companies

Meridian Pharma Ltd, a listed company with a turnover of ₹800 crore, has a subsidiary and an associate. The board is preparing the annual financial statements for the year. Under the Companies Act, 2013, which statement is correct about consolidation?

A company with subsidiaries, associates or joint ventures must prepare consolidated financial statements in addition to its own standalone statements and place both before the AGM. Consolidation is not limited to wholly owned or listed subsidiaries, and it does not replace the standalone statements.

  1. AA company having one or more subsidiaries or associate companies or joint ventures must, in addition to its own financial statements, prepare a consolidated financial statement and lay it before the annual general meetingCorrect
  2. BConsolidated financial statements are required only if the subsidiary is wholly owned
  3. CConsolidated financial statements replace the standalone statements, which need not be prepared
  4. DConsolidation is needed only for listed subsidiaries

Explanation

Where a company has subsidiaries, associates or joint ventures, it must prepare consolidated statements in addition to its standalone statements, in the same form and manner, and lay them at the AGM. Option B wrongly limits to wholly owned subsidiaries. Option C is wrong because standalone statements remain mandatory. Option D adds a listing condition that does not exist.

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