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CA Final · Financial Reporting · Consolidated Financial Statements

Meru Industries Ltd prepares consolidated financial statements under Ind AS 110. Which description of consolidated financial statements is consistent with the Standard?

Consolidated financial statements present the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries as if they belonged to a single economic entity. Showing investments in subsidiaries as a single cost line is separate financial statements, not consolidation.

  1. AFinancial statements of the group in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single economic entityCorrect
  2. BFinancial statements in which the parent's investment in each subsidiary is shown as a single line at cost
  3. CFinancial statements in which only the parent's assets and liabilities are combined with the subsidiaries' net profit
  4. DFinancial statements prepared separately for each subsidiary and then attached to the parent's balance sheet

Explanation

Ind AS 110 defines consolidated financial statements as those of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single economic entity. Showing the investment as one line at cost describes separate financial statements, not consolidation.

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