Skip to content

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

Meru Ltd is a parent that meets the definition of an investment entity under Ind AS 110 and is required to measure its investment in subsidiary Z at fair value through profit or loss under Ind AS 109. It also holds an associate A and a subsidiary Y that provides investment-related services and is consolidated. Meru prepares separate financial statements. What treatment does Ind AS 27 require for Z?

Meru must measure Z at fair value through profit or loss under Ind AS 109 in its separate financial statements as well. Ind AS 27 requires the same accounting as the parent is required to apply under Ind AS 110, so the cost option does not apply to Z.

  1. ACost, as separate statements always allow a cost choice for each investment
  2. BEquity method, to align with the consolidation exception
  3. CFair value through profit or loss under Ind AS 109, the same way as required in the consolidated contextCorrect
  4. DFair value through OCI, as an irrevocable election

Explanation

Where a parent is required under Ind AS 110 to measure a subsidiary investment at FVTPL under Ind AS 109, it must account for that subsidiary in the same way in its separate financial statements. The cost option is therefore not available for Z. The equity method is not permitted by Ind AS 27.

Did you get it right without looking?

One question tells you little. A timed set on Ind AS 27 Separate Financial Statements shows your real accuracy, how long you take and where you lose marks.

Practise Ind AS 27 Separate Financial StatementsFree diagnostic mock

More Ind AS 27 Separate Financial Statements questions