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CA Final · Financial Reporting · Consolidated Financial Statements

Meru Ltd (March year-end) holds subsidiaries P Ltd (statements at 31 December), Q Ltd (statements at 31 March) and R Ltd (statements at 31 October). Preparing additional statements at 31 March is impracticable for P and R. Assuming no other facts, which is the correct assessment under Ind AS 110?

P can be consolidated using its 31 December statements, adjusted for significant events, as the gap is three months. R cannot, because its gap of five months exceeds the three-month maximum permitted by Ind AS 110.

  1. AP can be consolidated with a three-month gap, but R cannot because the gap is five monthsCorrect
  2. BP and R both qualify because only the length of reporting periods matters
  3. CNeither P nor R qualifies, since any gap is prohibited when the parent has a March year-end
  4. DR qualifies, since its statements are the most recent, but P does not because its gap is three months

Explanation

The gap between a subsidiary's statements and the consolidated date must be no more than three months. P's gap (31 Dec to 31 Mar) is three months, so permitted with adjustments for significant events. R's gap (31 Oct to 31 Mar) is five months, exceeding the limit, so it fails.

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