Skip to content

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

Orion Ltd is a parent that meets the conditions in Ind AS 110 requiring it to measure its investment in a subsidiary, Pavan Ltd, at fair value through profit or loss under Ind AS 109 in consolidated statements. Orion also holds another subsidiary, Qila Ltd, that it consolidates. In its separate financial statements, Orion proposes to carry Pavan at cost. Which statement is correct?

Orion must account for its investment in Pavan at fair value through profit or loss under Ind AS 109 in its separate financial statements, because Ind AS 27 requires the same treatment where Ind AS 110 requires that measurement. Carrying it at cost is not permitted for that investment.

  1. ACost is allowed, since separate statements permit a free choice for each investment
  2. BOrion must also account for its investment in Pavan at fair value through profit or loss under Ind AS 109 in its separate financial statementsCorrect
  3. COrion must use the equity method for Pavan in separate statements
  4. DOrion may use cost only if Pavan is also held for sale

Explanation

If a parent is required under Ind AS 110 to measure an investment in a subsidiary at FVTPL under Ind AS 109, it shall account for that subsidiary the same way in its separate financial statements. The free-choice argument is wrong because the requirement overrides the cost option. The equity method is not permitted in separate statements.

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