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CA Intermediate · Corporate and Other Laws · Accounts of Companies

Rohan Engineering Ltd has a wholly owned subsidiary in Pune and an associate company, and holds a joint venture interest. Its Board is preparing financial statements for the year. Which of the following statements about consolidated financial statements under the Companies Act, 2013 is correct?

A company with subsidiaries, associate companies or joint ventures must prepare consolidated financial statements in addition to its own standalone statements, in the same form, and lay both before the annual general meeting. Consolidation does not replace standalone statements and is not limited to listed companies.

  1. AConsolidation is required only for subsidiaries, and associates and joint ventures are never included
  2. BA company having one or more subsidiaries, associate companies or joint ventures must, in addition to its own financial statements, prepare a consolidated financial statement, which is laid before the AGM along with its standalone statementsCorrect
  3. CConsolidated statements replace standalone statements and the latter need not be prepared
  4. DConsolidated statements are required only if the company is listed

Explanation

Where a company has one or more subsidiaries, associate companies or joint ventures, it must prepare a consolidated financial statement in addition to its own financial statements, in the same form and manner, and lay it before the AGM. Standalone statements are not replaced. Consolidation is not limited to listed companies or to subsidiaries alone.

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