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

Rudra Ltd has an associate, Sagar Ltd, and elects under Ind AS 28 to measure this investment at fair value through profit or loss under Ind AS 109 as it is held by a venture capital organisation-type entity. Rudra also prepares separate financial statements. How should Rudra account for Sagar in them?

Rudra must account for its investment in Sagar at fair value through profit or loss under Ind AS 109 in its separate financial statements, because Ind AS 27 requires the same treatment as elected under Ind AS 28. Cost or the equity method is not permitted for it.

  1. AAt cost, as separate statements always default to cost
  2. BUsing the equity method, to align with consolidated statements
  3. CIn the same way, at fair value through profit or loss in accordance with Ind AS 109Correct
  4. DAt fair value through other comprehensive income, with no recycling

Explanation

Ind AS 27 states that if an entity elects under Ind AS 28 to measure investments in associates or joint ventures at FVTPL under Ind AS 109, it shall also account for those investments in the same way in its separate financial statements. Hence cost is not available for that investment. The equity method is also not permitted in separate statements.

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