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

Sagar Foods Ltd is a parent that is required, under paragraph 31 of Ind AS 110, to measure its investment in a subsidiary at fair value through profit or loss in accordance with Ind AS 109. How must it account for that subsidiary in its separate financial statements?

Sagar Foods must account for that subsidiary at fair value through profit or loss under Ind AS 109 in its separate financial statements as well. Ind AS 27 requires the same treatment as required in consolidation under Ind AS 110 paragraph 31, removing the cost option.

  1. AAt cost, since separate statements always permit a free choice
  2. BUsing the equity method to align with consolidated statements
  3. CAt fair value through other comprehensive income only
  4. DIn the same way, at fair value through profit or loss in accordance with Ind AS 109Correct

Explanation

Where a parent must measure a subsidiary at FVTPL under Ind AS 110 paragraph 31, Ind AS 27 requires it to account for that investment in the same way in separate financial statements. The cost choice is therefore not available for that subsidiary, and the equity method is never allowed.

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