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CA Intermediate · Corporate and Other Laws · Accounts of Companies

Tarun Pharma Ltd, a listed company, holds a subsidiary, Tarun Labs Pvt Ltd. The Board is preparing its financial statements for the year. Which statement about consolidated financial statements is correct under the Companies Act, 2013?

A company with subsidiaries, associates or joint ventures must prepare consolidated financial statements in addition to its standalone statements, in the same form, and lay both before the annual general meeting. Consolidation does not replace standalone accounts and does not depend on the subsidiary being public.

  1. AA company having one or more subsidiaries must prepare, in addition to its standalone statements, consolidated financial statements of the company and its subsidiaries, associates and joint ventures, laid before the AGMCorrect
  2. BConsolidated statements replace standalone statements, which need not be prepared
  3. CConsolidated statements are required only if the subsidiary is a public company
  4. DConsolidated statements need not be laid before the AGM but only filed with the Registrar

Explanation

A company with subsidiaries, associates or joint ventures must prepare consolidated financial statements in addition to its own standalone statements, in the same form and manner, and lay them before the AGM. They do not replace standalone statements, and the subsidiary's type is irrelevant.

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