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CA Final · Financial Reporting · Ind AS 110 Consolidation Procedure for Subsidiaries

Trident Ltd, the parent, has a subsidiary Orion Ltd whose reporting date is 31 December, while Trident's is 31 March. Orion Ltd can prepare additional financial information as of 31 March for consolidation. Orion Ltd's accounting policies differ from the group's for similar transactions. Which statement reflects the consolidation procedure required?

Orion's additional financial information as of 31 March should be consolidated after adjusting it to the group's uniform accounting policies. Where the subsidiary can prepare statements at the parent's reporting date, that is used rather than its own 31 December statements.

  1. AConsolidate using Orion's 31 March additional information, after adjusting its financial statements to apply uniform group accounting policiesCorrect
  2. BConsolidate using Orion's 31 December statements without adjustment, disclosing the difference
  3. CConsolidate Orion's 31 December statements but adjust only for significant transactions in the three months, ignoring policy differences
  4. DEquity account Orion because of the differing dates

Explanation

Consolidated statements must use uniform accounting policies for like transactions, with adjustments made where a member uses different policies. Where the reporting dates differ, the subsidiary prepares additional information as of the parent's date unless impracticable. Since this is possible, the 31 March information is used with policy alignment.

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