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CS Executive · Corporate Accounting and Financial Management · Consolidation of Accounts

Under AS 21, from which point are the results of operations of a subsidiary included in the consolidated statement of profit and loss?

The subsidiary's results are included from the date the parent-subsidiary relationship came into existence. Income earned before that date is pre-acquisition and is not part of the group's consolidated profit and loss. The start of the year or the next AGM is irrelevant.

  1. AFrom the beginning of the financial year in which the investment was made
  2. BFrom the date on which the parent-subsidiary relationship came into existenceCorrect
  3. CFrom the date of the next annual general meeting after acquisition
  4. DFrom the first day of the following financial year

Explanation

AS 21 states that the results of a subsidiary are included in the consolidated financial statements as from the date on which the parent-subsidiary relationship came into existence. Including the full year's results would bring in pre-acquisition income that does not belong to the parent's group.

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