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

Under Ind AS 110, how must a parent that is not itself an investment entity treat a subsidiary that is an investment entity?

A parent of an investment entity consolidates all entities it controls, including those controlled through the investment entity subsidiary, unless the parent itself is an investment entity. The investment entity exception from consolidation does not extend to a parent that is not an investment entity.

  1. AIt consolidates all entities it controls, including those controlled through the investment entity subsidiaryCorrect
  2. BIt measures the investment entity subsidiary at fair value and does not consolidate the entities that subsidiary controls
  3. CIt consolidates only the investment entity subsidiary but not the entities that subsidiary controls
  4. DIt is exempt from preparing consolidated financial statements

Explanation

A parent of an investment entity must consolidate all entities it controls, including those controlled through an investment entity subsidiary, unless the parent itself is an investment entity. The fair value exception does not carry up to a non-investment-entity parent.

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