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

Under Ind AS 110, how must an investment entity ordinarily account for an investment in a subsidiary that is not itself an investment entity and does not provide services relating to the investment entity's investment activities?

An investment entity does not consolidate such a subsidiary. It measures the investment at fair value through profit or loss in accordance with Ind AS 109, because Ind AS 110 exempts investment entities from consolidation except for subsidiaries that provide investment-related services.

  1. AConsolidate it line by line with Ind AS 103 applied on acquisition
  2. BMeasure it at fair value through profit or loss in accordance with Ind AS 109Correct
  3. CMeasure it at cost less impairment under the equity method
  4. DMeasure it at fair value through other comprehensive income with no recycling

Explanation

Ind AS 110 (paragraph 31) says an investment entity does not consolidate its subsidiaries or apply Ind AS 103 on obtaining control. It measures the investment at fair value through profit or loss under Ind AS 109. Consolidation is required only for a subsidiary whose main purpose is providing services relating to the investment activities.

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