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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 related 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 consolidating subsidiaries other than those providing services related to their investment activities.

  1. AIt consolidates the subsidiary line by line and applies Ind AS 103 on acquisition
  2. BIt measures the investment at fair value through profit or loss in accordance with Ind AS 109Correct
  3. CIt measures the investment at cost less impairment under the equity method
  4. DIt measures the investment at fair value through other comprehensive income without recycling

Explanation

Ind AS 110 states that an investment entity shall not consolidate its subsidiaries or apply Ind AS 103 when it obtains control of another entity. Instead it measures the investment in the subsidiary at fair value through profit or loss under Ind AS 109. Line-by-line consolidation is the exception only for subsidiaries providing investment-related services.

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