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

Under Ind AS 110, when a parent loses control of a subsidiary, which of the following is required?

On losing control, the parent derecognises the former subsidiary's assets and liabilities from the consolidated balance sheet. It also recognises any retained investment at fair value when control is lost and recognises the gain or loss attributable to the former controlling interest.

  1. AContinue to include the subsidiary's assets and liabilities in the consolidated balance sheet until the year end
  2. BDerecognise the subsidiary's assets and liabilities from the consolidated balance sheetCorrect
  3. CCarry any retained investment at its original cost without remeasurement
  4. DRecognise the gain or loss only on the portion of the investment sold, ignoring any retained interest

Explanation

On loss of control the parent derecognises the former subsidiary's assets and liabilities, recognises any retained investment at fair value at that date, and recognises the gain or loss attributable to the former controlling interest. Keeping the retained stake at cost is therefore wrong.

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