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CA Final · Financial Reporting · Ind AS 27 Separate Financial Statements

Vasudha Textiles Ltd, a parent, prepares separate financial statements (SFS) under Ind AS 27. The CFO suggests that, as IAS 27 permits, the investment in its associate Kaveri Dyes Ltd could be carried in the SFS using the equity method. Which statement is correct under Ind AS 27?

Ind AS 27 does not allow the equity method in separate financial statements. Investments in subsidiaries, joint ventures and associates must be accounted for either at cost or in accordance with Ind AS 109, because the equity method is a manner of consolidation rather than a measurement basis.

  1. AThe equity method is permitted for associates but not for subsidiaries
  2. BThe equity method is not an option in Ind AS 27; investments are at cost or per Ind AS 109Correct
  3. CThe equity method is permitted if disclosed as an accounting policy
  4. DThe equity method is mandatory for associates and joint ventures in SFS

Explanation

Ind AS 27 allows only cost or Ind AS 109 for subsidiaries, joint ventures and associates. The equity method option in IAS 27 was removed because equity method is a manner of consolidation, not a measurement basis. Option A is wrong because the equity method is unavailable for any category.

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