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

Veda Industries Ltd, a parent, prepares separate financial statements in addition to its consolidated statements. It holds shares in two subsidiaries, one associate and one joint venture. Which of the following accounting bases for these investments is permitted in its separate financial statements under Ind AS 27?

Ind AS 27 permits investments in subsidiaries, joint ventures and associates to be accounted for either at cost or in accordance with Ind AS 109, applying the same accounting to each category. The equity method is not allowed in separate financial statements because it is a manner of consolidation, not a measurement basis.

  1. AEquity method for subsidiaries and cost for associates and joint ventures
  2. BCost, or in accordance with Ind AS 109, applied consistently for each category of investmentsCorrect
  3. CEquity method for all categories, as permitted by IAS 27
  4. DProportionate consolidation for the joint venture and cost for the rest

Explanation

Ind AS 27 requires investments in subsidiaries, joint ventures and associates to be accounted for either at cost or in accordance with Ind AS 109, with the same accounting applied for each category. The equity method option in IAS 27 was not carried into Ind AS 27 because the equity method is a manner of consolidation, not a measurement basis. Hence the equity-method options are wrong.

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