Skip to content

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

Veda Industries Ltd, a parent, prepares separate financial statements under Ind AS 27. Its Finance Head suggests carrying the investment in its associate, Kaveri Ltd, using the equity method in the separate financial statements, because IAS 27 permits it. Which statement is correct under Ind AS 27 as notified in India?

The equity method cannot be used in separate financial statements under Ind AS 27. The entity must account for investments in subsidiaries, associates and joint ventures either at cost or in accordance with Ind AS 109, since the equity method is a manner of consolidation rather than a measurement basis.

  1. AThe equity method is allowed in separate financial statements as a third option besides cost and Ind AS 109
  2. BThe equity method is not permitted; investments must be at cost or in accordance with Ind AS 109Correct
  3. CThe equity method is mandatory for associates but not for subsidiaries
  4. DThe equity method is allowed only if the associate is listed

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. The equity-method option available in IAS 27 was removed in Ind AS 27 because the equity method is a manner of consolidation, not a measurement basis. Option A reflects IAS 27, not Ind AS 27.

Did you get it right without looking?

One question tells you little. A timed set on Ind AS 27 Separate Financial Statements shows your real accuracy, how long you take and where you lose marks.

Practise Ind AS 27 Separate Financial StatementsFree diagnostic mock

More Ind AS 27 Separate Financial Statements questions