Skip to content

CA Final · Financial Reporting · Consolidated Financial Statements

Veda Industries Ltd consolidates its subsidiary Kaveri Plastics Ltd. Kaveri's reporting date is 31 December, while Veda's is 31 March. It is impracticable for Kaveri to prepare additional statements as at 31 March. Which approach is consistent with Ind AS 110 as reproduced in the official text?

Veda should consolidate Kaveri's latest statements, adjusted for significant transactions or events between 31 December and 31 March. The date difference may not exceed three months, and it must stay the same period to period. Different reporting dates alone do not justify excluding a subsidiary from consolidation.

  1. AVeda consolidates Kaveri's most recent financial statements adjusted for significant transactions or events between the two dates, provided the date gap is no more than three monthsCorrect
  2. BVeda excludes Kaveri from consolidation because the reporting dates differ
  3. CVeda consolidates Kaveri's unadjusted statements, since adjustments are never required
  4. DVeda consolidates Kaveri's statements only if the gap is no more than six months

Explanation

Where preparing statements at the parent's date is impracticable, the parent uses the subsidiary's most recent statements adjusted for significant transactions or events between the dates. The gap must not exceed three months, and the gap and period length must be consistent from period to period. Here the gap is exactly three months, so it is acceptable. Exclusion or a six-month limit contradicts the text.

Did you get it right without looking?

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

Practise Consolidated Financial StatementsFree diagnostic mock

More Consolidated Financial Statements questions