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CA Final · Financial Reporting · Consolidated Financial Statements

Veda Industries Ltd consolidates its subsidiary Kaveri Plastics Ltd. Under Ind AS 110, which description best captures what consolidated financial statements present?

Consolidated financial statements present the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries as those of a single economic entity. Cash flows are included, and the subsidiary is not shown merely as an investment or dividend income line.

  1. AOnly the net assets of the subsidiary shown as a single line investment
  2. BThe assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries presented as those of a single economic entityCorrect
  3. COnly the parent's assets and liabilities, with subsidiary profits shown as dividend income
  4. DThe combined balance sheets of the group's entities excluding cash flows

Explanation

Ind AS 110 defines consolidated financial statements as the financial statements of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single economic entity. Cash flows are expressly included, so the option omitting them is wrong. Showing the investment as one line or as dividend income is not consolidation.

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