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CA Final · Financial Reporting · Consolidated Financial Statements

Veda Industries Ltd holds a controlling stake in Kiran Components Ltd and Lotus Packaging Ltd. Which description best matches how Ind AS 110 defines consolidated financial statements?

Consolidated financial statements are the 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. They are not separate statements or a one-line investment presentation.

  1. AFinancial 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 entityCorrect
  2. BFinancial statements in which the parent reports its investments in subsidiaries at cost or fair value
  3. CFinancial statements that show only the net assets of the subsidiaries as a single line in the parent's balance sheet
  4. DFinancial statements in which each group entity's results are presented separately and then added in the notes

Explanation

Ind AS 110 defines consolidated financial statements as those 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. Option B describes separate financial statements. Option C describes a one-line equity-method presentation. Option D describes separate reporting, not consolidation.

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