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CA Final · Financial Reporting · Financial Instruments: Scope and Definitions

Veda Textiles Ltd holds 30% of the equity shares of Kiran Dyes Ltd, which it accounts for as an associate under Ind AS 28 using the equity method. Veda also holds a trade receivable from a customer and a bank fixed deposit. Which of these is outside the scope of Ind AS 109?

The interest in the associate accounted for under Ind AS 28 is outside Ind AS 109. The Standard excludes interests in subsidiaries, associates and joint ventures accounted for under Ind AS 110, 27 or 28, whereas receivables, bank deposits and bonds held are ordinary financial instruments within its scope.

  1. AThe trade receivable from the customer
  2. BThe bank fixed deposit
  3. CVeda's interest in Kiran Dyes Ltd accounted for under Ind AS 28Correct
  4. DA bond Veda holds in a third-party company

Explanation

Ind AS 109 applies to all financial instruments except interests in subsidiaries, associates and joint ventures accounted for under Ind AS 110, Ind AS 27 or Ind AS 28. The receivable, the deposit and the bond are ordinary financial assets within scope. Therefore only the equity-accounted associate interest is excluded.

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