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

Vindhya Ltd elected Ind AS 109 for all its investments in subsidiaries in its separate financial statements. The investment in Satpura Ltd was classified as held for sale during the year. Which statement about measurement is correct under Ind AS 27?

Measurement under Ind AS 109 is not changed when the investment becomes held for sale. Only investments accounted for at cost move to Ind AS 105 measurement, so Vindhya continues to measure Satpura at fair value under Ind AS 109.

  1. AMeasurement is changed to the lower of carrying amount and fair value less costs to sell under Ind AS 105
  2. BMeasurement under Ind AS 109 is not changed by the held for sale classificationCorrect
  3. CThe investment must be reverted to cost before applying Ind AS 105
  4. DMeasurement switches to the equity method until disposal

Explanation

Ind AS 27 requires only cost-based investments to follow Ind AS 105 when held for sale. For investments accounted for under Ind AS 109, the measurement is not changed in such circumstances. Applying the Ind AS 105 lower-of test would wrongly alter the fair value basis.

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