CA Final · Financial Reporting · Ind AS 110 Consolidation Procedure for Subsidiaries
Vistara Capital is an investment entity under Ind AS 110. It holds a subsidiary Alpha Ltd, an operating investee, and another subsidiary Beta Advisory Ltd, which is not an investment entity and whose main purpose and activities are providing services relating to Vistara's investment activities. How should Vistara account for these two subsidiaries?
Vistara measures Alpha at fair value through profit or loss and consolidates Beta. Investment entities do not consolidate subsidiaries, except a non-investment-entity subsidiary whose main purpose is providing services related to the investment entity's activities, which is consolidated with Ind AS 103 applied.
- AConsolidate both Alpha and Beta applying Ind AS 103
- BMeasure both Alpha and Beta at fair value through profit or loss
- CMeasure Alpha at fair value through profit or loss; consolidate Beta and apply Ind AS 103 to its acquisitionCorrect
- DConsolidate Alpha; measure Beta at fair value through profit or loss
Explanation
An investment entity does not consolidate its subsidiaries and measures them at fair value through profit or loss under Ind AS 109. The exception is a subsidiary that is not an investment entity and whose main purpose and activities are providing services relating to the investment entity's activities; that subsidiary is consolidated and Ind AS 103 applies to its acquisition. So Alpha is at FVTPL and Beta is consolidated.
Did you get it right without looking?
One question tells you little. A timed set on Ind AS 110 Consolidation Procedure for Subsidiaries shows your real accuracy, how long you take and where you lose marks.
More Ind AS 110 Consolidation Procedure for Subsidiaries questions
- Kaveri Ltd holds 80% of Narmada Ltd. During the year Narmada sold goods costing Rs 6,00,000 to Kaveri for Rs 8,00,000. At year end Kaveri st…
- Himalaya Ltd sold an item of plant to its subsidiary Vindhya Ltd at a loss. Which statement is consistent with Ind AS 110 on accounting for …
- Trident Ltd, the parent, has a subsidiary Orion Ltd whose reporting date is 31 December, while Trident's is 31 March. Orion Ltd can prepare …
- Himalaya Ltd sold a machine with a carrying amount of ₹5,00,000 to its subsidiary Nilgiri Ltd for ₹4,20,000, resulting in a loss in Himalaya…
- Arunachal Capital Ltd qualifies as an investment entity. It holds two subsidiaries: Brahma Ventures Ltd, a startup investee that is not an i…
- H Ltd owns 80% of S Ltd. During the year S Ltd sold goods costing ₹60,000 to H Ltd for ₹90,000, and H Ltd holds 1/3 of them at year end. The…