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CA Final · Financial Reporting · Ind AS 110 Consolidation Procedure for Subsidiaries

Which of the following correctly describes a consolidation procedure required by Ind AS 110 when preparing consolidated financial statements of a parent and its subsidiaries?

Consolidation combines like items of assets, liabilities, equity, income, expenses and cash flows of parent and subsidiaries, and offsets the parent's investment against its share of each subsidiary's equity. Intragroup balances and transactions are then eliminated in full, so side-by-side presentation or retaining them is incorrect.

  1. ACombine like items of assets, liabilities, equity, income, expenses and cash flows of the parent with those of its subsidiaries, then offset the parent's investment against its portion of subsidiary equityCorrect
  2. BPresent the parent's and subsidiaries' statements side by side without combining line items
  3. COffset the parent's investment against the subsidiary's equity, but retain intragroup balances to show gross group activity
  4. DEliminate intragroup cash flows only when they exceed materiality of the subsidiary's equity

Explanation

Ind AS 110 requires combining like items of the parent and subsidiaries, offsetting the carrying amount of the parent's investment in each subsidiary against the parent's portion of the subsidiary's equity, and eliminating intragroup balances and transactions in full. Retaining intragroup balances contradicts this.

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