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CS Executive · Corporate Accounting and Financial Management · Consolidation of Accounts

Which of the following is a required step on loss of control of a subsidiary under Ind AS 110, and which ordinary consolidation matter does Ind AS 110 expressly leave to Ind AS 103?

On loss of control the parent derecognises the former subsidiary's assets and liabilities from the consolidated balance sheet. Ind AS 110 does not cover business combination accounting or goodwill arising on it; those matters are dealt with in Ind AS 103.

  1. ARetain subsidiary's assets at carrying amount; goodwill on business combination is dealt with in Ind AS 110
  2. BDerecognise the subsidiary's assets and liabilities from the consolidated balance sheet; goodwill on a business combination is dealt with in Ind AS 103Correct
  3. CDerecognise only the assets; goodwill on a business combination is dealt with in Ind AS 109
  4. DRecognise the gain or loss in reserves directly; goodwill is dealt with in Ind AS 110

Explanation

On loss of control the parent derecognises the assets and liabilities of the former subsidiary from the consolidated balance sheet. Ind AS 110 states it does not deal with accounting requirements for business combinations and their effect on consolidation, including goodwill, which are covered by Ind AS 103. The other options contradict this.

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