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

Which of the following is a step that Ind AS 110 requires in preparing consolidated financial statements?

The required step is to eliminate the carrying amount of the parent's investment in each subsidiary against the parent's portion of the subsidiary's equity. Ind AS 110 also requires like items to be combined and intragroup balances, income, expenses and cash flows to be eliminated in full.

  1. AEliminate the carrying amount of the parent's investment in each subsidiary against the parent's portion of equity of each subsidiaryCorrect
  2. BAdd the parent's investment in each subsidiary to the subsidiary's equity
  3. CEliminate only intragroup assets and liabilities but retain intragroup income and expenses
  4. DCombine only the assets and liabilities of subsidiaries, leaving income and expenses at the parent level

Explanation

Ind AS 110 requires like items of assets, liabilities, equity, income, expenses and cash flows to be combined, and the parent's investment in each subsidiary to be offset against the parent's portion of equity. It also requires intragroup assets, liabilities, equity, income, expenses and cash flows to be eliminated in full. The other options misstate these steps.

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