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

Which of the following is NOT a step required of a parent under Ind AS 110 when it loses control of a subsidiary?

Continuing to consolidate the former subsidiary's assets until the retained investment is sold is not required. On loss of control, the parent derecognises the subsidiary's assets and liabilities, recognises the retained investment at fair value and recognises the related gain or loss.

  1. ADerecognise the assets and liabilities of the former subsidiary from the consolidated balance sheet
  2. BRecognise the retained investment at fair value when control is lost
  3. CRecognise the gain or loss associated with loss of control attributable to the former controlling interest
  4. DContinue to consolidate the former subsidiary's assets until the retained investment is soldCorrect

Explanation

Paragraph 25 lists three steps: derecognise assets and liabilities of the former subsidiary, recognise the retained investment at fair value, and recognise the gain or loss attributable to the former controlling interest. Continuing to consolidate after control is lost contradicts the first step.

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