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CA Final · Financial Reporting · Consolidated Financial Statements

Which statement best describes consolidated financial statements as defined in Ind AS 110 (Appendix A, as reproduced)?

Consolidated financial statements present the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries as those of a single economic entity. They are therefore not parent-only statements, nor limited to balance sheet items, nor an equity-method presentation.

  1. AStatements of the parent only, with investments in subsidiaries shown at fair value
  2. BStatements in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single economic entityCorrect
  3. CStatements combining only the assets and liabilities of parent and subsidiaries, excluding income and cash flows
  4. DStatements prepared by an investor to present its interest in associates using the equity method

Explanation

The defined term covers assets, liabilities, equity, income, expenses and cash flows of parent and subsidiaries presented as a single economic entity. Option C omits income, expenses and cash flows. Option A describes separate statements, and option D describes equity accounting, not consolidation.

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