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

Which statement correctly describes the consolidation procedures in Ind AS 110 for combining a parent with 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 carrying amount against its portion of each subsidiary's equity. Intragroup items are eliminated in full, with goodwill handled under Ind AS 103.

  1. AOnly assets and liabilities are combined; income and expenses are added at the parent's share
  2. BIntragroup balances are eliminated only to the extent of the parent's ownership percentage
  3. CLike items of assets, liabilities, equity, income, expenses and cash flows are combined, and the parent's investment is offset against its portion of the subsidiary's equityCorrect
  4. DThe carrying amount of the parent's investment is retained alongside the subsidiary's equity to show the full investment

Explanation

Appendix B requires combining like items of assets, liabilities, equity, income, expenses and cash flows. It also requires offsetting the carrying amount of the parent's investment against the parent's portion of the subsidiary's equity, with goodwill dealt with under Ind AS 103. Intragroup items are eliminated in full, not partially.

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