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CA Final · Financial Reporting · Ind AS 27 Separate Financial Statements

Zenith Ltd is a parent that qualifies as an investment entity and, as required by paragraph 31 of Ind AS 110, measures its investment in a subsidiary at fair value through profit or loss under Ind AS 109. How must Zenith account for that subsidiary in its separate financial statements under Ind AS 27?

Zenith must measure the subsidiary at fair value through profit or loss under Ind AS 109 in its separate financial statements too. Ind AS 27 requires the same accounting as is required in consolidation under Ind AS 110, leaving no choice of cost.

  1. AAt cost, because separate statements allow a free choice
  2. BIn the same way, at fair value through profit or loss under Ind AS 109Correct
  3. CUsing the equity method
  4. DAt cost, but with an annual impairment test

Explanation

Ind AS 27 states that if a parent is required under paragraph 31 of Ind AS 110 to measure its investment in a subsidiary at fair value through profit or loss, it shall also account for that investment in the same way in its separate financial statements. The free choice between cost and Ind AS 109 therefore does not apply here.

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