Ind AS 110, Consolidated Financial Statements : The objective of Ind AS 110, is to establish principles for the presentation  and preparation of consolidated financial statements when an entity controls one or more other entities.

Consolidated Financial Statements are the financial statements of a group 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 entity.

Ind AS 110

The Standard requires an entity that is a parent to present Consolidated Financial Statements (CFS). A limited exemption is  available  to  some entities. The Standard defines the principle of control and establishes control as the basis for determining which entities are consolidated in  the  consolidated financial statements.

An investor controls an investee when the investor is exposed, or  has  rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

An investor controls an investee, if and only if, the investor has all the following:

  • Power over an investee –  when the investor has existing rights that  give it the current ability to direct the relevant activities, e.,  the activities that significantly affect the investee’s returns.
  • Exposure, or rights, to variable returns from its involvement with the investee – An investor is exposed, or has rights, to variable returns from its involvement with the investee when the investor’s returns from its involvement have the potential to vary as a result of  the investee’s performance. The investor’s returns can be only positive, only negative or both positive and negative.
  • The ability to use power over the investee to affect the amount of the investor’s returns – An investor controls an investee if the investor not only has power over the investee and exposure or rights to variable returns from its involvement with the investee, but also has the ability to use its power to affect the investor’s returns from its involvement with the investee. Thus, an investor with decision-making rights shall determine whether it is a principal or an

A parent of an investment entity shall consolidate all entities that it controls, including those controlled through an investment entity subsidiary, unless the parent itself is an investment entity.


Accounting Requirements

A parent shall prepare consolidated financial statements using uniform accounting policies for like transactions and other events in similar circumstances. Intragroup balances and transactions must be eliminated.

Non-controlling interests in subsidiaries shall be presented in  the  consolidated statement of financial position within equity, separately from the equity of the owners of the parent.

Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary are equity transactions (i .e., transactions with owners in their capacity as owners).

If parent losses control over the subsidiary, the parent shall:

  • derecognize the assets and liabilities of former subsidiary;
  • recognizes any investment retained in the subsidiary at its fair value in accordance with Ind AS 109;
  • recognizes gain and loss associated with the loss of control.

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