Page 3 - 17. COMPILER QB - INDAS 110

and
(iv) Its ultimate or any intermediate parent produces financial statements that are available for public use
and comply with Ind ASs, in which subsidiaries are consolidated or are measured at fair value through

profit or loss in accordance with this Ind AS.
In accordance with the above, a parent need not present consolidated financial statements if it is a:
— wholly-owned subsidiary; or
— is a partially-owned subsidiary of another entity and all its other owners, including those not
otherwise entitled to vote, have been informed about, and do not object to, the parent not presenting

consolidated financial statements.
Although GD Limited is a partly-owned subsidiary of G Limited, it is the wholly-owned subsidiary of Gamma
Limited (and therefore satisfies the condition 4(a)(i) of Ind AS 110 without regard to the relationship with its
immediate owners, i.e. G Limited and D Limited). Thus, GD Limited being the wholly owned subsidiary fulfills

the conditions as mentioned under paragraph 4(a)(i) and is not required to inform its other owner D Limited
of its intention not to prepare the consolidated financial statements.
Thus, in accordance with the above, GD Limited may take the exemption given under paragraph 4(a) of Ind
AS 110 from presentation of consolidated financial statements.

In Alternative Scenario, where both G Limited and D Limited are owned by an individual Mr. X, then GD

Limited is ultimately wholly in control of Mr. X (i.e., an individual) and hence it cannot be considered as a
wholly owned subsidiary of an entity.
This is because Ind AS 110 makes use of the term ‘entity’ and the word 'entity’ includes a company as well as
any other form of entity. Since, Mr. X is an ‘individual’ and not an ‘entity’, therefore, GD Limited cannot be
considered as a wholly owned subsidiary of an entity.

Therefore, in the given case, GD Limited is a partially-owned subsidiary of another entity. Accordingly, in order
to avail the exemption under paragraph 4(a), its other owner, D Limited should be informed and it should not
object to GD Limited not presenting consolidated financial statements. Further, for the purpose of
consolidation of G Limited and D Limited, GD Limited will be required to provide relevant financial information
as per Ind AS.

Q2. (Nov 21)

PP Ltd., a non-investment entity, is the parent of Praja Ltd. within the meaning of Ind AS 110 ‘Consolidated
Financial Statements’. The investment in Praja Ltd. was carried in the separate financial statements of PP
Ltd. at fair value with changes in fair value recognised in the other comprehensive income. On 1st April, 20X2,
PP Ltd. qualifies as one that is an investment entity. Carrying amount of the investment on 1st April, 20X2
was Rs. 8,00,000. The fair value of its investment in Praja Ltd was Rs. 10,00,000 on that date. PP Ltd had
recognised in OCI an amount of Rs. 1,00,000 as a previous fair value increase related to the investment in

Praja Ltd.
How would PP Ltd account for the investment in Praja Ltd on the date of change of its classification/status
as an investment entity, in its separate financial statements?

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