Page 253 - CA Final PARAM Digital Book.

its other members, including those not otherwise entitled to vote, having been intimated in
writing and for which the proof of delivery of such intimation is available with the company,
do not object to the company not presenting consolidated financial statements;
it is a company whose securities are not listed or are not in the process of listing on any stock
exchange, whether in India or outside India; and
Its ultimate or any intermediate holding company files consolidated financial statements with
the Registrar which is in compliance with the applicable Accounting Standards. Thus, all the
three above-mentioned conditions need to be complied for getting exemption from
preparation of consolidated financial statements.
Part III – Case Discussion
➢ In the given case, Xcess Ltd. is itself a holding company of two subsidiaries i.e. not satisfying the
condition of being wholly/partially owned subsidiary.

Part IV – Conclusion
➢ Therefore, contention of the CEO of the company is not tenable and the company needs to
prepare consolidated financial statements.

Temporary Holding ( AS & IND AS - Old Course – (M19E, N19E, SM21)
QNO Combined) New Course – (SM23)
436.000
TITANIUM CNO—GA.180
R Ltd. owns 51% voting power in S Ltd. It however, holds and discloses all the shares as “Stock-in-trade”
in its financial statements since 'the shares are held exclusively with a view to their subsequent disposal
in the near future. R Ltd. represents that while preparing Consolidated Financial Statements, S Ltd. can
be excluded from the consolidation. As the Statutory Auditor of R Ltd, how would you deal when the
consolidated financial statements are to be drawn up in compliance with Ind AS?
Answer Part I -- Relevant Standards & Laws
▪ Section 129(3) of the Companies Act, 2013
▪ Companies (Accounts) Rules, 2014,
▪ Accounting Standard 21
▪ Accounting Standard 13
▪ IND-AS 110
Part II -- Requirements of Relevant Standards & Laws
➢ Companies Act, 2013
Section 129(3) of the Companies Act ,2013
Where a company has one or more subsidiaries, including associate company and joint
venture, it shall, in addition to its own financial statements prepare a consolidated
financial statement of the company and of all the subsidiaries in the same form and
manner as that of its own.

Companies (Accounts) Rules, 2014,
The consolidation of financial statements of the company shall be made in accordance
with the provisions of Schedule III to the Act and the applicable accounting standards.
However, a company which is not required to prepare consolidated financial statements
under the Accounting Standards, it shall be sufficient if the company complies with
provisions on consolidated financial statements provided in Schedule III of the Act

➢ Accounting Standard

Accounting Standard 21 “Consolidated Financial Statements”, states that
Accounting Standard 21 “Consolidated Financial Statements”, states that a subsidiary
should be excluded from consolidation when control is intended to be temporary because
the shares are acquired and held exclusively with a view to its subsequent disposal in the
near future.

Control to be considered Temporary& AS 13
Where an enterprise owns majority of voting power by virtue of ownership of the shares
of another enterprise and all the shares are acquired & held exclusively with a view to
their subsequent disposal in the near future, the control by the first mentioned enterprise
would be considered temporary and the investments in such subsidiaries should be
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