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ind-AS PrACTiCe PoinTS: ConSolidATion exCePTion

u Commit to its investors that its business 3. Companies (Indian Accounting Stand-
purpose is to invest funds solely for ards) (Amendment) Rules, 2016
returns from capital appreciation, in- 4. IND-AS 110, IND-AS 112, IND-AS
vestment income or both, and 113 and IND-AS 109

u Measures and evaluates the performance 4.1 Section 129(3) of the Companies Act,
of all its investments on a fair value 2013 - Where a company has one or more
basis. subsidiaries, it shall, in addition to financial
4. Practice Points statements provided under Sub-section 2,
prepare a consolidated financial statement of
(i) Relevant statutory provisions - Certain the company and all of the subsidiaries in
relevant provisions of company law as the same form and manner as that of its own
applicable to investment entity financial which shall also be laid before the annual
statement preparation are analyzed general meeting of the company along with
hereinbelow. the laying of its financial statement under
1. Section 129(3) of the Companies Act, sub-section (2).
2013 4.2 Indian Accounting Standard Rules: IND-
2. Companies (Indian Accounting Stand- AS 110 - The requirements of IND-AS 110
ards) Rules, 2015 - Consolidated Financial Statements as amended
are extracted hereinbelow:

Para 4B u A parent that is an investment entity shall not present consolidated financial state-
ments if it is required, in accordance with paragraph 31 of this IND-AS, to measure
all of its subsidiaries at fair value through profit or loss.
Para 31 u Investment entities: Exception to consolidation
n Except as described in Para 32, an investment entity shall not consolidate its
subsidiaries or apply IND-AS 103 when it obtains control of another entity.
Instead, an investment entity shall measure an investment in a subsidiary at
fair value through profit or loss in accordance with IND-AS 109.
Para 32 u Notwithstanding the requirement of paragraph 31, if an investment entity has a
subsidiary that is not itself an investment entity and whose main purpose and
activities are providing services that relate to the investment entity’s investment
activities (paragraphs B85C-B85E), it shall consolidate that subsidiary in accordance
with paragraphs 19-26 of this Ind AS and apply the requirements of Ind AS 103
to the acquisition of any such subsidiary.
IND-AS 110 u An investment entity may provide investment-related services (e.g., investment advisory
Application services, investment management, investment support and administrative services),
Guidance either directly or through a subsidiary, to third parties as well as to its investors,
even if those activities are substantial to the entity, subject to the entity continuing
to meet the definition of an investment entity.
u If an investment entity has a subsidiary that is not itself an investment entity and
whose main purpose and activities are providing investment-related services or
activities that relate to the investment entity’s investment activities to the entity or
other parties, it shall consolidate that subsidiary. If the subsidiary that provides the
investment-related services or activities is itself an investment entity, the investment
entity’s parent shall measure that subsidiary at fair value through profit or loss.
Further, IND-AS 112 - Disclosure of Interests which it presents the disclosures required
in Other Entities (Para 25A) states that an by paragraphs 19A-19G.
investment entity need not provide the disclosures 4.3 Responsibility - The preparation of
required by Para 24 for an unconsolidated financial statements in accordance with IND-
structured entity that it controls and for AS requires the Directors of the parent

156 January 20 To January 26, 2018 u Taxmann’s Corporate Professionals Today u Vol. 41 u 50