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Consolidation of financials

jamali.k (Chartered Accountant) (43 Points)

25 October 2016

Pvt Td company have the associate company(Share 25.6% in Associate Company) but don't have any subsidiary company. is it required to prepare consolidated financials statements for the FY 2015-16? If yes what is the method of accounting for investment in consolidated financials and is it required consolidate the assets and liabilities of the associate company in consolidated financials and to create minority interest in financials statements? and provide the auditor's report for the same. Thanking You

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3 Replies

CA D.C. Bansal (Accounts Head) (283 Points)
Replied 25 October 2016

Consolidation of Associate company is required only if Holding company is preparing consolidated financial statements.

Amit Ashok Chawla (Corporate Trainer) (383 Points)
Replied 30 October 2016

Consolidation is mandatory for any registered company. The accounting requires that if an entity does not have a subsidiary, it is required to present its stand-alone financial statements as consolidated financial statements. Since the above company has an associate, the share of profits in the associate are required to be shown in income statement. The investment made in the associate and the respective share of profits are required to be presented as investment made in associate in the balance sheet in consolidated financial statements.

In stand-alone financial statements, investment in associate needs to be shown at fair value through other comprehensive income (OCI).

I hope this meets the requirements of your question.