nikhil garg (student) (55 Points)
27 June 2016
Rama chary Rachakonda
(Master in Accounts & high court Advocate)
(8674 Points)
Replied 27 June 2016
Consolidated financial statements combine the financial statements of separate legal entities controlled by a parent company into one set of financial statements for the entire group of companies.
For example, let's assume that Northern Electric Power (NEP) is an electric utility with its stock traded on a stock exchange. NEP acquires all of the stock of Midwest Gas Corporation (MGC). Both NEP and MGC continue as separate legal entities. NEP is the parent company and MGC is the subsidiary company. Each of these corporations will continue to operate its respective business and each will issue its own financial statements. However, the investors and potential investors in NEP will find it helpful to see the financial results and the financial position of the economic entity (the combination of NEP and MGC) that they control.
CS Arjun Rajagopal
(B.com, ACS)
(1056 Points)
Replied 27 June 2016
| Originally posted by : nikhil garg | ||
 |
Whether a company having wholly owned foreign subsidiary is required to make consolidated financial statement and if yes ,are they mandatory as per companies act ?? |  |
Yes, CFS is mandatory . Kindly refer Section 129(3) of the Companies Act, 2013.
P C Agrawal
(Registered independent director Past Ch)
(8229 Points)
Replied 27 June 2016
Foreign subsidiary is a 'body corporate' and not a 'company' under Companies Act 2013. However, Explanation (d) to Section 2(87) specifically mentions that for the purposes of that clause (i.e. definition of subsidiary company), the expression 'company' includes any body corporate. Hence foreign body corporate being a subsidiary company, its consolidation is mandatory u/s 129(3).
Jatin Bajaj
(CS)
(2930 Points)
Replied 27 June 2016
Kindly refer section 129(3), read with rule 5 of company accounts rule
According to section 129(3), where companies has one or more subsidiaries, it shall in addition to the financial ststement provided under (2), consolidated financial ststement of the company of all of the nsubsidiaries company in same form and manner as of its own which shall be laid before AGM of the company along with financial statement
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