Auditguru Auditguru Frequently Asked Questions(FAQ) Auditguru Auditguru
 Meet Us Here
AishwaryaAishwarya asked 3 years ago
1 Answers
RaviRavi Staff answered 3 years ago

As per Ind AS 110 – Para 27 to 33

  • Investment entities are entities whose business is to invest money and they value majority of there investments on fair value.
  • Such entities are not suppose to consolidate its subsidiaries, because investments are made for capital appreciation and investment income and to expand business.
  • But if subsidiary is created to expand investment services then consolidation is  should be done.
  • Further parent of IE will consolidate IE & Its subsidiaries unless Parent is also IE. That means there is no exception to parent of IE, it will do regular consolidation of all subsidiaries direct or indirect unless parent itself is IE. 
  • Holding company of investment entity should consolidate all subsidiaries that means it should consolidate subsidiary doing investment business , so that means IE generally does not consolidate its subsidiaries unless it is giving investment services but it will get consolidated with its holding company.

Please comment back for more clarity.
Below are para 31 to 33
Investment entities: exception to consolidation
31 Except as described in paragraph 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.
32 Notwithstanding the requirement in paragraph 31, if an investment entity has a subsidiary that provides services that relate to the investment entity’s investment activities (see 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.
33 A parent of an investment entity shall consolidate all entities that it controls, including those controlled through an investment entity subsidiary, unless the parent itself is an investment entity.

Call Back Request