Consolidated Balance Sheet Standard: AS 21
The preparation of a consolidated Balance Sheet for a holding company and its subsidiary company is primarily governed by Accounting Standard (AS) 21.
Key Aspects of AS 21
- Objective: AS 21 mandates that a parent company present consolidated financial statements, including a consolidated Balance Sheet, presenting the financial position of the parent and its subsidiaries as a single economic entity.
- Scope: It applies when a parent controls one or more subsidiaries.
- Requirement: It requires the parent to consolidate the financial statements of the parent and its subsidiaries, line by line, and eliminate the parent's investment in each subsidiary and the subsidiary's equity.
Other Accounting Standards
While other standards might touch upon related aspects, they are not the primary standard for consolidation itself:
- $AS 11$ deals with the effects of changes in foreign exchange rates.
- $AS 22$ concerns accounting for taxes on income.
- $AS 23$ relates to accounting for investments in associates within consolidated financial statements, not the primary consolidation process.
Therefore, AS 21 is the specific standard for the preparation of consolidated financial statements, including the Balance Sheet.
Important Questions from Indian Accounting Standards and IFRS
The accounting standard AS3 (Revised) has become mandatory w.e.f. accounting periods beginning from 01-04-2001 for which of the following enterprise?
Match List I with List II
Choose the correct answer from the options given below:List I
List II
A.
Ind - AS : 1
I.
Provisions, Contingent Liabilities and Contingent Assets
B.
Ind - AS : 29
II.
Consolidated Financial Statements
C.
Ind - AS : 37
III.
Presentation of Financial Statements
D.
Ind - AS : 110
IV.
Financial reporting in Hyperinflationary Economies
The sources of the Indian GAAP (IGAAP) include:
A. Indian Companies Act, 2013
B. Notifications issued by Ministry of Finance
C. Accounting standards
D. ICAI's pronouncements
Choose the correct answer from the options given below:
Which of the following events after the balance sheet date would normally qualify as adjusting events according to AS-4 (Events after balance sheet date)?
(A) The insolvency of a customer on the balance sheet date
(B) A decline in the market value of investments
(C) The declaration of an ordinary dividend
(D) The determination of the cost of assets purchased before the balance sheet date
Choose the most appropriate answer from the options given below:
Match List I with List II:
List- I
Accounting Standard
List – II
Description
A.
Ind - AS : 1 (I)
Investments in Associates and Jot ventures B.
Ind - AS : 8 (II)
Presentation of Financial Statements C.
Ind - AS : 28 (III)
Interim Financial Reporting D.
Ind - AS : 34 (IV)
Accounting policies. changes in Accounting Estimates and Errors
Choose the correct answer from the options given below -
