29 May 2016
My co. A pvt. ltd hs to first time prepare CFS pursuant to CO. Act 2013. the Date of investment in subsidiary is 3rd March 2007. will i have to make consolidated balnce sheet from that period i.e, 2006-7. to arrive at correct position .
20 July 2024
When preparing consolidated financial statements for the first time under the Companies Act, 2013, the treatment of investment in subsidiaries prior to the effective date of the Act (3rd March 2014) requires specific consideration. Here’s how you should approach it:
### Date of Investment in Subsidiary
- **Investment Date (Pre-Companies Act 2013):** If your company (Co. A Pvt. Ltd.) made investments in its subsidiary before 3rd March 2014, the Companies Act, 2013 introduced new provisions regarding the preparation of consolidated financial statements. Specifically, Section 129 and other relevant provisions of the Act govern the requirements for consolidated financial statements.
### Requirements for Consolidated Financial Statements
1. **Consolidation Period:** Normally, when preparing consolidated financial statements for the first time, you would consolidate from the date of acquisition of control over the subsidiary until the reporting date of the current financial statements.
2. **Transition Provisions:** The transition provisions under the Companies Act, 2013 do not typically require you to go back and prepare consolidated financial statements from the date of investment before 3rd March 2014. Instead, you consolidate from the effective date of the Companies Act, 2013 (3rd March 2014) onwards.
3. **Comparative Information:** While you do not need to prepare consolidated financial statements for periods before 3rd March 2014, you may need to provide comparative information in your consolidated financial statements. This means you should disclose the financial results and position of your subsidiary for the comparative periods in your first set of consolidated financial statements under the new Act.
### Practical Steps
- **Determine Reporting Date:** Choose a reporting date for your consolidated financial statements under the new Act (e.g., as of 31st March).
- **Consolidate Post-Transition:** Consolidate the financial results and position of your subsidiary from 3rd March 2014 (the effective date of the Companies Act, 2013) onwards.
- **Provide Comparative Information:** Include comparative financial information for the subsidiary for periods before 3rd March 2014 in your first set of consolidated financial statements.
- **Accounting Treatment:** Ensure all investments in subsidiaries are accounted for using appropriate consolidation methods (e.g., equity method or proportionate consolidation method) as per accounting standards applicable in India (e.g., Indian Accounting Standards).
### Conclusion
You do not need to prepare consolidated financial statements from the date of investment in subsidiaries before 3rd March 2014. Instead, consolidate from the effective date of the Companies Act, 2013 (3rd March 2014) onwards, and provide comparative information where required. Ensure compliance with applicable accounting standards and the provisions of the Companies Act, 2013 for accurate and compliant reporting of consolidated financial statements.
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