yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 02 June 2020
I don’t think you can treat it as a subsidiary because, a separate financial statements are needed for an entity. In the consolidated statements, subsidiaries, associates and JV are recognised by the control over investee. Please check the enclosed and this should probably the same treatment here as well.
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 02 June 2020
However, there is a problem here.. I have further checked IndAS 103 business combinations and classification of subsidiary, associate and JV interests is not mentioned. While IFRS 3 business combinations is defining as when a parent holding stake is more than 50%, it is classified as a subsidiary.
IndAS 28 classified JV interest as 20% or more. Things are different. But since you have 75%, it is like a subsidiary Interest your holding and can consolidate.
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 04 June 2020
If you have Controlling interest on assets, and if you have the right to control financial and operating policies of your investment, it is treated as a Subsidiary.
If you don’t have the Control, but have significant influence, then it will be treated as Associate.
If you are a parent who does not prepare consolidated statements- then maintain separate financial statements I.e. include investments in subsidiaries, associates, and JV in the same way.
If you are not a parent, and just an investor, you have to include the investment in your IndAS 27 financial statements.
If you are a parent, if you do consolidation statements, you have to consolidate using equity method for subsidiaries, Associates and JV.
So, if you only have significant interest, account it as Associate.
If you have control as well, it becomes a subsidiary.
Technically, all JV’s have significant influence or joint control. If you alone hold the control, it is a subsidiary. (previously held interests IndAS 103.41-42 or 27.6)
You can account this as: if you have consolidated statements, report it in accordance with equity method.
If you maintain separate statements: maintain records in accordance with ‘cost or instruments’.
CAclubindia
