CA Final FR | Consolidated Financial Statements – Scope & Applicability | Lecture 1

"What exactly will we cover in this Ind AS 110? What is the scope of this standard? Well, the answer is: this Ind AS will teach us how to consolidate the financial statements of subsidiaries with the financial statements of the parent. If a parent acquires control over any other entity, the parent has to consolidate the subsidiary's financial statements with its own financial statements. Ind AS 110 will teach us all about this consolidation process from the very beginning to the end. After studying this, over the next six, seven, or eight classes, you will thoroughly understand how to do subsidiary consolidation. Number two: 'Sir, what exactly is control?' We know that control means having more than 50% of the voting rights of any entity—whether those rights are held by you or by your subsidiary. Either you directly hold more than 50% of the voting rights, or your subsidiary is holding more than 50% of the voting rights of any other entity; you will say that the target entity is controlled by you. This means either A Limited has more than a 50% stake in B Limited, or A Limited has more than a 50% stake in B, and B has more than a 50% stake in C Limited. Even then, you will say, 'Yes, A Limited controls C Limited because A Limited controls B Limited'. It becomes clear right from this point. Even here you will say, 'Yes, no problem, even though C Limited is B's subsidiary, but because B is A's subsidiary, A not only controls B but also controls C'. Now, a question will immediately pop into your mind. What is it? 'Sir, B also controls C, right?' Absolutely, it does. 'So, sir, shouldn't B also prepare consolidated financial statements?' Absolutely, it should. And it will! B will prepare them, and A will prepare them too. B will consolidate C's financial statements to prepare BC's consolidated financial statements (the group is BC). And A will bring B and C together to prepare the consolidated financial statements for ABC as a whole. Yes, there are times when B claims an exemption here. How B claims this exemption and what the conditions are for it—we will study exactly that before we move forward into the consolidation procedures. Okay." #IndAS110 #ConsolidatedFinancialStatements #CAFinalFR #SubsidiaryCompany #ParentCompany #FinancialReporting #AccountingStandards #VotingRights #CorporateControl #SudarshanAgrawalClasses