Consolidation under Companies Act 2013

[Narasimhan E]

Dear All,

Sec 129(3) - states that where the company has one or more subsidiaries, it shall prepare consolidated financial statements.

Further Subsidiary is defined to be a "company" per the Act.

This means if a Company has invested in a Partnership Firm, and holds controlling interest, it need not be consolidated per the Act. However per Accounting Standards Consolidation is mandatory even if its a partnership firm as long as control exists.

Any update on this dichotomy?

Regards

CA E Narasimhan

  

[CS Simranjeet Singh]

Hii for the purpose of this Section we need to consider subsidiary only which shall include associate company and joint venture only.. can u pls share relevant part of accounting standard which says its mandatory for partnership firm also.

 

 

With Best Regards?

Simranjeet Singh

Associate Company Secretary

"To know, is to know that you know nothing. that is the meaning of true knowledge."

 

   

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[Narasimhan E]

Definition of Control per Para 5 of AS 21 is as under:

Control: 

(a) the ownership, directly or indirectly through subsidiary(ies), of more than one-half of the voting power of an enterprise; or 

(b) control of the composition of the board of directors in the case of a company or of the composition of the corresponding governing body in case of any other enterprise so as to obtain economic benefits from its activities.

The moment Control is attracted, it has to be consolidated.

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Regards 
E Narasimhan
Partner 

KEN & Co.
Chartered Accountants 
"Vasantha Krupa", 
#42, III Cross, 
Venkateshwara Layout, S G Palya 
Bangalore 560029.

Phone: + 91-98867-44517
Website: ken-co.in