Combine Parent & Translated Subsidiary SFSs Line-by-Line, Even If It Leads to Different Carrying Amounts in CFS for Similar Assets

Para B87 of Ind AS 110 states that if a member of the group uses accounting policies other than those adopted in the consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to that group member’s financial statements in preparing the consolidated financial statements to ensure conformity with the group’s accounting policies.

In case where parent company is operating in India having INR as functional currency and subsidiary company operating in foreign currency and incorporating in India having functional currency in US Dollar. Both companies acquired the identical leasehold land and capitalised the same to fixed asset. Due to conversion of functional currency to presentation currency i.e. USD to INR has given rise to translation gain in the value of the asset over a period of year. While consolidating the financial statement items line by line, auditor observed that same identical ROU leasehold land are taken on different values and believes that a parent shall prepare consolidated financial statements using uniform accounting policies for like transactions and other events in similar circumstances.

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