AS-21 – Consolidated Financial Statements :

The objective of this standard is to lay down principles and procedures for preparation and presentation of consolidated financial statements and for accounting for investments in subsidiaries in separate financial statements. Consolidated financial statements are presented by a parent (also known as holding enterprise) to provide financial information about the economic activities of its group. Consolidated financial statements are the financial statements of a group presented as those of a single enterprise.

Consolidated financial statements normally include consolidated balance sheet, consolidated statement of profit and loss, and notes, other statements and explanatory material that form an integral part thereof. Consolidated cash flow statement is presented in case a parent presents its own cash flow statement. The consolidated financial statements are presented, to the extent possible, in the same format as that adopted by the parent for its separate financial statements. In preparing consolidated financial statements, the financial statements (balance sheet and profit and loss account) of the parent and its subsidiaries should be combined on a line by line basis by adding together like items of assets, liabilities, incomes and expenses.

For the purpose of consolidation the financial statements are required to be drawn up to the same reporting date. If it is not practicable to draw up the financial statements of one or more subsidiaries to such date and, accordingly, those financial statements are drawn up to different reporting dates, adjustments should be made for the effects of significant transactions or other events that occur between those dates and the date of the parent’s financial statements. In any case, the difference between reporting dates should not be more than six months.

Consolidated financial statements should be prepared using uniform accounting policies for like transactions and other events in similar circumstances. If it is not practicable to use uniform accounting policies in preparing the consolidated financial statements, then the items in which different accounting policies have been followed should be disclosed.

Minority interests should be presented in the consolidated balance sheet separately from liabilities and the equity of the parent’s shareholders. The following disclosures should also be made in consolidated financial statements:

(i) a list of all subsidiaries including the name, country of incorporation or residence, proportion of ownership interest and, if different, proportion of voting power held;

(ii) where applicable:

– the nature of the relationship between the parent and a subsidiary, if the parent does not own, directly or indirectly through subsidiaries, more than one-half of the voting power of the subsidiary;

– the effect of the acquisition and disposal of subsidiaries on the financial position at the reporting date, the results for the reporting period and on the corresponding amounts for the preceding period; and

– the names of the subsidiary(ies) of which reporting date(s) is/are different from that of the parent and the difference in reporting dates.