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AS 21


(issued in 2001)



To formulate principles and procedures for preparation and presentation of consolidated financial statements



 This standard is applicable to the following:


a. Group of enterprises under the control of a parent.

b. Investments in subsidiaries


it does not deal with

a. Amalgamations

b. Investments in associates

c. Investments in joint ventures






a. Ownership, directly or indirectly, of more than one half of the voting power.

b. Control of composition of board of directors of a company


Subsidiary: it includes both domestic and foreign companies.


Consolidated financial statement contains the following:

a.     Consolidated Balance sheet

b.     Consolidated P & L statement

c.      Notes, Explanatory material, additional statements


The consolidated financial statements are compiled on the basis of financial statements of PARENT and all enterprises that are controlled by the parent.

However, the parent shall not include its subsidiaries when

a.     Control on that subsidiary is intended for short term.

b.     Subsidiary operates under severe long term restrictions.





1. The financial statements of the parent and its subsidiaries should be combined on a ONE-TO-ONE BASIS by grouping together the like items of assets, liabilities, income and expenses.

2. The holding company should eliminate its cost of investment in each of its subsidiaries




3. If cost of investment > Equity share holding  ----->       GOODWILL


4. If cost of investment < Equity share holding    ----->     CAPITAL RESERVE


5. Minority interests in the net income should be identified and adjusted against the income of the group in order to arrive at the net income attributable to the owners of the parent; and


Disclosure requirements:

The consolidated financial statements should disclose the following wherever applicable:


a. The nature of the relationship between the parent and a subsidiary.


b. The impact of the acquisition and disposal of subsidiaries on the financial position.


c. The names of the subsidiary of which reporting date is different from that of the parent and the difference in reporting dates.


d. Minority interests should be presented in the consolidated balance sheet separately from liabilities and the equity of the parent's shareholders.


e. Consolidated financial statements should be prepared using uniform accounting policies. In case such uniform accounting policies cannot be incorporated in preparation of consolidated financial statements the same shall be disclosed.

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