ABC Inc., incorporated in a foreign country has a net worth of 700 crores. It has two Indian subsidiaries X Ltd. whose net worth as on 31st March…

As per Rule 4 (1) (ii) (a) of the Companies (Indian Accounting Standards) Rules, 2015, X Ltd. having net worth of 600crores at the end of the financial year 2015-2016, would be required to prepare its financial statements for the accounting periods commencing from 1st April, 2016, as per the Companies (Indian Accounting Standards) Rules, 2015. While Y Ltd. having net worth of 150crores in the year 2015-2016, would be required to prepare its financial statements as per the Companies (Accounting Standards) Rules, 2006. Since, the foreign company ABC Inc., is not a company incorporated under the Companies Act, 2013 or the earlier Companies Act, 1956, it is not required to prepare its financial statements as per the Companies (Indian Accounting Standards) Rules, 2015. As the foreign company is not required to prepare financial statements based on Ind AS, the net worth of foreign company ABC Inc. would not be the basis for deciding whether Indian Subsidiary X Ltd. and Y Ltd. are required to prepare financial statements based on Ind AS.