H Ltd. purchased a 100% subsidiary S Ltd. for 500,000 at the end of March, 20X3, when the fair value of the S Ltd.'s net assets was - 400,000. H…
CA Final · Financial Reporting · RTP · September 2025
H Ltd. purchased a 100% subsidiary S Ltd. for 500,000 at the end of March, 20X3, when the fair value of the S Ltd.'s net assets was - 400,000. H Ltd. sold 60% of its investment in the S Ltd. in March, 20X5 for 675,000, leaving H Ltd. with 40% investment and significant influence. At the date of disposal, the carrying value of the net assets of S Ltd., excluding goodwill, is 800,000. The fair value of the investment in S Ltd. retained is proportionate to the fair value of the 60% investment sold. Required: Compute gain or loss for H Ltd. on sale of 60% stake in S Ltd. for the purpose of separate financial statements and consolidated financial statements.
Suggested Answer and Working Notes:
Computation of gain on the sale of 60% investment in Separate Financial Statements of H Ltd.'s for the year ended 31st March, 20X5 ₹ Sale proceeds 6,75,000 Less: Cost of investment in S Ltd. (5,00,000 x 60%) (3,00,000) Gain on sale in the parent's financial statements 3,75,000
Topics: Ind AS 28
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