How should Dream Play Limited be consolidated on transition to Ind AS considering that Fastest Finger Limited has opted to avail the exemption from…

(a) Appendix C to Ind AS 101 prescribes an optional exemption from retrospective restatement in relation to past business combinations. Paragraph C (4) (j) of Appendix C to Ind AS 101 prescribes that when the past business combinations are not restated and a parent entity had not consolidated an entity as a subsidiary in accordance with its previous GAAP (either because it was not regarded as a subsidiary or no consolidated financial statements were required under previous GAAP), then the subsidiary’s assets and liabilities would be included in the parent’s opening consolidated financial statements at such values as would appear in the subsidiary’s separate financial statements if the subsidiary were to adopt the Ind AS as at the parent’s date of transition. It may be noted here that the above exemption is available only under those circumstances where the parent, in accordance with the previous GAAP, has not presented consolidated financial statements for the previous year; or where the consolidated financial statements were prepared in accordance with the previous GAAP, but the entity was not treated as a subsidiary, associate or joint venture under the previous GAAP. As such, if the consolidated financial statements were required to be prepared and there is a change in classification of the entity from subsidiary to associate or vice versa in accordance with Ind AS, then the above exemption does not apply. In the present case, the subsidiary’s separate financial statements would be prepared as if it was a first-time adopter of Ind AS i.e. after availing relevant first-time adoption mandatory exceptions and voluntary exemptions. The parent will adjust the carrying amount of the subsidiary’s assets and liabilities to the amounts that Ind ASs would require in the subsidiary’s balance sheet. The deemed cost of goodwill equals the difference at the date of transition between: (a) the parent’s interest in those adjusted carrying amounts; and (b) the cost in the parent’s separate financial statements of its investment in the subsidiary. The measurement of non-controlling interest and deferred tax follows from the measurement of other assets and liabilities.