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Dear sir,
As per Kaplan study text subsidiary may be excluded from consolidation either because it is:
-held for resale, or
-immaterial.When I was going through my revision kit I have encountered an mcq asking about bases for exclusion of subsidiaries from consolidation for which the answer was that there is no basis on which a subsidiary may be excluded from consolidation. However one of the choices was “held for resale” (the one I chose).
So I’m at a loss here. I know this issue may be immaterial to overall exam points. But I still wanted to hear your opinion on the bases for exclusion of subsidiary from consolidation.
There is at least one base for exclusion – where the subsidiary is immaterial in the context of the group as a whole
Assets held for sale are, apparently, no longer excludable.
But they DO have a different treatment – the group’s interest in a subsidiary held for sale is shown as separate line items in assets and in liabilities rather than being aggregated with the assets and the liabilities of the other companies within the group
OK?
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