Ind AS 110 Consolidated Financial Statements: A Practitioner Guide for FY 2026-27
Ind AS 110 (Consolidated Financial Statements) is the Indian Accounting Standard that prescribes when and how a parent company must consolidate its subsidiaries into group financial statements.
The Ministry of Corporate Affairs notified Ind AS 110 via the Companies (Indian Accounting Standards) Rules, 2015. It became mandatory from 1 April 2016 for Phase I companies. Ind AS 110 supersedes AS 21 for Ind AS-applicable entities and aligns closely with IFRS 10.
For FY 2026-27, Indian conglomerates such as Tata Sons and Reliance Industries face complex consolidation decisions under Ind AS 110. Special attention is required for de facto control situations and layered holding structures.
Ind AS 110 at a Glance
Ind AS 110 establishes the principle that a parent entity must present consolidated financial statements when it controls one or more subsidiaries. The standard primarily serves companies preparing group accounts under the Indian Accounting Standards regime.
| Field | Value |
|---|---|
| Standard Number | Ind AS 110 |
| Full Name | Consolidated Financial Statements |
| Issuing Body | ICAI (Accounting Standards Board) |
| Notified By | MCA, Companies (Indian Accounting Standards) Rules, 2015, dated 16 February 2015 |
| Effective Date | 1 April 2015 (voluntary), 1 April 2016 (mandatory Phase I) |
| Supersedes | AS 21 (Consolidated Financial Statements) for Ind AS-applicable entities |
| Equivalent Standard | AS 21 ↔ Ind AS 110 ↔ IFRS 10 |
| Applies To | All companies required to follow Indian Accounting Standards that have one or more subsidiaries. Section 129(3) of Companies Act requires CFS |
What is Ind AS 110: Consolidated Financial Statements?
Ind AS 110 defines when an entity must consolidate another entity as a subsidiary and how to prepare consolidated financial statements. The standard requires consolidation whenever an investor controls an investee, based on power over the investee, exposure to variable returns, and the ability to affect those returns.
The Institute of Chartered Accountants of India introduced Ind AS 110 as part of India's convergence with International Financial Reporting Standards. It replaced the older voting power-based model in AS 21 with a more robust control assessment aligned with IFRS 10.
CFOs, statutory auditors, finance teams in listed companies, and CA students studying group accounting refer to this standard most frequently.
Objective of Ind AS 110
The objectives of Ind AS 110 are:
- Establish principles for presenting and preparing consolidated financial statements when an entity controls one or more other entities.
- Define the principle of control and require control as the basis for consolidation.
- Set out how to apply the principle of control to identify whether an investor controls an investee and therefore must consolidate it.
These objectives ensure that group financial statements provide a true and fair view as required by Section 129 of the Companies Act, 2013. Proper application prevents off-balance sheet structures from obscuring economic reality in consolidated accounts.
Who Must Apply Ind AS 110?
Entities covered, applicability table
All companies required to follow Indian Accounting Standards must apply Ind AS 110 if they have subsidiaries. This includes:
| Category | Applicability |
|---|---|
| Phase I (listed/net worth ≥ Rs 500 cr) | Mandatory from FY 2016-17 |
| Phase II (net worth ≥ Rs 250 cr) | Mandatory from FY 2017-18 |
| Voluntary adopters | Permitted from FY 2015-16 onwards |
Section 129(3) of the Companies Act mandates consolidated financial statements where there are subsidiaries, joint ventures or associates.
Scope exclusions
Entities not covered by Ind AS 110 include:
- Post-employment benefit plans accounted for under Ind AS 19
- Some intermediate parents meeting specific exemption criteria (Para 4)
When the standard does not apply
Post-employment benefit plans are covered under Ind AS 19 Employee Benefits. Intermediate parents may be exempt if they meet all conditions in Para 4, such as being wholly-owned subsidiaries whose ultimate parent produces consolidated financial statements available for public use under Indian GAAP or IFRS.
Key Definitions under Ind AS 110
| Term | Definition |
|---|---|
| Control | Power over investee; exposure/rights to variable returns; ability to affect those returns (Para 6). |
| Power | Rights giving current ability to direct relevant activities affecting investee’s returns. |
| Variable returns | Returns that change with investee’s performance, dividends, fees, residual interests or tax benefits. |
| Subsidiary | Entity controlled by another entity (the parent). |
| Non-controlling interest (NCI) | Equity in a subsidiary not attributable directly or indirectly to a parent. |
| Investment entity | Entity obtaining funds from investors for investment management; measures investments at fair value. |
Recognition and Measurement under Ind AS 110
When to recognise
An investor must consolidate an investee when it controls that investee per Para 7 of Ind AS 110. Control exists only if all three elements are present:
Power over the investee,
Exposure or rights to variable returns,
Ability to use power over the investee to affect those returns.
Control assessment is continuous; if facts or circumstances change, such as changes in shareholding or contractual rights, control must be reassessed immediately.
Initial measurement
At acquisition date, consolidation involves combining like items of assets, liabilities, equity, income and expenses across parent and subsidiaries on a line-by-line basis (Para B86). Intra-group balances and transactions are eliminated in full.
Non-controlling interests at acquisition can be measured either:
At fair value; or
At NCI’s proportionate share of identifiable net assets,
as elected per acquisition under Ind AS 103 Business Combinations.
**Goodwill formula:**
Goodwill = Consideration transferred + NCI at acquisition + Fair value of previously held interest, Net identifiable assets acquired
If previously held equity interests exist (step acquisitions), these are remeasured at fair value at acquisition date with any resulting gain/loss recognised in profit or loss.
Subsequent measurement
Consolidation continues each reporting period until control is lost:
Changes in ownership interest without loss of control are treated as equity transactions; no gain/loss recognised in profit or loss.
If control is lost (for example through disposal), derecognise subsidiary’s assets/liabilities and NCI.
Recognise any retained investment at fair value.
Recognise gain/loss arising from loss of control in profit or loss per Para 25.
Investment entities do not consolidate most subsidiaries but instead measure them at fair value through profit or loss per Para 31.
The Three Elements of Control
Ind AS 110 requires all three elements, power over the investee; exposure/rights to variable returns; ability to use power to affect those returns, before consolidation is triggered. Power usually comes from majority voting rights but may also arise through contractual arrangements or regulatory rights even without majority ownership.
Variable returns encompass dividends, management fees, residual profits/losses and tax benefits linked directly to performance outcomes rather than fixed payments alone.
Judgement is crucial where voting rights do not clearly confer control or where multiple parties hold significant stakes but one party exercises de facto power due to widely dispersed holdings among others.
Worked Examples on Ind AS 110
Example 1: Acquisition of 60% subsidiary with full goodwill method
Maharashtra Holdings Ltd acquires a controlling stake in Krishna Steel Industries by purchasing 60% equity on 1 April 2025 for Rs 240 crore cash consideration. The fair value of Krishna Steel’s identifiable net assets at acquisition totals Rs 320 crore; NCI is measured at fair value Rs 160 crore per management estimate.
Computation Table
| Component | Amount (Rs crore) | Description |
|---|---|---|
| Consideration transferred | Rs 240 | Paid by Maharashtra Holdings Ltd |
| NCI at acquisition | Rs 160 | Fair value approach elected |
| Net identifiable assets | Rs 320 | Per acquisition-date balance sheet |
| Goodwill | Rs 80 | Calculation below |
Goodwill = Rs 240 + Rs 160, Rs 320 = Rs 80 crore
Journal Entry on Consolidation
Dr Identifiable Net Assets Rs 320 crore
Dr Goodwill Rs 80 crore
Cr Investment Rs 240 crore
Cr Non-controlling Interest Rs 160 crore
In subsequent years’ consolidations:
Profit is attributed between owners of Maharashtra Holdings Ltd and NCI based on their respective shares each period after eliminating intra-group balances fully.
Example 2: Loss of control through partial disposal
Sundaram Holdings Ltd holds a controlling interest (70%) in Sundaram Logistics with net assets carrying amount Rs 100 crore in consolidated books; NCI stands at Rs 30 crore equity component on balance sheet date before transaction.
On 1 October 2025 Sundaram Holdings disposes half its holding, i.e., sells off a further stake equal to 35%, for cash consideration Rs 70 crore while retaining only 35% interest post-sale which no longer confers control over Sundaram Logistics.
Assume retained stake’s fair value equals transaction price pro-rata i.e., Rs 35 crore.
Computation Table
| Component | Amount (Rs crore) | Description |
|---|---|---|
| Cash received | Rs 70 | Sale proceeds |
| Retained investment | Rs 35 | Fair value post-loss-of-control |
| Derecognised net assets | Rs 100 | Carrying amount |
| Derecognised NCI | Rs 30 | Remove NCI related equity |
Gain on loss-of-control =
(Rs70 + Rs35), (Rs100, Rs30) =
Rs105, Rs70 = Rs35 crore
Journal Entry
Dr Cash Rs70 crore
Dr Investment in Associate Rs35 crore
Dr Non-controlling Interest Rs30 crore
Cr Net Assets of Subsidiary Rs100 crore
Cr Gain on Loss of Control (P&L) Rs35 crore
The retained stake will be accounted as an associate under Ind AS 28 if significant influence exists; otherwise as a financial asset per relevant standards.
Disclosure Requirements under Ind AS 110
Disclosures under Ind AS 110 and Schedule III to the Companies Act, 2013 ensure transparency in group structures, control assessments, and risks. Proper disclosure enables users of consolidated financial statements to understand the scope of consolidation, significant judgements made, and the interests of non-controlling shareholders.
| Item | Requirement | Para Reference |
|---|---|---|
| Significant judgements and assumptions in determining control | Disclose in line with Ind AS 112 | Cross-ref Ind AS 112 |
| Composition of the group | Disclose principal subsidiaries with country of incorporation, principal activities, ownership percentage | Para 10 of Ind AS 112 |
| Non-controlling interests information | Disclose NCI's portion of profit, accumulated NCI, and summarised financial information for each material NCI | Para 12 of Ind AS 112 |
| Restrictions on access to assets of subsidiaries | Disclose nature and extent of significant restrictions | Para 13 of Ind AS 112 |
| Risks associated with consolidated structured entities | Disclose nature and extent | Para 14 of Ind AS 112 |
| Changes in ownership without loss of control | Disclose effect on equity attributable to owners of the parent | Para 18 of Ind AS 112 |
Auditors must verify these disclosures as part of their responsibilities under SA 700 to ensure fair presentation and compliance.
Common Mistakes & Industry-Specific Considerations
Common errors auditors flag
- Assessing control based only on majority voting rights without considering protective or kick-out rights.
- Failing to consolidate special purpose or structured entities where de facto control exists.
- Not aligning accounting policies between parent and subsidiary at consolidation.
- Omitting elimination of intra-group transactions, especially upstream sales.
- Treating changes in non-controlling interest without loss of control as profit or loss items instead of equity transactions.
- Incorrect goodwill calculation in step acquisitions by not remeasuring previously held interests at fair value.
Industry application notes
Conglomerates such as Tata Sons or Adani Group must apply Ind AS 110 rigorously due to complex holding structures. De facto control situations often arise where no single entity has majority voting rights but one party directs key decisions.
Investment entities like mutual funds or alternative investment funds may qualify for the fair value exception if they meet strict criteria set out in Para 27. These entities do not consolidate most subsidiaries but instead measure them at fair value through profit or loss.
Real estate developers frequently use special purpose vehicles (SPVs) for project structuring. Each SPV is typically consolidated unless joint control exists, in which case Ind AS 28 applies instead.
Ind AS 110 vs AS 21 vs IFRS: Key Differences
The following table summarises the key differences between India's legacy standard (AS 21), Ind AS 110, and IFRS 10:
| Aspect | AS 21 | Ind AS | IFRS |
|---|---|---|---|
| Definition of control | Voting power-based; ownership >50% | Power + variable returns + ability | Same as Ind AS |
| Measurement of NCI at acquisition | Proportionate share of net assets | Choice: fair value or proportionate share | Choice |
| Step acquisitions | Cost-based; no remeasurement | Remeasure previously held interest at fair value | Same as Ind AS |
| Loss of control | Cost-based gain/loss calculation | Fair value retained interest; comprehensive gain/loss | Same as Ind AS |
| Investment entity exception | Not available | Available (Para 31) | Available |
India’s adoption of Ind AS 110 largely aligns with IFRS 10. However, certain implementation guidance and carve-outs exist to address Indian regulatory requirements. The investment entity exception is a notable addition compared to legacy Indian GAAP.
Latest Amendments to Ind AS 110 (FY 2026-27)
No amendments have been notified to Ind AS 110 for FY 2026-27 as of 2026-05-02. The standard continues to apply in its existing form.
Related Standards You Should Know
- [Ind AS 103](/ind-as-103-business-combinations/), Business combinations accounting determines acquisition-date measurement of goodwill and NCI.
- [Ind AS 28](/ind-as-28-investments-in-associates/), Investments in associates and joint ventures (significant influence/joint control without control).
- [Ind AS 111](/ind-as-111-joint-arrangements/), Joint arrangements, joint operations and joint ventures.
- [Ind AS 112](/ind-as-112-disclosure-of-interests-in-other-entities/), Disclosure of interests in other entities.
- [AS 21](/as-21-consolidated-financial-statements/), Equivalent consolidation standard for non-Ind AS companies; uses voting power-based control test.
Need Help with Ind AS 110 Compliance?
Patron Accounting LLP supports clients across India with end-to-end solutions for group consolidation under Ind AS 110 Consolidated Financial Statements. Our team combines technical knowledge with sector experience from manufacturing, real estate, conglomerates, NBFCs, and investment entities.
Our services include:
- Statutory Audit
- Ind AS Advisory
- Financial Reporting & Schedule III
- Disclosure Review
Schedule a 30-minute consultation with our Ind AS team, Pune · Mumbai · Delhi · Gurugram.
Frequently Asked Questions (FAQs)
Every parent company required to follow Indian Accounting Standards must prepare consolidated financial statements if it controls one or more subsidiaries. Section 129(3) of the Companies Act, 2013 mandates this requirement for companies with subsidiaries, associates, or joint ventures.
Control under Ind AS 110 exists when an investor has power over an investee, exposure or rights to variable returns from involvement with that investee, and the ability to use power to affect those returns. All three elements must be present for consolidation.
The primary difference is that Ind AS 110 uses a broader definition of control based on power plus exposure to variable returns plus ability to affect those returns. In contrast, AS 21 relies mainly on majority voting rights for consolidation decisions.
Yes. Under Ind AS 110 read with Ind AS 103, a parent may elect either fair value or proportionate share measurement for NCI at each business combination. This choice affects goodwill recognised on consolidation.
When a parent loses control over a subsidiary, such as by disposing shares, the parent derecognises all assets/liabilities and NCI related to that subsidiary. Any retained interest is measured at fair value. Gain or loss is recognised in profit or loss per Para 25.
In a step acquisition where an investor obtains control after holding an earlier stake, previously held interests are remeasured at fair value on acquisition date. Any resulting gain or loss is recognised immediately in profit or loss according to Para 42(a)-(b).
Investment entities, such as mutual funds or private equity funds, do not consolidate most subsidiaries but measure them at fair value through profit or loss if they meet strict criteria outlined in Para 27-31. This exception applies only when all conditions are met.
Yes. All intra-group balances, transactions, income and expenses, including unrealised profits, must be eliminated fully during consolidation under Para B86(b). This ensures group results reflect only external transactions.
Structured entities such as SPVs must be assessed for de facto control using all three elements, power, exposure/rights to variable returns, ability to affect those returns, even if no majority voting rights exist. Judgement is often required for these cases.
Schedule III requires disclosure on composition of the group; significant judgements made regarding consolidation; details about non-controlling interests; restrictions on asset transfers within the group; risks from structured entities; and changes in ownership interests without loss of control, all cross-referenced from Ind AS 112.
About This Article
Reviewed by CA & CS Team · Patron Accounting LLP
Technical reviewer: CA Sundram Gupta, FCA
Last reviewed: 2026-05-02
Sources: ICAI Compendium of Accounting Standards · MCA Notification (Companies (Indian Accounting Standards) Rules, 2015, dated 16 February 2015) · IFRS Foundation