DQuestion 14 1 pts If a subsidiary (or associate or joint venture) adopts IFRS l

Question

DQuestion 14 1 pts If a subsidiary (or associate or joint venture) adopts IFRS later than its parent, it measures its assets and liabilities in its individual accounts at the carrying amounts that would be included in the parent's IFRS consolidated financial statements based on the parent's date of transition, before consolidation and business combination adjustments. This is the only way the subsidiary can measure the assets and liabilities in its individual accounts. Is this statement true or false? True Falsc

Explanation / Answer

According to IFRS 1, if a subsidiary (or associate or joint venture) adopts IFRS later than its parent then IFRS 1 allows the choice between two types of measurements in the subsidiary’s separate financial statements. These two choices are as follows:

i) The carrying amount that would be included in the parent's IFRS consolidated financial statements, based on the parent's date of transition to IFRSs, ‘before consolidation and business combination adjustments and

ii) The carrying amount which is required by IFRS 1 based on the subsidiary's date of transition to IFRSs

Thus, the given statement which states “If a subsidiary (or associate or joint venture) adopts IFRS later than its parent, it measures its assets and liabilities in its individual accounts at the carrying amounts that would be included in the parent’s IFRS consolidated financial statements based on the parent’s date of transition, ‘before consolidation and business combination adjustments. This is not the only way the subsidiary can measure the assets and liabilities in its individual accounts” is false because there are two ways available for the subsidiary (or associate or joint venture) which adopts IFRS later than its parent rather than only one way.

Therefore, the given statement is false.

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