Accounting Standard (AS) 21
(revised 2016)
Consolidated Financial Statements1
[This Accounting Standard includes paragraphs set in bold italic type and plain
type, which have equal authority. Paragraphs in bold italic type indicate the
main principles. This Accounting Standard should be read in the context of its
objective, the Preface to the Statements of Accounting Standards2and the
‘Applicability of Accounting Standards to Various Entities’ (See Appendix 1 to this
Compendium).]
Objective
The objective of this Standard is to lay down principles and procedures for
preparation and presentation of consolidated financial statements. Consolidated
financial statements are presented by a parent (also known as holding
enterprise) to provide financial information about the economic activities of its
group. These statements are intended to present financial information about a
parent and its subsidiary(ies) as a single economic entity to show the economic
resources controlled by the group, the obligations of the group and results the
group achieves with its resources.
The Standard was originally issued in 2001. The Standard was revised by the Ministry of
Corporate Affairs, Government of India, vide Notification dated 30th March, 2016, which was
relevant for companies following Companies (Accounting Standards) Rules, 2006 and which
should be used for preparation of accounts for accounting periods commencing on or after the
date of notification. The Standard was revised for entities other than companies in 2016 by
the Council of the ICAI and applicable for accounting periods commencing on or after April 1,
2017 (see Announcement XLV). Consequent to this revision, paragraph 9 was revised. The
Standard has been notified as part of Companies (Accounting Standards) Rules, 2021, under
Companies Act, 2013.
1 It is clarified that AS 21 does not require an enterprise to presents consolidated financial
statements. In other words, the accounting standard does not mandate an enterprise to
present consolidated financial statements but, if the enterprise presents consolidated
financial statements for complying with the requirements of any statute or otherwise, it should
prepare and present consolidated financial statements in accordance with AS 21. (See
Appendix 1 ‘Applicability of Accounting Standards to Various Entities’ to this Compendium).
2 Attention is specifically drawn to paragraph 4.3 of the Preface, according to which
Accounting Standards are intended to apply only to items which are material.
, 364 AS 21 (revised 2016)
Scope
1. This Standard should be applied in the preparation and presentation of
consolidated financial statements for a group of enterprises under the
control of a parent.
2. This Standard should also be applied in accounting for investments in
subsidiaries in the separate financial statements of a parent.
3. In the preparation of consolidated financial statements, other Accounting
Standards also apply in the same manner as they apply to the separate financial
statements.
4. This Standard does not deal with:
(a) methods of accounting for amalgamations and their effects on
consolidation, including goodwill arising on amalgamation (see AS 14,
Accounting for Amalgamations);
(b) accounting for investments in associates (at present governed by AS 13,
3
Accounting for Investments ); and
(c) accounting for investments in joint ventures (at present governed by AS
4
13, Accounting for Investments ).
Definitions
5. For the purpose of this Standard, the following terms are used with the
meanings specified:
5.1 Control:
(a) the ownership, directly or indirectly through subsidiary(ies), of
more than one-half of the voting power of an enterprise; or
3 Accounting Standard (AS) 23, Accounting for Investments in Associates in Consolidated
Financial Statements, specifies the requirements relating to accounting for investments in
associates in Consolidated Financial Statements.
4 Accounting Standard (AS) 27, Financial Reporting of Interests in Joint Ventures, specifies
the requirements relating to accounting for investments in joint ventures.
(revised 2016)
Consolidated Financial Statements1
[This Accounting Standard includes paragraphs set in bold italic type and plain
type, which have equal authority. Paragraphs in bold italic type indicate the
main principles. This Accounting Standard should be read in the context of its
objective, the Preface to the Statements of Accounting Standards2and the
‘Applicability of Accounting Standards to Various Entities’ (See Appendix 1 to this
Compendium).]
Objective
The objective of this Standard is to lay down principles and procedures for
preparation and presentation of consolidated financial statements. Consolidated
financial statements are presented by a parent (also known as holding
enterprise) to provide financial information about the economic activities of its
group. These statements are intended to present financial information about a
parent and its subsidiary(ies) as a single economic entity to show the economic
resources controlled by the group, the obligations of the group and results the
group achieves with its resources.
The Standard was originally issued in 2001. The Standard was revised by the Ministry of
Corporate Affairs, Government of India, vide Notification dated 30th March, 2016, which was
relevant for companies following Companies (Accounting Standards) Rules, 2006 and which
should be used for preparation of accounts for accounting periods commencing on or after the
date of notification. The Standard was revised for entities other than companies in 2016 by
the Council of the ICAI and applicable for accounting periods commencing on or after April 1,
2017 (see Announcement XLV). Consequent to this revision, paragraph 9 was revised. The
Standard has been notified as part of Companies (Accounting Standards) Rules, 2021, under
Companies Act, 2013.
1 It is clarified that AS 21 does not require an enterprise to presents consolidated financial
statements. In other words, the accounting standard does not mandate an enterprise to
present consolidated financial statements but, if the enterprise presents consolidated
financial statements for complying with the requirements of any statute or otherwise, it should
prepare and present consolidated financial statements in accordance with AS 21. (See
Appendix 1 ‘Applicability of Accounting Standards to Various Entities’ to this Compendium).
2 Attention is specifically drawn to paragraph 4.3 of the Preface, according to which
Accounting Standards are intended to apply only to items which are material.
, 364 AS 21 (revised 2016)
Scope
1. This Standard should be applied in the preparation and presentation of
consolidated financial statements for a group of enterprises under the
control of a parent.
2. This Standard should also be applied in accounting for investments in
subsidiaries in the separate financial statements of a parent.
3. In the preparation of consolidated financial statements, other Accounting
Standards also apply in the same manner as they apply to the separate financial
statements.
4. This Standard does not deal with:
(a) methods of accounting for amalgamations and their effects on
consolidation, including goodwill arising on amalgamation (see AS 14,
Accounting for Amalgamations);
(b) accounting for investments in associates (at present governed by AS 13,
3
Accounting for Investments ); and
(c) accounting for investments in joint ventures (at present governed by AS
4
13, Accounting for Investments ).
Definitions
5. For the purpose of this Standard, the following terms are used with the
meanings specified:
5.1 Control:
(a) the ownership, directly or indirectly through subsidiary(ies), of
more than one-half of the voting power of an enterprise; or
3 Accounting Standard (AS) 23, Accounting for Investments in Associates in Consolidated
Financial Statements, specifies the requirements relating to accounting for investments in
associates in Consolidated Financial Statements.
4 Accounting Standard (AS) 27, Financial Reporting of Interests in Joint Ventures, specifies
the requirements relating to accounting for investments in joint ventures.
