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A private company (ABC Pvt. Ltd.) is in the process of converting into LLP. During the preparation of statement of assets and liabilities, are consolidated accounts of ABC Pvt. Ltd. to be considered or standalone accounts? Please share views.
Please note ABC Pvt. Ltd. holds 48% shares in another private company and so consolidates its accounts every year.
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In my view, as the ABC Private Limited holds 48% share in another company it is an Associate of that company (Not a holding company as it requires more than 50% Share) and it's accounting treatment will be as per AS-13: Accounting for Investments.
Now while converting the Company into LLP, the separate entity concept should be considered (Separate Financial Statement) and the Investment will still appear in the Assets side of the Balance Sheet.
Expert's opinion should be taken before going ahead.