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A company's foreign subsidiary uses IFRS for its local financial reporting but prepares accounts under the Companies Act / Section 133 (Indian GAAP) for consolidation with the Indian parent. On the parent's Ind AS transition, the foreign subsidiary's PREVIOUS GAAP for first-time adoption purposes is:
AWhichever standard the foreign subsidiary's auditor accepts
BBoth — disclosed in parallel during the transition period
CIndian GAAP (the Companies Act / Section 133 / AS-based statements used for the parent's consolidation) — NOT IFRS
DIFRS — as that is the foreign subsidiary's primary reporting basis
Answer & Solution
Correct answer: C. Indian GAAP (the Companies Act / Section 133 / AS-based statements used for the parent's consolidation) — NOT IFRS
Definition (7) of Previous GAAP — for first-time adoption purposes in India, previous GAAP is the basis used for STATUTORY REPORTING IN INDIA immediately before adopting Ind AS. For consolidation with an Indian parent, the foreign sub's Indian-GAAP statements ARE the previous GAAP, NOT its local IFRS. The first-time adoption framework is rooted in India's statutory reporting context.
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