Ind AS 28 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Ind AS 28 prescribes the accounting for investments in associates and joint ventures and sets out the requirements for applying the equity method — under which the investment is recognised at cost and adjusted thereafter for the investor's share of the investee's post-acquisition results.
Overview
Ind AS 28, notified under the Companies (Indian Accounting Standards) Rules, 2015, defines significant influence and joint control and requires the equity method for investments in associates and joint ventures in consolidated financial statements. It works alongside Ind AS 111 (joint arrangements) and Ind AS 110 (consolidation).
Significant Influence
Significant influence is the power to participate in the financial and operating policy decisions of the investee without controlling or jointly controlling those policies. It is presumed where the investor holds 20% or more of the voting power (directly or through subsidiaries), and presumed absent below 20%, though either presumption may be rebutted. Evidence of significant influence includes board representation, participation in policy-making, material transactions, interchange of managerial personnel, and provision of essential technical information.
The Equity Method
Under the equity method, the investment is initially recognised at cost. The carrying amount is then increased or decreased to recognise the investor's share of the investee's profit or loss after the acquisition date. The investor's share of the investee's profit is recognised in the investor's profit or loss; its share of the investee's OCI is recognised in the investor's OCI. Distributions (dividends) received reduce the carrying amount of the investment.
Applying the Method
Any difference between the cost of the investment and the investor's share of the net fair value of the investee's identifiable assets and liabilities is treated as goodwill (included in the carrying amount, not amortised) or, if negative, recognised as income. The investor's share of profit is adjusted for depreciation of the fair value adjustments and for the elimination of unrealised profits on upstream and downstream transactions to the extent of its interest. Uniform accounting policies and coterminous reporting dates (or adjustments) are applied.
Losses in Excess of Interest
If the investor's share of losses equals or exceeds its interest in the associate or joint venture (including any long-term interests that in substance form part of the net investment), the investor discontinues recognising its share of further losses. Additional losses are recognised only to the extent the investor has incurred legal or constructive obligations or made payments on behalf of the investee.
Worked Example
An investor acquires a 30% interest in an associate for ₹6,00,00,000, giving significant influence. In the year, the associate earns a profit of ₹1,00,00,000 and pays a dividend of ₹20,00,000. The investor increases the carrying amount by its 30% share of profit (₹30,00,000) recognised in its profit or loss, and reduces it by its 30% share of the dividend (₹6,00,000). The investment's carrying amount becomes ₹6,00,00,000 + ₹30,00,000 − ₹6,00,000 = ₹6,24,00,000.
Impairment and Discontinuing the Method
Because equity-method goodwill is not tested separately, the whole carrying amount is tested for impairment as a single asset under Ind AS 36 whenever indicators arise. When an investment ceases to be an associate or joint venture, the equity method is discontinued; any retained interest is remeasured at fair value, and the difference is recognised in profit or loss.
Key Differences from AS 23/27 (old)
Ind AS 28 requires the equity method for both associates and joint ventures (proportionate consolidation of JVs is not permitted), mandates fair value adjustments on acquisition, and requires the single-asset impairment approach — refinements over the earlier AS 23.