Ind AS 27
Separate Financial Statements

October 2026 update: Ind AS 27: Separate Financial Statements - Cost vs Ind AS 109

2-Minute Summary

• Ind AS 27 governs accounting for subsidiaries, associates and joint ventures when separate financial statements are presented.
• For each investment category, the entity uses cost or Ind AS 109 in accordance with the Indian standard; the equity-method option in current IAS 27 is not an Ind AS option.
• A cost-accounted investment meeting held-for-sale criteria is dealt with under Ind AS 105.
• Dividends are recognised in profit or loss when the right to receive them is established, subject to the wider accounting facts.

Decision path

First distinguish separate statements from consolidated or equity-accounted reporting

Separate financial statements are not simply the parent-only page of a consolidation workbook. They are financial statements in which investments in subsidiaries, joint ventures and associates are accounted for under the measurement choices permitted by Ind AS 27. Consolidated financial statements apply Ind AS 110, and associates or joint ventures in group reporting generally bring in Ind AS 28. The accounting memo should state which statements are being prepared and why, because the same investee can have a very different carrying amount in separate and consolidated reporting.

Choose the measurement basis by category and apply it consistently

Ind AS 27 permits the relevant investments to be accounted for at cost or in accordance with Ind AS 109. The policy is applied for each category of investments rather than selected investee by investee to achieve a preferred result. Under the Indian standard, do not import the equity-method option found in IAS 27. Where a cost-accounted investment qualifies as held for sale, Ind AS 105 becomes relevant. Investment entities also have specific rules, so a blanket “all subsidiaries at cost” conclusion can be wrong without checking the entity’s status and the nature of the subsidiary.

Dividends and reorganisations need more than a cash-receipt entry

A dividend from a subsidiary, associate or joint venture is recognised when the right to receive it is established. The receipt should also trigger a review of impairment indicators and of whether the distribution changes the evidence supporting the investment’s carrying amount. In group reorganisations, transfers between entities under common control can require careful analysis of the applicable standards and cost basis. Keep the legal shareholding register, consideration evidence, board approvals and investment ledger tied to the accounting policy.

Worked example

Parent P carries its subsidiary S at cost of Rs 40 crore in separate financial statements. S declares a Rs 6 crore dividend after the reporting date, with the shareholder right arising in the next period. P does not recognise the dividend merely because S had accumulated profits at year-end; recognition follows when P’s right is established. P should separately assess whether facts around S’s performance or distributions indicate impairment of the cost investment.

Close checklist

• State whether the reporting set is separate or consolidated.
• Define investment categories and the chosen cost/Ind AS 109 policy.
• Do not use the IAS 27 equity-method option in Ind AS reporting.
• Check Ind AS 105 when a cost investment is held for sale.
• Tie dividend recognition to the legal right date.
• Retain investment ledger, shareholding evidence and impairment review.

Questions practitioners ask

Primary sources

• ICAI - Ind AS 27 text in the 2025-26 Compendium
• ICAI - Compendium of Indian Accounting Standards 2025-26

For periods affected by later notified amendments, read the compendium together with the applicable MCA notification listed by ICAI.

October 2026 update: Ind AS 27 Separate Financial Statements for Holding Companies

A standalone holding-company policy file for subsidiary, associate and joint-venture investments.

Finin2min 2-Minute Summary

• In separate financial statements, investments in subsidiaries, joint ventures and associates are accounted for at cost or in accordance with Ind AS 109, subject to the standard's specific provisions.
• The same accounting is applied to each category of investments; finance should document what constitutes each category.
• Cost-accounted investments classified as held for sale are addressed through Ind AS 105 when its criteria are met.
• Dividends from subsidiaries, joint ventures or associates are recognised in profit or loss when the right to receive them is established.
• Do not carry the equity method from consolidated or equity-accounted reporting into Ind AS 27 separate financial statements unless the notified Indian standard permits it for the fact pattern.

Separate financial statements answer a different question

A holding company's standalone balance sheet does not replicate consolidation. In consolidated financial statements, a subsidiary's assets, liabilities, income and expenses are consolidated; an associate or joint venture may be equity accounted. In separate financial statements, the investor accounts for the investment itself under Ind AS 27's permitted bases.

The accounting-policy memo should define the categories - subsidiaries, joint ventures and associates - and state whether each category is carried at cost or under Ind AS 109. The policy must then be applied consistently to the category.

Cost does not mean 'never revisit the balance'

A cost-accounted investment still interacts with other standards. Held-for-sale classification can bring Ind AS 105 into the measurement process. Impairment indicators and the applicable impairment framework also need consideration. Corporate reorganisations, changes in investment-entity status and distributions require specific analysis rather than automatic continuation of the historical carrying amount.

Dividend income is recognised when the investor's right to receive the dividend is established. Finance should reconcile the investee's approval, record date/payment evidence, withholding taxes where relevant and the parent company's receivable/cash entry.

Worked example: parent with two subsidiaries and an associate

Suppose a parent carries its subsidiary investments at cost and has elected the permitted policy for that category. A new subsidiary acquired during the year should enter the same category policy rather than being measured differently because its acquisition was recent. The associate category should be assessed under the entity's documented policy. The standalone ledger should not post the parent's share of the associate's annual profit merely because the associate is equity accounted in consolidated reporting.

Holding-company close controls

• Maintain a legal-entity map and classification of each investee.
• Document the measurement policy for each investment category.
• Reconcile acquisitions, disposals and ownership changes to legal documents.
• Test held-for-sale and impairment interactions where relevant.
• Reconcile dividend rights and receipts.
• Cross-check standalone and consolidated entries so consolidation logic does not leak into separate accounts.

Can a holding company use cost for subsidiary investments in separate financial statements?

Yes. Ind AS 27 permits cost or Ind AS 109, subject to its provisions.

Must every investee use the same measurement basis?

The standard requires the same accounting for each category of investments; document the category policy clearly.

Is an associate's profit automatically booked in the parent's separate P&L?

No. The separate-financial-statement accounting follows Ind AS 27's permitted investment measurement basis rather than automatically applying the equity method.

When is dividend income recognised?

When the entity's right to receive the dividend is established.

Official sources

• ICAI - Ind AS 27 Separate Financial Statements - Paras 10-12: cost/Ind AS 109 policy, consistency by category and dividend recognition
• ICAI - Compendium 2025-26 - Current Ind AS corpus
• ICAI - Notified Ind AS Rules - Current rules gateway
• Finin2min Ind AS hub - use the standard-level page for broader paragraph-by-paragraph learning.

Note: Professional-use caution: Separate-statements caution: investment classification and measurement must follow the entity's documented Ind AS 27 policy and the facts of each investee category.