Ind AS 28
Investments in Associates and Joint Ventures

October 2026 update: Ind AS 28: Associates & Joint Ventures - Equity Method in Practice

2-Minute Summary

• Significant influence is a facts-and-circumstances conclusion; a 20% voting interest is a rebuttable indicator, not an automatic answer.
• The equity method starts at cost and adjusts for the investor’s share of post-acquisition profit/loss and OCI; distributions reduce the carrying amount.
• Long-term interests that form part of the net investment interact with Ind AS 109 before the Ind AS 28 loss-allocation sequence.
• Investor-investee transactions and impairment need separate controls; goodwill is embedded in the investment carrying amount.

Decision path

Prove significant influence before opening the equity-method workbook

Board representation, participation in policy decisions, material transactions, interchange of managerial personnel and provision of essential technical information can evidence significant influence. Voting interest is an important indicator, but the conclusion can be rebutted in either direction when facts are persuasive. Potential voting rights that are currently exercisable or convertible may matter. The accounting paper should identify the date influence is obtained or lost because that date determines when equity accounting begins or ceases.

The equity-method roll-forward is an ownership and accounting reconciliation

Start with cost, then recognise the investor’s share of the investee’s profit or loss and OCI using aligned accounting policies. Dividends are not additional income under the equity method; they reduce the carrying amount. Eliminate the investor’s share of unrealised gains or losses on upstream and downstream transactions to the extent required, subject to the standard’s exceptions. Reporting-date differences and policy mismatches must be adjusted where necessary. Goodwill is included within the investment and is not tested as a separate asset.

Losses, long-term interests and impairment need a defined sequence

Apply Ind AS 109 to qualifying long-term interests before considering the allocation of Ind AS 28 losses. If the investor’s share of losses exhausts its interest, further losses are recognised only when the investor has incurred legal or constructive obligations or made payments on behalf of the investee. Once the equity-method carrying amount is established, test the entire investment for impairment when indicators exist. On loss of significant influence or joint control, the retained interest is measured as required by the applicable standards.

Worked example

Investor A owns 30% of Associate B. Opening carrying amount is Rs 12 crore. B earns Rs 4 crore and pays dividends of Rs 1 crore. Ignoring other adjustments, A recognises Rs 1.20 crore share of profit and reduces the investment by Rs 0.30 crore for its share of dividend, producing Rs 12.90 crore before impairment or transaction-elimination adjustments. If A also has a long-term loan that in substance forms part of the net investment, the Ind AS 109 and loss-allocation sequence must be applied rather than simply adding the loan to the equity account.

Close checklist

• Document evidence for significant influence or joint control.
• Fix the acquisition/loss-of-influence dates.
• Align investee policies and reporting dates.
• Reconcile share of profit, OCI and distributions.
• Eliminate relevant unrealised investor-investee gains/losses.
• Sequence Ind AS 109, loss allocation and impairment correctly.

Questions practitioners ask

Primary sources

• ICAI - Ind AS 28 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 28 Associates and Joint Ventures: Equity-Method Control File

A period-end control file for significant influence, equity pickup, eliminations, losses and impairment.

Finin2min 2-Minute Summary

• A 20% voting-power holding creates a presumption of significant influence, but the presumption can be rebutted; holdings below 20% can still carry significant influence when facts support it.
• Under the equity method, the investment begins at cost and is subsequently adjusted for the investor's share of the investee's profit or loss and OCI; distributions reduce the carrying amount.
• Upstream and downstream transactions require elimination of unrealised gains or losses to the extent required by the standard.
• Loss allocation, long-term interests and obligations need a controlled sequence so losses are not stopped or extended incorrectly.
• When significant influence or joint control ends, the retained interest may move to Ind AS 109 measurement as required.

Significant influence is a governance fact, not a percentage shortcut

Start with voting power, board representation, policy participation, material transactions, management interchange and essential technical information. Twenty per cent is a rebuttable presumption, not an automatic definition. The analysis should also consider potential voting rights and the substance of arrangements that affect participation in financial and operating policy decisions.

Once an investee is an associate or joint venture within Ind AS 28, the equity-method ledger becomes a continuing reconciliation between the investor's carrying amount and its share of the investee's post-acquisition movements.

Build the equity-method bridge every reporting period

Begin with the opening carrying amount. Add the investor's share of profit or loss and OCI, adjust for distributions, acquisition-date basis differences and required eliminations on investor-investee transactions, then evaluate loss allocation and impairment. The bridge should reconcile to investee financial statements adjusted for consistent accounting policies and appropriate reporting-date differences.

Long-term interests that in substance form part of the net investment require interaction with Ind AS 109 and Ind AS 28. They should not be treated as an informal extension of ordinary shares without working through the prescribed sequence.

Worked example: 30% associate with an upstream sale

An investor owns 30% of an associate. The associate sells inventory to the investor at a profit and part of that inventory remains unsold to external customers at year-end. The equity-method working should identify the unrealised profit embedded in the closing inventory and eliminate the investor's share as required. A simple 30% multiplication of the associate's reported profit would overstate the investor's recognised share.

Equity-method control file

• Significant-influence/joint-control memo with governance evidence.
• Investee trial balance and financial statements used for the pickup.
• Accounting-policy and reporting-date alignment adjustments.
• Acquisition-date basis difference and goodwill schedule.
• Upstream/downstream unrealised-profit eliminations.
• Loss, long-term-interest and obligation sequence.
• Impairment indicators and retained-interest accounting on loss of influence/control.

Does 20% ownership always create an associate?

No. It creates a presumption of significant influence that can be rebutted; influence can also exist below 20% when facts demonstrate it.

How are dividends from an associate treated under the equity method?

They reduce the carrying amount of the investment rather than being recognised again as a separate share of profit.

Do long-term loans to an associate fall outside the equity-method analysis?

Not necessarily. Long-term interests that in substance form part of the net investment require the Ind AS 109 and Ind AS 28 sequence.

What happens when an investment stops being an associate or joint venture?

Ind AS 28 requires discontinuation of the equity method and, where the retained interest becomes a financial asset, fair-value measurement under Ind AS 109 as specified.

Official sources

• ICAI - Ind AS 28 Investments in Associates and Joint Ventures - Significant influence, equity method, discontinuation and long-term-interest requirements
• 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: Equity-method caution: significant influence, investor-investee adjustments, long-term interests and impairment require investee-specific evidence and the full Ind AS 28 analysis.