Ind AS 28: Investments in Associates and Joint Ventures…

Standard orientation

What Ind AS 28 is designed to achieve

Prescribe accounting for associates and application of the equity method to associates and joint ventures.

Scope: Applies to investors with significant influence or joint control. Separate financial statements are governed by Ind AS 27.

Significant influence

Participation in policy decisions without control.

Presumption

Twenty per cent voting power is rebuttable.

Equity method

Initial cost, then share of P&L and OCI.

Losses

Can extend into long-term net-investment interests and obligations.

Full standard map

Paragraph-by-paragraph register

Paragraphs	Requirement and simple decode
1–3	Objective, scope and definitions Covers associates, joint ventures and equity-method terminology.
5–7	Significant influence indicators Use rebuttable voting presumptions, board participation, policy involvement, material transactions, management interchange and essential information.
8–9	Potential voting rights Consider substantive rights currently exercisable or convertible.
10	Equity method Recognise at cost and adjust for post-acquisition P&L, OCI and distributions.
11–14	Investor interest and long-term interests Include direct/indirect holdings and identify instruments forming part of net investment.
14A	Ind AS 109 sequence Apply Ind AS 109, including impairment, to long-term interests before Ind AS 28 loss allocation.
15	P&L, OCI and distributions Share of investee P&L goes to P&L, share of OCI to OCI and dividends reduce carrying amount.
16–17	Exemptions Qualifying parent-style exemptions may apply.
18–19	Venture-capital election Specified investors may elect FVTPL investment by investment.
20–21	Held for sale and discontinued operations Apply Ind AS 105 to the qualifying portion and equity method to the remainder.
22–25	Loss or retention of influence Fair-value retained interests when influence is lost; proportionate OCI treatment on partial disposal retaining influence.
26	JV to associate Continue equity method without remeasurement.
27–30	Acquisition and ownership changes Identify goodwill/bargain purchase and account for changes while retaining influence.
31–36	Procedures Use recent statements, adjust intervening events, align policies and keep reporting-date differences within three months.
37–40	Losses Allocate to ordinary and long-term interests; recognise beyond zero only for legal/constructive obligations or payments; resume profits after unrecognised losses are recovered.
41A–41C	Long-term-interest sequence Apply Ind AS 109 first, then equity-method losses and then Ind AS 36 to the net investment.
42–44	Transactions with investee Eliminate unrealised upstream/downstream gains to the investor’s interest; recognise losses indicating impairment.
45–47	Step acquisitions and dilution Measure goodwill and ownership changes without unnecessary remeasurement while influence continues.
48–51	Impairment Assess evidence and test the entire carrying amount as one asset under Ind AS 36; embedded goodwill is not separate.
52–54	Separate statements and history Use Ind AS 27 in separate statements and current notified amendments.

Major areas decoded

Technical requirements in simple language

Influence is substantive

Twenty per cent is a presumption, not a bright line.

Equity-method mechanics

Adjust for acquisition values, goodwill, policy differences, OCI and unrealised profit.

Long-term interests

Apply Ind AS 109 before loss allocation.

Loss ceiling

Recognise further losses only for obligations or payments after interests reach zero.

Transaction elimination

Eliminate only the investor’s share unless the transaction evidences impairment.

Impairment

Test the whole investment; do not separately test embedded goodwill.

International project

IASB proposals are not current Ind AS.

Visual learning

Finin2min decision map

Editable SVG and high-resolution PNG are included in the batch assets.

Exceptions

What professionals frequently overlook

Twenty per cent is rebuttable.
Substantive potential voting rights can affect influence.
Venture-capital FVTPL election is investment-specific.
Ind AS 105 applies only to the qualifying portion.
Losses can extend to long-term interests.
Unrecognised losses are recovered before future profits.
Goodwill is not separately tested.
JV-to-associate change does not trigger fair-value remeasurement.

Practical application

Transaction examples

Fact pattern

Treatment

Reason

25% plus board seat

Associate

Influence presumed and evidenced.

15% with policy rights

Possible associate

Influence can exist below 20%.

Downstream inventory profit

Eliminate investor share

Unrealised profit remains within group relationship.

Ordinary investment at zero

Allocate to net-investment loan

Apply Ind AS 109 first.

Retained 10% after loss of influence

Fair-value retained interest

Equity method ceases.

Three-month reporting lag

Potentially acceptable

Adjust significant intervening events and remain consistent.

Accounting mechanics

Illustrative journal entries

Share of profit

Dr Investment Cr Share of profit

Dividend

Dr Cash / Receivable Cr Investment

Share of OCI

Dr / Cr Investment Cr / Dr OCI

Impairment

Dr Impairment loss Cr Investment

CA / finance / boardroom cases

Applied case studies

1. Below-20% influence

Applied case

An 18% investor appoints two of five directors and participates in budgets.

Finin2min analysis: Significant influence may exist.

2. Subordinated loan

Applied case

Ordinary investment is nil and a long-term loan forms part of net investment.

Finin2min analysis: Apply Ind AS 109 first, then allocate losses by seniority.

3. Reporting lag

Applied case

Investor reports March and associate December.

Finin2min analysis: Three months can be acceptable with consistency and intervening-event adjustments.

4. Downstream land sale

Applied case

Investor owns 30% and sells land with ₹30 crore unrealised gain.

Finin2min analysis: Eliminate ₹9 crore until realised externally, unless impairment exists.

5. Loss of influence

Applied case

Holding falls from 30% to 12%.

Finin2min analysis: Stop equity method, fair-value retained interest and recognise gain/loss and OCI effects.

Global comparison

Ind AS versus IFRS and US GAAP

Topic	Ind AS	IFRS	US GAAP
Core model	Equity method unless exemption/election.	Broadly aligned.	ASC 323 differs in thresholds and mechanics.
Long-term interests	Ind AS 109 first.	Broadly aligned.	US sequencing differs.
Reporting lag	Maximum three months.	Broadly aligned.	Similar lag can be allowed.
Loss of influence	Fair-value retained interest.	Broadly aligned.	US derecognition differs.
Current project	No change without notification.	IASB project active.	Not applicable.

Implementation lens

Implications for key stakeholders

CFO

Approve influence and loss sequence.

M&A

Track step acquisitions and disposals.

Consolidation

Align policies, dates and unrealised profits.

Treasury

Identify net-investment instruments.

Audit committee

Challenge impairment and unrecognised losses.

Quality-control watchlist

Common errors and exam traps

Treating 20% as absolute.
Ignoring potential voting rights.
Failing acquisition-date adjustments.
Recognising dividends as equity-method income.
Not eliminating unrealised profits.
Stopping losses before long-term interests.
Applying Ind AS 28 before Ind AS 109.
Testing embedded goodwill separately.
Using a reporting lag over three months.
Ignoring obligations beyond zero.
Remeasuring when JV becomes associate.
Applying IASB proposals as current Ind AS.

Finin2min Q&A

Frequently asked questions

1. Is 20% always an associate?

No.

2. How are dividends treated?

They reduce carrying amount.

3. Can losses exceed ordinary shares?

Yes through qualifying long-term interests and obligations.

4. Is goodwill separately tested?

No.

5. What happens on loss of influence?

Fair-value the retained interest.

6. Are IASB proposals effective?

No.

Two-minute revision

Finin2min cheat sheet

INFLUENCE → COST → SHARE P&L/OCI → DIVIDENDS REDUCE → ELIMINATE → LOSS SEQUENCE → IMPAIR

Validation register

Primary sources

ICAI Compendium 2025–26Primary or authoritative validation source.
Open source ↗

ICAI Educational Material — Ind AS 27 and 28Primary or authoritative validation source.
Open source ↗

IFRS Foundation — IAS 28Primary or authoritative validation source.
Open source ↗

IFRS Foundation — Equity Method projectPrimary or authoritative validation source.
Open source ↗

Review date: 26 June 2026.