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Financial Reporting · Ind AS 28 Investments in Associates and Joint Ventures

Ind AS 28: Separate Financial Statements and Carve-outs from IAS 28

Updated 5 October 2026 · Fact-checked

In separate financial statements, an investment in an associate or joint venture is accounted for under paragraph 10 of Ind AS 27: at cost, or as a financial instrument under Ind AS 109. Ind AS 27 removed the IAS 27 equity method option. Identify the statement type, apply the right measurement, and recall the Ind AS 28 differences from IAS 28.

Understand Separate Financial Statements and Carve-outs from IAS 28

Ind AS 28 mainly tells you how to apply the equity method to an associate or joint venture. The equity method belongs to the consolidated financial statements, or to the investor's own statements where it has no subsidiaries. It does not decide how the investment appears in separate financial statements.

Separate financial statements are those the entity presents in addition to its consolidated statements, or in addition to its statements where the investor has no subsidiaries. Ind AS 28 sends you to Ind AS 27. The investor accounts for the investment in an associate or joint venture as Ind AS 27 paragraph 10 says: at cost, or in accordance with Ind AS 109. The same accounting must be applied to each category of investment.

The equity method is not a permitted option in separate financial statements under Ind AS. IAS 27 allows it as a third choice. Ind AS 27 carves out that option. Note that this is a difference between Ind AS 27 and IAS 27. It is not an Appendix 1 difference of Ind AS 28.

Under the cost model, the carrying amount does not move with the investee's profits. Dividends from the investee are recognised in profit or loss when the right to receive them is established.

If the investment is classified as held for sale, Ind AS 105 applies. In separate financial statements, the investment is measured at the lower of carrying amount and fair value less costs to sell. In consolidated statements, Ind AS 105 applies to the investment, or the portion of it, that is held for sale. Equity accounting is discontinued for that portion.

Appendix 1 to Ind AS 28 lists the differences from IAS 28. Be careful with venture capital organisations. Paragraph 18 of Ind AS 28 keeps the IAS 28 text. Venture capital organisations, mutual funds, unit trusts and similar entities, including investment-linked insurance funds, may elect to measure investments in associates or joint ventures at fair value through profit or loss under Ind AS 109. It is a permitted election, not a requirement, and it is not an Appendix 1 difference.

Learn the actual list of differences and their paragraph references from Appendix 1 of your ICAI material, and revise it near the exam.

Key rules to remember

Separate FS treatment (Ind AS 27 para 10, via Ind AS 28)
Investment in associate or JV = Cost, or Ind AS 109 (same accounting for each category)
The equity method is not allowed in separate financial statements under Ind AS, because Ind AS 27 removed the IAS 27 option.
Cost model carrying amount
Carrying amount = Cost of investment (less impairment, if any)
Investee profits do not change it. Dividend received goes to profit or loss as income.
Equity method carrying amount (consolidated FS only)
Closing = Cost + share of post-acquisition profit/OCI − dividends received
Use it only to compare with the separate FS figure.
Held for sale investment
Lower of (carrying amount, fair value less costs to sell)
Ind AS 105 applies. Any write-down on classification goes to profit or loss. In consolidated statements, Ind AS 105 applies to the investment or the portion held for sale, and equity accounting is discontinued for that portion. That consolidated point is separate from the cost model in separate statements.

How to solve Separate Financial Statements and Carve-outs from IAS 28 questions

Use this order for any question on separate financial statements or Ind AS 28 versus IAS 28.

  1. 1Read the question and decide which statements are asked for: separate, consolidated, or both.
  2. 2If it is separate financial statements, ignore the equity method and go to Ind AS 27 paragraph 10.
  3. 3Choose the basis: cost, or Ind AS 109 (fair value). Use the basis the question gives or the entity's policy, and apply it to the whole category.
  4. 4Check for held for sale classification. If it applies, Ind AS 105 applies: measure at the lower of carrying amount and fair value less costs to sell, and take any reduction to profit or loss. In consolidated statements, apply Ind AS 105 to the investment or portion held for sale and discontinue equity accounting for that portion.
  5. 5Treat dividends as income in profit or loss when the right to receive is established. Do not reduce the investment under the cost model.
  6. 6If the question asks for a comparison, set out the Ind AS 28 position, then the IAS 28 position, then the reason for the difference.
  7. 7State the conclusion in one line with the amount and the paragraph reference.

Quickest way: Three-check shortcut

When to use it: Use this for MCQs and short case-scenario questions where you have under two minutes.

  1. Check 1: Is it separate or consolidated? Separate means cost or Ind AS 109, never equity method.
  2. Check 2: Is the investment held for sale? If yes, the lower of carrying amount and fair value less costs to sell.
  3. Check 3: Is the dividend taken to profit or loss? Yes under the cost model, and the carrying amount stays the same.
  4. For Ind AS 28 versus IAS 28 questions, state the IAS 28 position, then the Ind AS 28 position, using only differences you can confirm from Appendix 1. Do not treat FVTPL for venture capital organisations as a difference, because paragraph 18 permits the election as in IAS 28. Keep the Ind AS 27 versus IAS 27 point separate.

Common mistakes in Separate Financial Statements and Carve-outs from IAS 28

  • Applying the equity method in the separate financial statements of the investor.

    Students link Ind AS 28 with the equity method and forget that it covers only consolidated statements.

    Fix: First decide the statement type. Separate means Ind AS 27 paragraph 10: cost or Ind AS 109.

  • Reducing the cost of the investment when a dividend is received.

    It is confused with the equity method, where dividends reduce the carrying amount.

    Fix: Under the cost model, the dividend is income in profit or loss and the carrying amount stays the same.

  • Saying Ind AS allows all three options in IAS 27, including the equity method.

    Students remember IAS 27 and assume Ind AS follows it.

    Fix: Write that the equity method option is carved out in Ind AS 27, so only cost or Ind AS 109 remain.

  • Listing the removal of the equity method option as an Ind AS 28 versus IAS 28 difference.

    Separate financial statements are discussed alongside Ind AS 28, so the source standard gets blurred.

    Fix: Attribute it to Ind AS 27 versus IAS 27. For Ind AS 28, cite only differences listed in Appendix 1 of your ICAI material. Do not cite FVTPL for venture capital organisations, because paragraph 18 permits that election as in IAS 28.

  • Mixing cost and fair value for investments of the same category.

    Students pick the better-looking figure for each investment separately.

    Fix: Apply one basis consistently to each category of investment.

  • Mixing up the held for sale treatment in separate and consolidated statements.

    The consolidated rule on discontinuing equity accounting is carried into separate statements, or the separate rule is ignored in consolidated statements.

    Fix: In separate statements, measure the investment under Ind AS 105 at the lower of carrying amount and fair value less costs to sell. In consolidated statements, apply Ind AS 105 to the investment or portion held for sale and discontinue equity accounting for that portion.

  • Inventing paragraph numbers in an answer on carve-outs.

    The Appendix 1 list is memorised loosely.

    Fix: State only what you are sure of and avoid made-up paragraph numbers.

Worked examples

Example 1

P Ltd holds 30% of A Ltd, an associate, bought at a cost of ₹50,00,000. P Ltd has subsidiaries and presents consolidated statements. For the year, A Ltd reports a profit of ₹40,00,000 and declares a dividend, of which P Ltd's share is ₹3,00,000. The dividend is declared and received in the same year. Show the investment and the income in P Ltd's separate financial statements (cost model) and its carrying amount in the consolidated statements.

Show the solution
  1. Separate financial statements follow Ind AS 27 paragraph 10. P Ltd chooses the cost model.
  2. Carrying amount stays at cost: ₹50,00,000. The profit of A Ltd does not change it.
  3. Dividend of ₹3,00,000 is recognised as income in profit or loss in the separate financial statements, because the right to receive is established in the year (declared and received in the year).
  4. Consolidated statements use the equity method: share of profit = 30% × ₹40,00,000 = ₹12,00,000.
  5. In the consolidated statements the ₹3,00,000 dividend is not income. It is eliminated against the investment, so it reduces the carrying amount.
  6. Consolidated carrying amount = ₹50,00,000 + ₹12,00,000 − ₹3,00,000 = ₹59,00,000.

Answer: Separate FS: investment ₹50,00,000 and dividend income ₹3,00,000 in profit or loss. Consolidated FS: investment ₹59,00,000, with share of profit ₹12,00,000 in profit or loss; the ₹3,00,000 dividend appears only in the separate FS as income and is eliminated against the investment in the consolidated FS.

Example 2

Q Ltd's separate financial statements show an investment in a joint venture at cost of ₹20,00,000. The board decides to sell it, and it meets the Ind AS 105 held for sale criteria at year end. Fair value less costs to sell is ₹18,00,000. The finance head suggests the equity method, as IAS 27 allows it. Advise.

Show the solution
  1. The equity method is not an option in separate financial statements under Ind AS 27. Ind AS 27 carves out the IAS 27 allowance.
  2. The investment meets the held for sale criteria, so Ind AS 105 applies.
  3. Measure at the lower of carrying amount (₹20,00,000) and fair value less costs to sell (₹18,00,000), which is ₹18,00,000.
  4. Write-down to fair value less costs to sell = ₹20,00,000 − ₹18,00,000 = ₹2,00,000, recognised in profit or loss.
  5. Present the investment as held for sale.

Answer: Reject the equity method. Show the investment as held for sale at ₹18,00,000 and recognise a write-down of ₹2,00,000 in profit or loss under Ind AS 105.

Exam tips

  • Write the one-line rule first: separate FS means cost or Ind AS 109, with no equity method. This usually earns the key mark.
  • For difference questions, use a two-column layout (Ind AS 28 | IAS 28) and show only differences you can confirm from Appendix 1. Do not claim FVTPL is mandatory for venture capital organisations: paragraph 18 permits the election, as in IAS 28. Show the separate FS point as an Ind AS 27 versus IAS 27 difference.
  • In case-scenario MCQs, identify the statement type before doing any calculation. Distractors usually use the equity method.
  • Never give a paragraph number you are unsure of. Name the standard and the rule instead.
  • Revise Appendix 1 of Ind AS 28 in your ICAI material as a short list during the last week.

Practice questions from Ind AS 28 Investments in Associates and Joint Ventures

Separate Financial Statements and Carve-outs from IAS 28 in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Separate Financial Statements and Carve-outs from IAS 28: frequently asked questions

Can an investor use the equity method in its separate financial statements under Ind AS?

No. Ind AS 28 refers to paragraph 10 of Ind AS 27, which allows only cost or Ind AS 109. Ind AS 27 carved out the equity method option that IAS 27 allows.

What are the main differences between Ind AS 28 and IAS 28?

Appendix 1 to Ind AS 28 lists them, so learn the full list and paragraph references from your ICAI material. Do not include FVTPL for venture capital organisations, mutual funds and similar entities as a difference. Paragraph 18 of Ind AS 28 permits them to elect FVTPL under Ind AS 109, as IAS 28 does.

How are dividends from an associate treated in separate financial statements?

Under the cost model, the dividend is recognised in profit or loss when the right to receive it is established. The carrying amount of the investment does not change.

What if the investment in an associate is held for sale?

Ind AS 105 applies. In separate financial statements, the investment is measured at the lower of its carrying amount and fair value less costs to sell. In consolidated statements, Ind AS 105 applies to the investment or the portion held for sale, and equity accounting is discontinued for that portion.