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

Gamma Ltd prepares consolidated financial statements and accounts for two investees under the equity method: Delta Ltd, an associate, and Epsilon Ltd, a joint venture. Both use accounting policies for similar transactions that differ from Gamma's. Gamma can obtain adjusted information from Epsilon, but it is impracticable to obtain adjusted information from Delta. Which statement reflects Ind AS 28?

Gamma must adjust Epsilon's financials to its own policies, but it need not do so for Delta. Ind AS 28 requires uniform accounting policies, and the only relief is for an associate where it is impracticable. A joint venture gets no such relief, so Epsilon must be adjusted.

  1. AAdjustments to uniform policies are required for both investees, with no exception
  2. BAdjustments are required for Epsilon; for Delta, the uniformity requirement does not apply where it is impracticableCorrect
  3. CNo adjustments are required for either, because the investor lacks control over both
  4. DAdjustments are required for Delta, but not for Epsilon, because joint ventures follow their own policies

Explanation

Para 35 of Ind AS 28 requires uniform accounting policies, unless, in the case of an associate, it is impracticable. The Ind AS differs from IAS 28 here because an investor without control may be unable to make an associate follow its policies. No such relief exists for a joint venture, so Epsilon's financials must be adjusted. The option requiring no exception ignores the associate relief.

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