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

Gupta Pharma Ltd holds 28% of Rao Labs Ltd, an associate. Rao Labs values its inventory on FIFO, while Gupta Pharma uses weighted average for similar inventory. Rao Labs is unwilling to prepare additional statements and Gupta Pharma cannot influence this. It is impracticable to obtain statements on the investor's policies. Which statement reflects Ind AS 28 (paragraph 35)?

Ind AS 28 requires uniform accounting policies for like transactions, but unlike IAS 28 it provides relief where it is impracticable in the case of an associate. The investor lacks control and may be unable to make the associate follow its policies, so the exception applies here.

  1. AUniform accounting policies are never required for associates
  2. BUniform policies are required, unless impracticable in the case of an associateCorrect
  3. CUniform policies are required without exception, as under IAS 28
  4. DUniform policies are required only for joint ventures, not for associates

Explanation

Paragraph 35 of Ind AS 28 requires uniform accounting policies, unless it is impracticable in the case of an associate. The reasoning is that the investor lacks control and may be unable to make the associate follow its policies. IAS 28 has no such relief, so the third option is wrong.

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