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

Raghav Ltd acquired 30% of Meera Ltd on 1 April 2025 for ₹80 crore. Meera's identifiable net assets at fair value on that date were ₹280 crore. For FY 2025-26, Meera reported profit of ₹50 crore and declared a dividend of ₹20 crore, and there were no other changes in its equity. Applying the equity method under Ind AS 28 as notified in India, what is the carrying amount of the investment at 31 March 2026?

Carrying amount is ₹93 crore. The excess of share of net fair value ₹84 crore over cost ₹80 crore goes to capital reserve, lifting the carrying amount to ₹84 crore. Adding the share of profit ₹15 crore and deducting the dividend share ₹6 crore gives ₹93 crore.

  1. A₹89 crore
  2. B₹93 croreCorrect
  3. C₹99 crore
  4. D₹105 crore

Explanation

Share of net assets is 30% × 280 = ₹84 crore. Cost is ₹80 crore, so ₹4 crore goes to capital reserve and the carrying amount starts at ₹84 crore. Add 30% of profit (₹15 crore) and deduct 30% of dividend (₹6 crore): 84 + 15 − 6 = ₹93 crore. The ₹89 crore option ignores the ₹4 crore adjustment.

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