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

Vishwa Ltd applies the equity method for an associate that follows accounting policies different from Vishwa's for similar transactions. It is impracticable for the associate to prepare additional financial statements aligned to Vishwa's policies. Which statement is correct under Ind AS 28 (paragraph 35)?

Ind AS 28 requires uniform accounting policies, but for an associate this requirement does not apply where it is impracticable, since the investor lacks control and cannot compel additional statements. IAS 28 contains no such relief. The associate is still equity accounted, and the investor cannot simply choose any policy.

  1. AAdjustments must always be made, and no exception exists for associates
  2. BUniform policies are required, but for an associate this is not required where it is impracticable, unlike IAS 28, which has no such reliefCorrect
  3. CThe associate must be excluded from equity accounting and carried at cost
  4. DThe investor may choose any policy because it has no control over the associate

Explanation

Paragraph 35 requires uniform accounting policies, except that for an associate it is not required where impracticable. IAS 28 gives no such relief. The reason is that the investor does not control the associate and may not be able to influence it to follow the investor's policies. The first option is wrong because it ignores this exception.

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