Ind AS 28 Investments in Associates and Joint Ventures: A Practitioner Guide for FY 2026-27
Ind AS 28 (Investments in Associates and Joint Ventures) is the Indian Accounting Standard that prescribes the equity method of accounting for investments where an entity has significant influence or joint control but not control.
The Ministry of Corporate Affairs (MCA) notified Ind AS 28 through the Companies (Indian Accounting Standards) Rules, 2015. It became mandatory from 1 April 2016 for Phase I entities. Ind AS 28 replaces AS 23 (Accounting for Investments in Associates) and the joint venture portion of AS 27.
For FY 2026-27, Ind AS 28 remains highly relevant to Indian corporates with strategic alliances. In sectors like automotive and technology, joint venture structures are common. Each arrangement requires careful classification under Ind AS 111 before applying Ind AS 28’s equity method.
Ind AS 28 at a Glance
Ind AS 28 establishes the equity method as the core principle for accounting investments in associates and joint ventures. This standard primarily serves listed companies, large private groups, and statutory auditors preparing or reviewing consolidated financial statements.
| Field | Value |
|---|---|
| Standard Number | Ind AS 28 |
| Full Name | Investments in Associates and Joint Ventures |
| Issuing Body | ICAI (Accounting Standards Board) |
| Notified By | MCA, Companies (Indian Accounting Standards) Rules, 2015, dated 16 February 2015 |
| Effective Date | 1 April 2015 (voluntary), 1 April 2016 (mandatory Phase I) |
| Supersedes | AS 23 (Accounting for Investments in Associates) and AS 27 (joint venture portion) |
| Equivalent Standard | AS 23 / AS 27 ↔ Ind AS 28 ↔ IAS 28 |
| Applies To | All companies required to follow Indian Accounting Standards. Equity method except investment entity exception applies. |
What is Ind AS 28: Investments in Associates and Joint Ventures?
Ind AS 28 defines how an investor accounts for investments where it has significant influence over another entity (associate), or joint control over a joint venture. The standard mandates use of the equity method rather than full consolidation or cost-based accounting.
The Institute of Chartered Accountants of India (ICAI) introduced this standard to converge Indian practice with global norms set by IASB’s IAS 28. It replaced earlier standards that permitted proportionate consolidation for joint ventures or cost-based methods for associates.
Statutory auditors, CFOs of listed groups, and finance teams preparing consolidated financial statements rely on this standard to ensure proper recognition of non-controlled but strategically significant investments.
Objective of Ind AS 28
- Prescribe accounting for investments in associates and set out requirements for application of the equity method when accounting for investments in associates and joint ventures.
- Define application of the equity method including initial recognition, subsequent measurement, and impairment.
- Establish disclosure requirements (substantial requirements are detailed further in Ind AS 112).
These objectives ensure that financial statements present a true and fair view under Section 129 of the Companies Act, 2013 by reflecting group earnings from associates and joint ventures without overstating control or assets.
Who Must Apply Ind AS 28?
Entities covered
Ind AS applicability follows a phased roadmap prescribed by MCA:
| Category | Applicability Timeline |
|---|---|
| Listed companies | Mandatory from FY 2016-17 onwards |
| Unlisted companies > Rs 250 crore net worth | Mandatory from FY 2017-18 onwards |
| Holding/subsidiary/joint venture/associate of above | Same as parent entity |
All entities preparing financial statements as per Indian Accounting Standards must apply Ind AS 28 if they have investments qualifying as associates or joint ventures.
Scope exclusions
Entities must not apply Ind AS 28 to:
- Investments held by venture capital organisations or mutual funds measured at fair value through profit or loss (FVTPL).
- Investment entities as defined under Ind AS 110, such investments are measured at FVTPL.
- Investments classified as held for sale, these fall under Ind AS 105.
When the standard does not apply
Investments held by mutual funds are covered under fair value measurement rules. Investment entities must apply measurement rules per Ind AS 110 Consolidated Financial Statements. Assets held for sale are governed by classification and measurement rules under Ind AS 105 Non-current Assets Held for Sale and Discontinued Operations.
Key Definitions under Ind AS 28
| Term | Definition |
|---|---|
| Associate | An entity over which the investor has significant influence. |
| Significant influence | Power to participate in policy decisions but not control; presumed at ≥20% voting power. |
| Joint venture | A joint arrangement where parties have rights to net assets via joint control (per Ind AS 111). |
| Joint control | Contractually agreed sharing of control requiring unanimous consent on relevant activities. |
| Equity method | Investment is initially at cost; adjusted post-acquisition for investor’s share of net assets. |
Recognition and Measurement under Ind AS 28
When to recognise
An investor must apply the equity method when it holds significant influence over an investee or shares joint control over a joint venture. Significant influence is generally presumed if holding at least twenty percent voting rights but may be demonstrated below this threshold if other factors exist, such as board representation or participation in policy decisions (Para 6). Joint control requires contractually agreed unanimous consent among parties on relevant activities per Ind AS 111.
Both triggers, significant influence or joint control, require use of the equity method from the date such influence or control arises.
Initial measurement
On acquisition date, an investment qualifying as associate or joint venture is recognised at cost per Para 10. Cost includes consideration paid plus directly attributable transaction costs.
If there is a difference between cost and investor’s share of identifiable net assets at acquisition:
- If cost exceeds share, this excess is goodwill embedded within investment carrying amount.
- If share exceeds cost, the excess is recognised immediately as bargain purchase gain in profit or loss.
No separate goodwill line item arises; goodwill stays within investment carrying amount.
Subsequent measurement
After initial recognition:
- The carrying amount increases/decreases with investor’s share of post-acquisition profits/losses.
- Investor’s share of investee’s profit/loss appears as a single line item in P&L.
- Share of investee’s other comprehensive income appears directly in OCI.
- Dividends/distributions received reduce carrying amount, not recognised as income.
- Adjustments align investee accounting policies with those of investor unless impracticable.
- Impairment testing follows Para 41-42 using principles from Ind AS 36 Impairment. The entire investment is tested as a single asset; goodwill embedded within investment is not tested separately.
- If losses reduce carrying amount to zero, further losses are not recognised unless legal/constructive obligations exist (Para 39).
**Formula:**
Carrying Amount at Year-End = Opening Carrying Amount + Share of Profit/Loss + Share of OCI − Dividends Received − Impairment Losses
Equity Method - Single-Line Investment Approach
The equity method presents investment in associates/joint ventures as a single line on balance sheet (“Investment in Associates/JVs”). This contrasts with full consolidation required by Ind AS 110 for subsidiaries.
Carrying amount comprises initial cost plus post-acquisition profits less losses/distributions/impairment losses. Share of profit/loss appears as one line item (“Share of Profit/Loss from Associate/JV”) in P&L, never line-by-line consolidation.
When losses bring carrying amount to zero, further losses are only recognised if legal/constructive obligations exist or payments have been made on behalf per Para 39. Cumulative unrecognised losses are tracked off-balance-sheet until profits reverse them out.
This approach ensures investors reflect their economic interest without overstating assets/liabilities they do not control directly.
Worked Examples on Ind AS 28
Example 1: Equity method initial recognition and subsequent year
Scenario:
Sundaram Holdings acquired thirty percent stake in Sundaram Auto Components on April 1st, 2025 for Rs sixty crore. Fair value of net assets at acquisition was Rs one hundred eighty crore; so thirty percent share equals Rs fifty-four crore, implying Rs six crore embedded goodwill. During FY 2025-26 Sundaram Auto Components earned Rs forty crore profit; OCI gain Rs five crore; dividend declared Rs ten crore.
Computation Table
| Item | Calculation | Amount (Rs crore) |
|---|---|---|
| Opening Carrying Amount | Initial Cost | ₹60 |
| Add: Share of Profit | ₹40 ×30% | ₹12 |
| Less: Share of Dividend | ₹10 ×30% | ₹3 |
| Add: Share of OCI | ₹5 ×30% | ₹1.50 |
| Closing Carrying Amount | Sum above | ₹70.50 |
Journal Entries
On acquisition:
Dr Investment in Associate ₹60 crore / Cr Bank ₹60 crore
Year-end profit:
Dr Investment ₹12 crore / Cr Share of Profit from Associate ₹12 crore
Dividend received:
Dr Bank ₹3 crore / Cr Investment ₹3 crore
OCI:
Dr Investment ₹1.50 crore / Cr Share of OCI from Associate ₹1.50 crore
Example 2: Loss-making associate - reduction to zero
Scenario:
Krishna Capital holds twenty-five percent stake in Krishna Tech (associate). Carrying amount before year-end stands at Rs eight crore. Krishna Tech reports Rs fifty crore loss during FY 2025-26.
Computation Table
| Item | Calculation | Amount (Rs crore) |
|---|---|---|
| Opening Carrying Amount | ₹8 | |
| Less: Share of Loss | ₹50 ×25% | ₹12.50 |
| Recognised Loss | Limited to carrying amount | ₹8 |
| Unrecognised Cumulative Loss* | Excess over carrying amount | ₹4.50 |
\*Unrecognised cumulative loss will be offset against future profits before recognising any further share in profits unless Krishna Capital incurs legal/constructive obligations relating to Krishna Tech's liabilities.
Journal Entry
Dr Share of Loss from Associate ₹8 crore / Cr Investment in Associate ₹8 crore
Investment reduced to zero; track unrecognised cumulative loss off-balance-sheet until reversal through future profits
Disclosure Requirements under Ind AS 28
Disclosures under Ind AS 28 are critical for users of financial statements, as Schedule III to the Companies Act, 2013 requires transparent reporting of investments in associates and joint ventures. These disclosures enable stakeholders, auditors, and regulators to assess the nature, risks, and financial impact of such investments.
| Item | Requirement | Para Reference |
|---|---|---|
| Carrying amount of investments in associates/JVs | Disclose carrying amounts as per detailed requirements | Cross-ref Ind AS 112 |
| Investor's share of investee's results | Disclose profit/loss and OCI share | Ind AS 112 Para 21 |
| Significant influence assessed | Disclose when holding <20% but significant influence is claimed | Ind AS 112 Para 22 |
| Material associates/JVs financial information | Provide summary financials for each material associate/JV | Ind AS 112 Para 21B |
| Restrictions on associate's ability to transfer funds | Disclose if applicable | Ind AS 112 Para 22 |
| Discontinuance of equity method | Disclose loss of significant influence/joint control; gain/loss recognised | Para 22-25 |
Auditors must ensure these disclosures are complete and accurate as part of their opinion under SA 700.
Common Mistakes & Industry-Specific Considerations
Common errors auditors flag
- Failing to apply equity method to investee where significant influence exists below 20% (e.g., board seat or policy participation).
- Continuing equity method after loss of significant influence.
- Incorrect alignment of investee accounting policies with investor’s; significant differences require adjustment.
- Failing to test investment for impairment when indicators are present.
- Recognising further share of losses after carrying amount reduced to zero without legal or constructive obligation.
- Treating dividends as income rather than reducing investment carrying amount under equity method.
Industry application notes
In the automotive and technology sectors, joint venture structures are prevalent. Contract manufacturing JVs and development partnerships must be classified under Ind AS 111 before applying the equity method under Ind AS 28.
Family business groups often have cross-holdings between group companies. These relationships create associate status requiring equity method consolidation in consolidated financial statements, reflecting group earnings on a non-controlled basis.
Listed companies frequently hold strategic stakes (20-50%) in unlisted partners. Significant influence assessment in such cases demands careful judgement, especially where SEBI material event disclosures may overlap with Ind AS reporting.
Ind AS 28 vs AS 23 vs IFRS: Key Differences
The table below summarises major differences between Indian GAAP (AS), Indian Accounting Standards (Ind AS), and IFRS with respect to accounting for associates and joint ventures:
| Aspect | AS | Ind AS | IFRS |
|---|---|---|---|
| Significant influence threshold | 20% (AS 23) | 20% rebuttable presumption | Same as Ind AS |
| Joint ventures | Proportionate consolidation under AS 27 | Equity method (Ind AS 111) | Equity method only |
| Loss recognition limit | Limited to carrying amount | Limited to carrying amount + obligations (Para 39) | Same |
| Goodwill on acquisition | Within investment, no separate test | Within investment, no separate impairment test (Para 42) | Same |
| Discontinuance of equity method | Cost-based | Fair value of retained interest (Para 22) | Same |
India’s transition from AS to Ind AS eliminated proportionate consolidation for joint ventures in favour of the equity method. This aligns closely with IFRS. However, entities must pay attention to Indian regulatory nuances, such as specific disclosure requirements under Schedule III and additional guidance from the Institute of Chartered Accountants of India.
Latest Amendments to Ind AS 28 (FY 2026-27)
No amendments have been notified to Ind AS 28 for FY 2026-27 as of 2026-05-02. The standard continues to apply in its existing form.
Related Standards You Should Know
- [AS 23](/as-23-investments-in-associates/), Equivalent associates standard for non-Ind AS companies.
- [Ind AS 110](/ind-as-110-consolidated-financial-statements/), Distinguishes control (subsidiaries, full consolidation) from significant influence (associates, equity method).
- [Ind AS 111](/ind-as-111-joint-arrangements/), Joint arrangements - distinguishes joint operations (line-by-line) from joint ventures (equity method).
- [Ind AS 112](/ind-as-112-disclosure-of-interests-in-other-entities/), Disclosure of interests in subsidiaries, associates, joint arrangements, structured entities.
- [Ind AS 36](/ind-as-36-impairment-of-assets/), Impairment of investment in associates.
Need Help with Ind AS 28 Compliance?
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Frequently Asked Questions (FAQs)
All companies required to prepare financial statements under Indian Accounting Standards must apply Ind AS 28 if they hold investments where they have significant influence or joint control over another entity that is not a subsidiary.
Significant influence is presumed if an investor holds at least twenty percent voting rights in another entity. However, it can also be demonstrated by board representation or participation in policy decisions even below this threshold. The assessment requires consideration of all relevant facts per Para 6.
Under the equity method required by Ind AS 28, investments appear as a single line item reflecting the investor’s share of net assets and profits. Proportionate consolidation, permitted earlier under Indian GAAP, added a share of each asset and liability line by line but is not allowed under current standards.
The entity must discontinue applying the equity method when it loses significant influence or joint control over an investee. Any retained interest is measured at fair value at that date per Paras 22-25; any resulting gain or loss is recognised in profit or loss.
Dividends received from an associate reduce the carrying amount of the investment on the balance sheet. They are not recognised separately as income in profit or loss when applying the equity method prescribed by Ind AS 28.
Once losses allocated reduce the investment’s carrying amount to zero, further losses are not recognised unless there is a legal or constructive obligation or payments have been made on behalf. Unrecognised losses are tracked off-balance-sheet until future profits reverse them out per Para 39.
The entire investment balance, including embedded goodwill, is tested for impairment whenever indicators arise. Testing follows principles from Ind AS 36 Impairment. Goodwill within the investment is not tested separately but forms part of a single asset test per Paras 41-42.
Entities must disclose summary financial information for each material associate or joint venture, including carrying amounts, profit/loss shares, other comprehensive income shares, and any restrictions on fund transfers per detailed requirements cross-referenced from [Ind AS 112].
Classification depends on rights conferred by contractual arrangement. If parties have rights to assets/liabilities they hold a joint operation; if rights relate only to net assets they hold a joint venture, requiring application of equity method per [Ind AS 111].
Indian GAAP aligns closely with IAS 28 issued by IFRS Foundation regarding recognition and measurement principles. However, some additional disclosure requirements exist due to Schedule III and MCA mandates specific to India’s regulatory environment.
About This Article
Reviewed by CA & CS Team · Patron Accounting LLP
Technical reviewer: CA Sundram Gupta, FCA
Last reviewed: 2026-05-02
Sources: ICAI Compendium of Accounting Standards · MCA Notification (Companies (Indian Accounting Standards) Rules, 2015, dated 16 February 2015) · IFRS Foundation