Appendix - 1 of Indian Accounting Standard (Ind AS) 28 - Earlier Accounting standard (23)

Investments in Associates

Appendix - 1

Note: This Appendix is not a part of the Indian Accounting Standard. The purpose of this appendix is only to bring out the differences between Indian Accounting Standard (Ind AS) 28 and the corresponding International Accounting Standard (IAS) 28, Investments in Associates.

Comparison with IAS 28, Investments in Associates

1. Where the financial statements of an associate used in applying equity method are prepared as of a date different from that of the investor, IAS 28 requires that this difference should not be more than three months. However, paragraph 25 (Ind AS) 28 provides that this difference should not be more than three months, unless impracticable. Similarly, paragraph 26 of Ind AS 28 requires use of uniform accounting policies, unless impracticable, which IAS 28 does not provide. These changes have been made because the investor does not have ‘control’ over the associate, it may not be able to influence the associate to prepare additional financial statements or to follow the accounting policies that are followed by the investor .

2. Paragraph 1(b) of IAS 28 has been deleted in Ind AS 28 as the Companies Act, 1956, is not applicable to mutual funds, unit trusts and similar entities including investment linked insurance funds and, thus, this standard would not be applicable to such entities. However, paragraph number 1(b) has been retained in Ind AS 28 to maintain consistency with IAS 28.

3. Paragraphs 5, 13(b) and 13(c) have been deleted as the applicability or exemptions to the Indian Accounting Standards is governed by the Companies Act and the Rules made thereunder. However, paragraph numbers have been retained in Ind AS 28 to maintain consistency with IAS 28.

4. Paragraph number 16 appears as ‘Deleted ‘in IAS 28. In order to maintain consistency with paragraph numbers of IAS 28, the paragraph number is retained in Ind AS 28

5. Paragraph 23 (b) has been modified on the lines of Ind AS 103 to transfer excess of the investor’s share of the associate’s identifiable assets and liabilities over the cost of investment in capital reserve whereas in IAS 28, it is recognised in profit or loss.