Ind As 28 - Investment in Associates and Joint Ventures.
Ind As 28 applied by all
InvinJV
1 Investor with Joint control
Investec Investecin Ju ofInvestor
LInvestment in Jv y
Assessment of significantInfluence
Influence
Holdsdirectly indirectly201
mmone ofvoting nightsthen
Miessmeteaniygentintstanege
hatthis is not thecase
Holdsdirectly Indirectly
95than 20 ofthevoting
ightsthen presumed no
quibicantInfluence unless
hehInfluence can be
leanly demonstrated
Equity Method
Application of Equity method
entities that are
Inv in Associates
2 Significant Influenceover an Investec
hivestee is an AssociateofInvestor
Investment in Associates
SIGNIFICANT INFLUENCE
Power to Participate in FINANCIAL
9 OPERATING
Policy decisions oftheinvestee
9 But No control on JointControl7
assessment
of whenAssessing influence
sigInfluence votingnightsInfluence
is
a RepresentationonBopon significant when it tosses thepowerto
iii
votingmightssuch participate inthefinancial
governingBody ofinvestee Potential
as shamewarrants Shane and operating policydecisio
b participation in policymaking alloptions convertibleInstt
Processincl decisionsabout ofthe investec
toreduceanotherparty's achange inownership
4
Entity and invest.ee
lev l
Material transactions bet voting
power such as associates becomes
They areconsidered onlyif subject to of
control aGout
game change of mangenia
homently Exercisable count administrator on
personnel
Notconsidered ifexercisedat regulatoryon contractual
Provision
ofEssen futureDateonoccurrence arrangement
technical information of a future event
ToAssessDvB Examineall
facts circumstances except
a Intentions ofmga
b FinancialAbility
Notsubstantive butthey are
ignored in IndAs28They
are consideredonly while
assessing control asper Ind
As 110
2 Exemptions 3 Equity method procedure
f Application of Equity method

Equity method not applied in Sfs

Under Equity method following Entries Passed
Investment Ale Dr Xxx
a Initial Entry at cost to Bank xxx
b Recording Investor's shame in Associate Plc on JointventurePlc after
InvestmentAfc Dr
DATE OF ACQUISITION To shame in pie of
Invitee xxx

4 Recording Investor's shame in Associate OCI on Joint venture OCI

InvestmentAfc Dr
After DATE OF ACQUISITION To shame in out of
Infestee
xxx
d Distributions received
from Investec DilipEndueshi thenvestment

Potential
voting Rights
Fog Assessing significant Influence Potential
voting nights are considered if cummently Exercisable

But for Equity method Accounting only Existing ownership interestare considered andeffectof

Potentialvoting rights
are not considered in Equity method they are accounted as per

Ind As 109
Exceptions However in of potential voting rights the terms ofthecontract
some cases
provides that investor will also
get the shame in Pll of the investec even bore the
Period Pmion
to the date of Actual Exercise ofthe option
 2 Exemptions from applying Equity method
An Entity need not apply equity method in following cases

Exemption 1 Exemption 2 Exemption 3

Exempted
from preparing Cfs
as pen panama otinansiio.intiiiitiisiniiiiingstiesinc
if all below conditions apply
a Entity is subsidiary ofanopenco
and Alltheowners are informed
andthey donotobject
b Its ultimate intermediate parent
produces
els availablefor public
use and comply with IndAs
ventureCapital organisation mutual fund in an Associate Jv if a
Portion of investment is
held indirectly through
a venturecap omg M f
Held directly indirectly investment similar entities incl inv
Linked insurance bands
in Associate on Jointventure
Entity may elect to measureiny Entity may electto mean
THAT
PORTION
of investmen
in Associates JV at FVTPL in Associates Tv at Futpl

c Debton Equity Instt nottraded Such Election shall be made separately Fon remaining portion ahi
in Publicmarket whether for each associate Ju at initial is notheldthroughventure
domestic on foreigny capital on above ong
me
cognition
Equitymethodis applied
d Notfilednon intheprocess of to thatremaining portion
filing its ell bon issuinganyclass
ReferIllustration97
ofinstt in public market
 Equity method Procedure

Calaof Goodwill 3 Afcofupstream 5 Dealwith Different 7 longterm Interest

OnCapitalReserve 9DownstreamTrans Reporting periods apartfrom Equity
Investment

2 Determine Group's 6 Uniform Accounting 8 shamein lossesofloss

4 Accounting ofcont
shame ofnonmonetaryAsset Policies making Associateam
Ju inexcessofvalue
interestin Aissociate
on Joint venture

I lap of Goodwill on capital Reserve

OnAcquisition Date Entity shall identify goodwill on capitalReserve

Goodwill Capital Reserve Certain Adjustments

Excess
ofcostofInvestmentoven
Excess
of Entity's share of whilerecording entity's shame
Entity'sshare of painvalue of Identifiable netAssetsover in plcof investee Adjustment
cost investmentis treated shallbemade for
Identifiable net assets is treated of
as capital Reserve
asGoodwill 1 Deptof Depmiciable Asset based
is recorded directlyinEquity ontheir fairvalue at Acgdate
such Goodwin is included incarrying it LRebenIllustration107
Amount of
Investment
2 Implosssuchas GoodwillonPPE
Goodwin Amortization notallowed

2 Group's Shane in Associate on Jointventure

Fom Applying Equity method AnEntity shall consider shame held directly indirectly through a
subsidiary in an associate on Jointventure
Onlyshameheld by its subsidiary is considered Shane held by associate TV is notconsidered
Acta
JointVenture
Associate
Subs
Subs Bud Ass Cud Ju Dad
15 8 gap
pop

Xud Here Only AUd lot Directly Bug 157 indirectly thru subs is
considered for Assessing significant influence
 ACtd Investor

Associate Jv Bud isan Associateon Tv at a Ady

Bltd Investecfor a Ud ForApplying Equitymethod A udshall
consider consolidated Financialstatements

of Bud Refer Illustration127

x an YNd 2 Ctd
i e shame of Pll Oci net Assets ofBud
subs Associate Jointventure incl its subsidiary x up Associate y ud
andJointVenture 244

UPSTREAM and DOWNSTREAM TRANSACTIONS between Entity its Associates on JV

AHLInvestor Acta
salesfromA salesfromB
Jv Bud is an Associate Ju of a Udy
Associateon
toA
41instream upstream
BudInvestee
Bug
Here A ladholds251 interestin
salesof Assets from A ltd to B49 Downstream Bud themebone B ud is an Associate
sales ofAssets from B ud to a ud 7 Upstream of A Ctd

Any gainfloss on such transactions only to the extent of unrelated investor's

interest in the associate on Jointventure I Refer Illustration 13 147
Lire Eliminate Gain loss to the extent of own interest

h Contribution
of alon monetary assets by Entity to its Associates Ju
An Entity might contribute non monetary Assets to an associate Ju in exchangeofanEquity
interest in an associate Ju such cont accounted with the Guidance bon Downstream transactions

if such contribution lacks commercial substance Gainfloss in such transaction considered

Unrealised and will be Eliminated In simplewords then carrying Amountof Investment

will be equal to cammying amount

of non monetary assets contributed in Exchange
 ng
if Entity cont nonmonetary assets and receives monetary Non monetary assets apart from
Equity interestin AsstJu theportionofthehairloss on nonmonetary cont relating to Monetary Non
thenDiffin
monetaryassets received is recognised in Pll Mlm assetDiya a m on MAssethiya
Pliny

5 Different ReportingPeriods of Entity and its Associates Jr

WhenEnd Dateofreporting period inimithlssiciatelou'artegidienent
ofEntity thenassociatetoushallprepare
additional FMtasifth period enddateofEntity forthepurposeof doing Equity method Accounting
If Impracticable Entity can use differentdate Els aftergivingeffectofsignificanttransactions

on events bet End Date of AssociateJu and End Dateof Entity

Note in no case the difference in dates can exceed 3 months

6 Uniform accounting policies

When using Fls of its Associate Ju for Equity method Accounting the Accounting policies
used by Associates ou in preparing els should be same as Alc policies used byEntity
If Not same Adjustment should be made to Align Alepolicies

Exceptions

InCase ofASSOCIATE Adjustmentboy uniformity 2 Entity A

Associate Ju
is not done if impracticable to do so
This Exception is notallowed in caseof Inv in EntityB Investmententity
Entity B being invest
men
s entity wouldaccountinv
Jointventure in subsidiaries entityC
EntityC subsofentityB atrainvalue
Reason
7 With just significant influence in
Associate it may be difficultto obtain necessary Insuchcase Entity a can electto retain the Fain
information Y valvemeasurementusedbyAssociate JV EntityB
7 Long term Interest in Associate Jointventure apart from Equity Investment
An Entity might hold Financial Instruments in an associateIsu omenthan investmentaccounted

using Equity method

These includes longterm interestthat forms part of Entity's netInvestment in Associate Jv
settlementboywhich is neither planned non likely to occur in Foneseeble Future
Such items include Preference shames longtermreceivables on loans account as perIndAs109
Butdo not include tradeReceivables TradePayables

8 1055 Making Associates on JointVentures Refer Illustration 15for better clarity

if Associates Ju is loss making Entity's shameof losses may equal or exceed itsinterest inAss Ju

then Entity discontinues recognise its share of funthem losses

Entity's interest in Ass Ju also includes longterm interestthatforms partof Entity's net
investment Entity should 1stApply End As log to such long term interest and then Ind
9
As 28.7
Losses recognised in excess of Entity's Investment in ordinary shames are applied to other
components of entity's interest in Ass to in reverse order
oftheir seniority Lie priority
in liquidation

If subsequently reports profits theentity resumes recognised its share profits

of only
after its share of profits equals shape of losses not recognized
 Forms Pantofnet
Investment
Forms Pantofnet
Investment
FirstlyIndAs109andthen
Ind As28

solution

Equityshares preference shames longterm Loan Total

estyn End

Opening Balance 1000000 500000 300000 1800000

Inelbecintain value 50000 100000

500007
openingAs109
1000000 450000 250000 1700000

Cossin Abs 1000000 450000 1600000

Shame
of416000007 150000
NIL NIL 100000 100000
 Ladyrand

Inelpecintainuate 50000 1500007

aspeaingasing
Ladiusted 100000 50000
NIL 50000
Adjustment 50000 50000

NIL NIL 50000 50000

Shane loss in
of 50000 1500007
Associate
2000004
Mil NIL NIL one
150000 unrecognised

zredymend

Increase in Preet 100000 50000 150000

150000 unrecognised 100000 500007 150000
Earlier
NIL NIL NIL NIL

athyn End
Increasein Pref
50000 50000
Inc in profit of 200000 500000 300000 1000000
Associates 410000004

200000 550000 300000 1050000

gthyrand
1551.3 01
2 10
Inc in Prief 30000 30000
Inc in profit 1000000 NIL 1000000

CA at 5thynEnd 1200000 580000 300000 2080000

 m
Impairment Losses Estimated Future cash Flows

After applying Equity method Entity shall determine whether objective Evidence that
entity's investment in Assange

ObjectEvidence that net Investment impaired includes observable data about followin
loss Events
significantfinancial 2 Boehofcontract 3 Entity granting concession a Probablethat AsstJu will
y difficultyofass go Ciedefaultinpayments because
of financial difficulty entenBankruptcy
5 6 Adverseelectinlegal 7 Significantdecline infain
Disappearance
ofActive economic on value Inu in an equity
marketfornet Investment technological of
becauseoffinancialdifficulty market environment in insttbelow its cost
which ass Ju open ales

In caseof ass Ju Goodwill is included in cannying Amountof investmentandnotseparately

meloquised suchgoodwillthemebone not tested Don impairment separately but entire cA

of investment is tested for impairment by comparing with Becovenable Amount as per

Ind As 36 RecoverableAmount
of Highen ofvalue in use 9 rain rate less lostto sell
Reversal of Impairment loss penmited to the extent R A subsequently increases

Value in use can be determined is 2 ways

estmethod andmethod

P v of future cash Flows from operations Pv of Dividends to be received

ofAssociate Jv AND
AND Proceeds from ultimate Disposal d
investment
Proceeds from Disposal
of Investment
Discontinuing the use of Equity method Refer illustration 164
when Investment ceases to be associate on Joint venture

When Investment becomes subsidiary 2 When Investmentbecomes financial Asset

I N
Ind as 1031110 Applies Ind As 109 Applies financial Instruments
H
Retained Interest in Fonmen associate Ju
Reval ofpreviously held interest at measured at Fain value
Acquisition date Fain valve
I I
Gain loss on revaluation recognised in Gain loss
Proceeds from disposing Pantinterest in ass Ju
Profit coss
Fain value of RetainedInterest
Carrying Amountof Investment
Gain loss recognised in Pll

Reclassification
of items recorded in OCI
On discontinuation
of Equity method shame in Oct of Ass Ju previously recognised by

entity meclassified to profiton loss

thesame thing applies if theme is a med's in ownership interest but investee still continues
to be Ass JU Reclassification from OCI to Pll done in Proportion
Classification
of investment in Associate on Joint venture as Held bon sale
An Entity shall apply Ind As 105 if investment on portionof investment in Ass Jv is
classified as Held for sale

Any retained portion of an investment that is not classified as Held bonsale

accounted as follows

Till Disposal of Portion classified asHFS After Disposal

ofPontionthat is classified as HFS
Whether Retained Interest continues to be an
Accounted using equity method Associate on Joint Venture
yes NO

tobeAssociate
continues Associateon Joint
on Jointventure venture relationceases

Equitymethod Ind As 109