Difference between AS 23 & AS 27 and Ind AS 28

Dear Rohit, Diff in Ind AS 28 AS 23 1 Excludes from its scope, investments in associates held by venture capital organisations, mutual funds, unit trusts and similar entities including investment-linked insurance funds, which are treated in accordance with Ind AS 39. while Does not make such exclusion. 2 Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. while Definition of control given in the existing AS 23 is rule-based, which requires the ownership, directly or indirectly through subsidiary(ies), of more than half of the voting power of an enterprise; or control of the composition of the board of directors in the case of a company or of the composition of the corresponding governing body in case of any other entity so as to obtain economic benefits from its activities. 3 The same has been defined as ‘power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies’. While ‘Significant Influence’ has been defined as ‘power to participate in the financial and/or operating policy decisions of the investee but is not control over those policies’. 4 Existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether an entity has significant influence or not. While For considering share ownership for the purpose of significant influence, potential equity shares of the investee held by investor are not taken into account. 5 Requires application of equity method in financial statements other than separate financial statements even if the investor does not have any subsidiary. While Requires application of the equity method only when the entity has subsidiaries and prepares Consolidated Financial Statements. 6 No such exemption is provided in Ind AS 28. while One of the exemptions from applying equity method in the existing AS 23 is where the associate operates under severe long-term restrictions that significantly impair its ability to transfer funds to the investee. 7 The same is to be accounted for at cost or in accordance with Ind AS 39 Financial Instruments: Recognition and Measurement. WHILE In separate financial statements, investment in an associate is not accounted for as per the equity method, the same is accounted for in accordance with existing AS 13, Accounting for investments. 8 Length of difference in the reporting dates of the investor and the associate should not be more than three months unless it is impracticable. While Permits the use of financial statements of the associate drawn upto a date different from the date of financial statements of the investor when it is impracticable to draw the financial statements of the associate upto the date of the financial statements of the investor. There is no limit on the length of difference in the reporting dates of the investor and the associate. 9 Require that similar accounting policies should be used. in case an associate uses different accounting policies for like transactions, appropriate adjustments shall be made to the accounting policies of the associate. While Require that similar accounting policies should be used. in case an associate uses different accounting policies for like transactions, appropriate adjustments shall be made to the accounting policies of the associate. 10 Provides that the investor’s financial statements shall be prepared using uniform accounting policies for like transactions and events in similar circumstances unless it is impracticable to do so. While Provides exemption to this that if it is not possible to make adjustments to the accounting policies of the associate, the fact shall be disclosed along with a brief description of the differences between the accounting policies. Any other query feel free to contact us.