This article explains the transition from proportionate consolidation under AS 27 to the equity method under Ind AS 28 for interests in joint ventures. It discusses how Ind AS 101 provides practical transition provisions for first-time adopters while preparing the Opening Ind AS Consolidated Balance Sheet.
‣ AS 27 to Ind AS 28 - Joint ventures move from line-by-line consolidation to a single investment balance under the equity method.
‣ Initial Carrying Amount - Assets, liabilities and goodwill previously consolidated are aggregated to determine the deemed cost.
‣ Impairment Testing - The investment must be tested for impairment at the time of transition.
‣ Deferred Tax and Disclosures - Tax effects, negative net assets and disclosure requirements must be carefully evaluated.
The article highlights why this transition is essential for comparability, transparency and compliance with Ind AS.
