Choose the statement basis before importing the investee’s results
In separate financial statements, Ind AS 27 paragraphs 4 and 10 provide cost or Ind AS 109 accounting for investments in subsidiaries, associates and joint ventures, applied consistently within each category. It does not offer the equity method as a separate-statement policy. An investee’s profit therefore cannot simply be multiplied by the holding percentage and posted to a cost-accounted investment. First identify which statements are being prepared and the applicable category policy.
This guide is checked on 25 October 2026 against the ICAI 2025–26 compendium. It concerns Ind AS separate statements and their closing investment register. It does not replace control, joint-control or significant-influence assessment, consolidation, Ind AS 109 classification or an impairment assessment. Examples are simplified pre-tax entries, with no fees, foreign currency or other movements unless stated.
Separate statements and consolidation serve different reporting purposes
Paragraphs 6–8A distinguish separate statements from statements using consolidation or the equity method and identify particular exemption or investment-entity situations. Calling a workbook “standalone” does not, by itself, establish the relevant standard or an exemption from consolidation. Keep the framework decision and the related group reporting obligations with the working papers.
Set up separate register sections for subsidiaries, joint ventures and associates. For every investment, record legal name, category, acquisition date, ownership interest, voting rights where different, chosen category policy and any mandatory exception. Do not select cost for one ordinary subsidiary and fair value for another just to obtain a preferred period result. Equally, category consistency does not force the same policy across all three categories where paragraph 10 allows different choices.
Dividends and status changes need their own event records
Paragraph 12 recognises the dividend in profit or loss when the right to receive it is established. Record that entitlement date and the later settlement separately. Cash receipt is not necessarily the recognition trigger, and a cost-accounted investment is not routinely reduced by an ordinary dividend as though it were an equity-method roll-forward. Special capital transactions and recoverability need their own analysis rather than being silently treated as ordinary distributions.
Paragraphs 11 and 11A preserve specified fair-value-through-profit-or-loss requirements for eligible associate/joint-venture choices and investment-entity subsidiaries. Paragraph 11B governs changes into or out of investment-entity status. It includes a deemed-cost route on ceasing that status and specific profit-or-loss and OCI treatment on becoming one. A change in a management label is not evidence that the technical status has changed.
Reorganisations and closing disclosures should not be lost in the register
Paragraphs 13–14 contain a special new-parent reorganisation rule only when all its conditions are met: the share exchange, unchanged group assets and liabilities, unchanged absolute and relative owner interests, and the cost-accounting facts. It is not a universal rule that investment cost always equals the investee’s net assets. Obtain the structure immediately before and after the transaction and test each condition.
Paragraphs 16–17 address the relevant significant-investment and statement-basis disclosures, including ownership and voting percentages and the method used. Cross-reference the actual related consolidated or equity-accounted statements where required. An investment-accounting policy does not remove other applicable Ind AS requirements; flag disposals, held-for-sale classification and impairment indicators for the appropriate separate working.
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: Profit does not create a cost-model uplift
An ordinary subsidiary investment is carried at ₹1,00,00,000 under the cost policy. The subsidiary reports ₹40,00,000 profit and the parent owns 80%. A mechanical ₹32,00,000 uplift is not a cost-model entry. With no additions, impairment or other relevant events, the investment remains ₹1,00,00,000.
Illustrative example 2: Recognise the dividend entitlement separately
A parent owns 80% of the subsidiary, whose valid ordinary dividend declaration totals ₹10,00,000. Assume the parent’s right is established before year-end. Dividend income and receivable are ₹8,00,000. The ₹1,00,00,000 cost-model investment is not reduced to ₹92,00,000 merely because of this ordinary dividend; assess other relevant issues separately.
Illustrative example 3: Apply a subsidiary-category policy consistently
Two ordinary subsidiary investments cost ₹90,00,000 and ₹50,00,000. Their closing fair values are ₹1,10,00,000 and ₹40,00,000. With a cost policy and a completed applicable assessment supporting no impairment or other adjustment, the category total is ₹1,40,00,000. The alternative arithmetic ₹1,50,00,000 from fair values is not a reason to mix measurement bases.
Illustrative example 4: Different categories can have different supported policies
Subsidiaries are validly cost-accounted at ₹3,00,00,000; an associate investment is properly measured under an established Ind AS 109 FVTPL classification, rising from ₹40,00,000 to ₹46,00,000. Its gain is ₹6,00,000 and combined closing investments ₹3,46,00,000. The associate’s gain does not remeasure the subsidiary category.
Illustrative example 5: Test a qualifying new-parent reorganisation
Assume all paragraph 13 conditions are met and the new parent obtains 100% of the original parent. Original separate-statement equity comprises ₹40,00,000 capital, ₹60,00,000 reserves and ₹20,00,000 retained earnings. The relevant carrying-equity total and new parent’s cost are ₹1,20,00,000. A ₹2,00,00,000 indicative market value does not replace that special measurement, a difference of ₹80,00,000.
Illustrative example 6: Use the status-change deemed-cost basis
A parent genuinely ceases to be an investment entity and validly chooses the paragraph 11B(a)(i) cost route. Its subsidiary investment’s fair value at that date is ₹1,50,00,000; the historic pre-fair-value cost was ₹1,00,00,000. Deemed cost is ₹1,50,00,000, not ₹1,00,00,000. The ₹50,00,000 basis difference is not an automatic fresh gain from this election.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Identify the financial-statement basis | Ind AS applicability and separate/group reporting decision. |
| 2 | Establish each investee category | Control, joint-control or significant-influence memorandum. |
| 3 | Read the category policy | Approved cost or Ind AS 109 policy and consistency check. |
| 4 | Test mandatory exceptions | Paragraphs 11, 11A and investment-entity status evidence. |
| 5 | Reconcile investment movements | Opening amount, additions, disposals and applicable adjustments. |
| 6 | Recognise dividend rights at the correct date | Declaration, entitlement and receivable-to-cash trail. |
| 7 | Assess exceptional events | Status-change, impairment and disposal referral workings. |
| 8 | Test any new-parent reorganisation | Before/after ownership, assets, liabilities and paragraph 13 checklist. |
| 9 | Reconcile ownership and voting disclosures | Registers, class rights and significant-investment list. |
| 10 | Link related financial statements | Applicable paragraphs 16–17 disclosures and final statement cross-reference. |
Sixteen practitioner FAQs
1. Does Ind AS 27 itself decide which entities must prepare separate statements?
It governs their accounting when prepared; determine the reporting obligation under the applicable framework and law.
2. Can the equity method be elected for these separate statements?
Ind AS 27 does not give that policy option. Do not import the IAS 27 choice without checking the Indian text.
3. Must every investment in the entity use the same basis?
The consistency requirement is category-wise for subsidiaries, joint ventures and associates, with the specified exceptions.
4. Can two ordinary subsidiaries be selectively measured for better profits?
Do not mix the category policy for that reason; assess the actual standard requirements and exceptions.
5. Can subsidiaries use cost while associates use Ind AS 109?
Paragraph 10 allows category choices; verify the classification and any mandatory conditions.
6. Does an investee’s profit increase a cost-accounted investment automatically?
No. Prepare the investment’s own movement schedule rather than an equity-method uplift.
7. When is ordinary dividend income recorded?
When the right to receive the dividend is established, not simply whenever cash arrives.
8. Should a receivable be recorded if cash comes next year?
If the entitlement is established and recognition requirements are met, distinguish the receivable from later collection.
9. Does an ordinary dividend routinely reduce investment cost?
Not as an equity-method distribution entry. Evaluate capital transactions and recoverability separately where relevant.
10. Are all fair-value investments FVTPL by default?
No. Ind AS 109 analysis matters; the example expressly assumes a valid FVTPL classification.
11. Can investment-entity exceptions be ignored for separate statements?
No. Paragraph 11A carries the specified subsidiary FVTPL requirement into these statements.
12. Does ceasing investment-entity status always restore historic cost?
No. For the stated cost route, paragraph 11B uses fair value at the change date as deemed cost.
13. Does a deemed-cost election automatically generate a new gain?
Do not post one mechanically. Reconcile the existing carrying amount and the exact status-change rule.
14. Does every holding-company insertion use paragraph 13?
No. Verify every reorganisation condition and the cost-accounting circumstances.
15. Why show voting rights separately from ownership?
The percentages can differ, and the significant-investment disclosure calls for the relevant distinction.
16. Does choosing cost remove impairment or held-for-sale considerations?
No. Refer the relevant facts to the other applicable Ind AS requirements and maintain the linked working.
Conclusion
Ind AS 27 permits cost or Ind AS 109 accounting for subsidiary, associate and joint-venture investments in separate statements, with category consistency and specific exceptions. Keep dividends, investee profits and status-change entries in distinct workings.