Applicability of Ind As to associate of associate

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This discussion clarifies whether a 'sub-associate' of an associate company needs to apply Indian Accounting Standards (Ind AS). The consensus is that the sub-associate (Company C in the example) is not automatically required to follow Ind AS simply due to its indirect link to a listed parent company (Company A) through an associate (Company B). Applicability for Company C depends on its own independent status and financial criteria, not solely its relationship to Company B.

Honestreview K

Honestreview K (Querist)
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27 November 2024 Is sub-associate of associate company is required to follow Ind As. Example: 'A' listed company is holding 30% shares in Company 'B'. The Company 'B' is associate of company 'A'. Again company 'B' is holding 30% shares in company 'C'. Whether the company 'C' is required to follow and apply Ind As.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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27 November 2024 The requirement for Company 'C' would depend on its own status—whether it is listed, whether it has a net worth above ₹250 crore, or if it meets any other specific criteria laid out by the MCA for the applicability of Ind AS. Company 'C' is not required to follow Ind AS solely because it is a sub-associate of an associate company.

Honestreview K

Honestreview K (Querist)
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27 November 2024 Is company 'C' is required for follow Ind AS at least for preparation of consolidation with associate Company 'B'.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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27 November 2024 As per my understanding, only Company 'B' has to follow Ind AS as it is associate of Company 'A'. Company 'C', being a sub-associate of Company 'A' through Company 'B', is not automatically required to follow Ind AS just because it is indirectly connected to a listed company 'A'.

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