Group accounts are decided before anyone makes an accounting judgement
What goes into a set of group accounts, at what value, and in what currency are three questions answered by IFRS 10, IFRS 3 and IAS 21 respectively. All three are answered by assessment rather than arithmetic, and all three are settled early and then rarely revisited, which is exactly why they are worth revisiting. A control conclusion reached at incorporation, a purchase price allocation done under time pressure at completion, and a functional currency assumed rather than determined are three of the most common findings in a diligence review of an Indian group.
- Control under IFRS 10, and why a shareholding percentage does not answer it
- Purchase price allocation, goodwill, and the IASB decision due in the second half of 2026
- Functional currency: determined from facts, not chosen, and not the same as presentation currency
Control decides consolidation, and control is not a percentage
An investor controls an investee when it has power over the investee, exposure to variable returns from it, and the ability to use that power to affect those returns. All three must be present. A majority shareholding usually produces that answer, but it neither guarantees it nor is required for it.
Power without a majority
Contractual arrangements, potential voting rights, and a widely dispersed remaining shareholder base can each give an investor practical control on well under half the equity. Indian groups with legacy joint venture structures and shareholder agreements from an earlier funding round often find control sits somewhere other than where the cap table suggests.
Structured entities
Where voting rights are not the dominant factor, the assessment turns on the purpose and design of the entity and on who directs the activities that most affect returns. Special purpose vehicles in infrastructure, securitisation and real estate are the usual examples.
Reassessment
Control is reassessed when facts change, and in 2026 the IFRS Interpretations Committee had a question on the reassessment of control under IFRS 10 on its agenda, alongside one on the control assessment for a single-investor fund. Both were at the tentative agenda decision stage with feedback due, so this is live rather than settled ground.
Business combinations: the allocation is the accounting
On acquiring a business, the acquirer measures the identifiable assets acquired and liabilities assumed at fair value at the acquisition date, and recognises goodwill as the residual. That sentence contains a year of work for any acquisition of size, and almost all of it sits in the word identifiable.
What gets recognised that was never on the target's balance sheet
Customer relationships, brands, technology, order backlog and non-compete agreements are all capable of recognition in a business combination even though the target could never have recognised them itself, because internally generated intangibles are generally not recognised. This is the largest single source of post-acquisition earnings drag, because each recognised intangible is then amortised.
Goodwill, and what the IASB is deciding
Goodwill is not amortised under IFRS. It is tested for impairment, which produces an earnings profile that is stable until it suddenly is not. The IASB has an open project on business combinations, disclosures, goodwill and impairment, which was at the decide project direction stage and due to be redeliberated in the second half of 2026.
It is not a project to reintroduce amortisation. The IASB considered doing exactly that and concluded it did not have a compelling case to move away from the impairment-only model. What the 2024 exposure draft actually proposed was disclosure: management's acquisition-date objectives and performance targets, and expected synergies, for strategic acquisitions above defined thresholds, with an exemption for commercially sensitive information. On the impairment side it proposed reducing the shielding effect through clearer allocation of goodwill to cash-generating units and better segment-level disclosure, permitting cash flows from uncommitted restructurings in value in use, and permitting a post-tax rather than requiring a pre-tax basis.
The measurement period is not a grace period. An acquirer has a limited window from the acquisition date to finalise provisional amounts, and adjustments in that window are made retrospectively. It is not an opportunity to revisit the deal in the light of how the business has since performed. Post-acquisition information about post-acquisition events is a current period matter, not a measurement period adjustment, and the distinction gets tested in audit.
Associates and joint arrangements
Significant influence without control brings the equity method: the investment is recognised at cost and then adjusted for the investor's share of post-acquisition profits and losses. Joint arrangements are classified first, between a joint operation, where the parties have rights to the assets and obligations for the liabilities and account for their own share directly, and a joint venture, where they have rights to the net assets and apply the equity method. The classification turns on the structure and terms of the arrangement, not on what the parties call it.
Expect this area to change substantially. The IASB's equity method project reached the final amendments stage in 2026, with the output expected in 2027, and it is not a set of discrete tweaks: it produces a revised IAS 28. It answers a long list of application questions by reference to a single principle, that an investor accounts for an associate as the purchase of a net investment rather than of the underlying assets and liabilities, adds disclosures in IFRS 12 and IAS 27, and reorganises the standard. Anything you have built on the current text of IAS 28 should be expected to need revisiting.
Separately, and already finalised rather than proposed: narrow-scope amendments issued in June 2026 clarify the fair value option in IAS 28, that is which investments in associates and joint ventures may be measured at fair value. They were prompted by diverging views on how that option interacts with IFRS 18's classification of income and expenses, and they take effect when an entity first applies IFRS 18.
Functional currency is determined, not chosen
Functional currency is the currency of the primary economic environment in which an entity operates. It is a matter of fact, established from the currency that mainly influences sales prices and costs, and it is not the same thing as the currency the accounts are presented in. Presentation currency is a free choice. Functional currency is not.
Why it matters more than it sounds
Functional currency decides which movements go through profit or loss as transaction differences and which go through other comprehensive income as translation differences. An Indian subsidiary of a foreign group that has assumed its functional currency is the parent's, when the facts point to the rupee, will have been putting exchange movements in the wrong place for as long as that assumption has held.
Two recent changes
Amendments on the lack of exchangeability address how to determine a spot rate when a currency cannot be exchanged into another. Separately, an amendment on translation to a hyperinflationary presentation currency was issued in November 2025 and takes effect for annual reporting periods beginning on or after 1 January 2027. Neither affects most groups, and both are decisive for the few they do affect.
Can an Indian company present its statutory accounts in a currency other than the rupee? For Companies Act financial statements, no. The constraint is not in the accounting standards at all: it is section 129(1) read with Schedule III, which prescribes the form of the financial statements, heads the balance sheet in rupees, and ties mandatory rounding to turnover thresholds expressed in crores, with the permitted units all rupee units. Rounding is mandatory in Division II, which is the Ind AS division.
The two concepts pull in different directions and it is worth separating them cleanly. Functional currency is determined on the facts and is not a policy choice, so an Indian company can perfectly well have a US dollar or dirham functional currency. Presentation currency is free under Ind AS 21, which says an entity may present in any currency. But Ind AS operates within section 133 and Schedule III rather than above them, so the Schedule III form overrides that freedom for statutory purposes.
What that means in practice
Determine functional currency objectively rather than assuming it. Keep the records in the functional currency. Translate to the rupee as presentation currency, with assets and liabilities at closing rate, income and expenses at transaction-date or average rates, and the difference to other comprehensive income. Disclose that the presentation currency differs from the functional currency, and why. Present in Schedule III Division II form. Then issue the functional-currency numbers separately as a reporting package for the parent or for lenders, which is where they are actually wanted.
Why the constraint sits in company law rather than in the accounting standards. A Ministry of Corporate Affairs working group reported in November 2022 on financial reporting by companies in an International Financial Services Centre in freely convertible foreign currency. Two of its findings settle the point by implication. It identified Schedule I and Schedule III as the schedules of the Companies Act carrying a specific reference to the rupee, and therefore the places that would have to change. And it concluded that no change would be needed to the accounting standards at all, because both the older AS 11 and Ind AS 21 already permit a non-rupee functional currency. That is the cleanest available statement that the impediment is company law, not accounting.
The Corporate Laws (Amendment) Bill 2026 then proposes to do exactly that for IFSC entities, through a new section 43A with a transition route for existing IFSC companies moving from rupees to a permitted foreign currency. It was introduced in March 2026, is before a Joint Parliamentary Committee, and is not enacted. That a Bill is needed for IFSC entities alone is strong evidence the freedom does not exist for companies generally.
Supporting practice, with its limits stated. ITFG Clarification Bulletin 7, Issue 2, of 30 March 2017 deals with an Indian company having a US dollar functional currency within a rupee-functional group. It concludes that the company may present in rupees by applying the translation procedures in Ind AS 21, and that the auditor accordingly reports on the rupee financial statements. Note that it treats the rupee requirement as a premise rather than deciding it, and cites no provision of the Companies Act, so it supports the position rather than establishing it. No Expert Advisory Committee opinion, MCA circular, NFRA statement or judicial decision on the point was located.
Where this sits
IFRS Advisory
The overview page, with all five guides listed and the situations each one answers.
Ind AS and IFRS: Where They Differ
Guide 1. The diagnosis: what is actually different between the framework you use and the one you are asked for.
Converting to IFRS
Guide 2. IFRS 1, the transition date, the elections, and the reconciliations a first IFRS set of accounts must disclose.
Revenue, Leases and Financial Instruments
Guide 3. IFRS 15, IFRS 16 and IFRS 9, plus the amendments effective 1 January 2026.
Consolidation, Business Combinations and Foreign Currency
Guide 4. IFRS 3, IFRS 10, IAS 28 and IAS 21.
What Changes Next
Guide 5. IFRS 18 and IFRS 19 from 1 January 2027, and where sustainability reporting has got to.
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This page is general information, not professional advice. IFRS Accounting Standards, the Indian Accounting Standards notified under section 133 of the Companies Act 2013, and the tax law that interacts with both, all change frequently, and how any of it applies depends on your own facts. The Income-tax Act 2025 replaced the 1961 Act with effect from 1 April 2026. Take professional advice before acting on anything on this page. We are happy to be that adviser, but we do not act on a web page, ours or anyone else's, without one.