Ind AS vs US GAAP vs IFRS: What Subsidiaries Must Reconcile

Ind AS is substantially converged with IFRS but retains specified carve-outs, so the reconciliation to an IFRS parent is usually narrow. US GAAP diverges more fundamentally, on lease classification, development costs, inventory costing and impairment methodology, so a US parent means a larger reconciliation. For an Indian subsidiary the effort concentrates on revenue recognition, leases, expected credit loss, business combinations and share-based payment.

The three-way position

Ind AS is converged with IFRS with specified carve-outs and carve-ins, so most IFRS treatments carry across but the exceptions matter and are where errors concentrate.

US GAAP differs more fundamentally — in lease classification, treatment of development costs, permitted inventory costing methods, and impairment methodology — so a subsidiary reporting to a US parent faces a larger reconciliation than one reporting to an IFRS parent.

Separately, the Indian statutory position may itself differ: not every Indian entity applies Ind AS, and companies below the applicability thresholds report under the previous accounting standards.

Where effort concentrates

Revenue recognition. Ind AS and IFRS are aligned on the five-step model, and US GAAP is closely converged, but application differs in practice on variable consideration, principal versus agent determination, and identification of performance obligations. For Indian subsidiaries in services and software these are the recurring adjustments.

Leases. Lessee accounting is broadly aligned between Ind AS and IFRS, both bringing leases on balance sheet. US GAAP retains a dual classification model producing a different expense profile. For an Indian subsidiary with significant property leases reporting to a US parent, this is a standing reconciliation item.

Financial instruments and expected credit loss. Classification, measurement, and the forward-looking ECL model. Judgement-intensive, and the assumptions require documentation that withstands audit — the model, not just the number.

Business combinations. Purchase price allocation, intangible identification and goodwill treatment. Goodwill impairment testing methodology differs between frameworks. Keep the accounting and tax positions distinct here: under Ind AS and IFRS goodwill is not amortised but is tested for impairment, whereas for Indian income tax purposes goodwill acquired in a business acquisition is not a depreciable asset at all. The two answers diverge, and conflating them is a common source of error in post-acquisition modelling.

Share-based payment. Measurement, vesting condition treatment and modification accounting. Interacts directly with Indian ESOP tax treatment, which follows its own rules.

Foreign currency and functional currency determination, which can differ from the reporting currency and is frequently assumed rather than assessed.

Deferred tax, compounded during the Income-tax Act, 2025 transition where changed provisions may affect recognition and measurement of deferred tax balances.

[INSERT: an anonymised Solique example of a reporting conversion — the area that consumed most effort and how it was resolved.]

Structuring the process

Maintain a standing reconciliation schedule rather than rebuilding it each period. Most differences recur, and the analysis should be written once and updated.

Document judgement areas contemporaneously — ECL assumptions, functional currency assessment, principal versus agent conclusions — because these are what auditors examine and what is hardest to reconstruct.

Align the local statutory close with the group reporting timetable, since Indian statutory deadlines and group deadlines rarely coincide.

Distinguish permanent differences from timing differences explicitly, since only the latter unwind.

Related reading

• post-acquisition conversion — Post-Merger Integration: Tax and Reporting Pitfalls in India
• board reporting — Board-Ready Reporting for PE-Backed Companies
• audit readiness — What “Audit-Ready” Actually Means for a Growth Company