01-Brahmastra 3.0 Sch-III Extract - 02-10-2021

VERSION 3.
Author : CA. Sarthak Niraj Jain

FR - Brahmastra
(Version 3.0)
01 01
02 IND AS BASED F.S. : FUNDAMENTALS 09
03 16
04 53
05 61
06 144
07 301
08 343
here "BRAHMASTRA"for CA Final Financial Reporting (New Syllabus), Version 3.0.
Whether in class or at house"

CA SJ-FR
Cover all other Ind AS, and other topics like CSR. Integrated Reporting, etc.
in a separate book - DRONE CHARTS
* For Practicals on FR refer our STRIKER*
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2 www.t.me/SarthakJainCA
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4 amendments
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CHAPTER: 1
CA FINAL- FINANCIAL REPORTING (NEW SYLLABUS)

(1) Relevant for Students : May 21, Nov 21, May 22, Nov 22, Nov 22, May 23
(2) For Amendments and Board Notes :
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(3) Syllabus (with expected marks weight): • Name
• City
• Roadmap, Schedule III, Ind AS 1, Framework : 5 to 15 marks • Student of
• Share Based Payments : Upto 10 marks PD/ Branch
• Financial Instruments : 15-20 marks Name
• Batch
• Consolidation :
• Business Combination : } 15-20 marks
• Attempt
• Order ID/
Details
• Ind AS : 40-50 marks
• Others : Integrated Reporting, CSR Reporting : upto 5 marks
(4) Paper Pattern: Of 4 to 15 mar

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(5) ICAI Material on Ind AS:

• ICAI Students - Study Material (SM 2020) +MTP + RTP
• ICAI Members & Others – Compedium of Ind AS notified by MCA, Education
material (EM)and Clarification Bulletins by ITFG (Ind AS Technical
Facilitation Group)
• IASB Material on IFRS - IAS and IFRS, SIC, IFRIC & Background Material.
CA FINAL - FINANCIAL REPORTING 1

INTRODUCTION
(6) FAST Material Covers: ICAI SM+ MTP+ RTP + EM+ IFRS/ACCA + Additional Question
(AD) from Old Syllabus (PM, Past exam ques. Redrafted)+ Concept builder (CB)
(Fast Exclusive)
(7) How to write answers to objective questions/case study based questions:
• Quote the Name and Number of

Para 1: Relevant Provision Ind AS or Section or Act or rules
• Quote only relevant part of the
provison
• Avoid any interpretations
• Start with facts of the case

Para 2: Relate facts of the question to • Relate facts to provision given
provison and interpret it in the answer above (no need
to repeat provision)
• Provide Interpretation
• Conclusion para to
specifically answer the questions
asked in the question
Para 3: Conclusion with assumption
or if’s/but’s if any • Make sure assumptions if used
in making conclusions are well
disclosed
• In case of Conditional Answers
first give the most obvious
answer
(8) Sequence to Study:

Same as followed in the class. Start with Roadmap aFundamentals aSchedule III &
Ind AS 1 aFinancial Instruments aConsolidation a Business Combination
aShare Based Payments a all other Ind AS a Other Topics
2 CA FINAL - FINANCIAL REPORTING

CHAPTER: 1
ROADMAP TO Ind AS
(a) Introduction of Ind AS in India
(b) Applicability of Ind AS and AS : Companies (Ind AS) Rules,2015 +
Companies (AS) Rules,2006 and related Amendments
(a) Ind AS : Introduction of Ind AS in India
Q. Are Ind AS 100% as per IFRS?

Ans: No, there are differences that can be categorised in 3 parts
1. Terminology Changes
CARVE-INs
2. Restriction of Options given in IFRS
3. Conceptually different from IFRS – CARVE-OUTs
Course Coverage FR (New Course) GFRS FR(Old)

Indirectly-Yes
(mostly questions Basic + AS &
Ind AS Yes Ind AS
in exam are Ind Comparision
AS based)
Ind AS to AS
AS Comparision (All) - Yes (100%)
(Rerely asked in exams)
IFRS & Ind AS
IFRS - -
Comparision
US GAAPs &
US-GAAPs - Ind AS & IFRS -
Comparision
(b) Applicability of Ind AS and AS : Companies (Ind AS) Rules,2015 (RULE 4)

Companies :
(1) Phase I : 01.04.2016 – Net Worth > 500 Cr.
(2) Phase II : 01.04.2017 – All Listed and
Unlisted Company- Net Worth > 250 Cr.
Exceptions:
(1) Banking Companies – 01.04.2018 01.04.2019 (Deferred till further notice)
(2) Insurance Companies – 01.04.2018 01.04.2020 (Deferred till further notice)

INTRODUCTION
(3) NBFCs – Phase I : 01.04.2018 – Net worth > 500Cr.
Phase II : 01.04.2019 – Listed and
- Unlisted having Net worth > 250 Cr.
Q. Is Voluntarily early adoption of Ind AS Possible ?

Ans: Yes, but not before 01.04.2015
And for – Banks : 01.04.2019 : From earliest application date
- Insurance Companies : 01.04.2020 : From earliest application date
- NBFCs : 01.04.2018 (Earliest application date)
Note : An entity covered under Ind AS as per above will make its H/S/JV/A
also covered under Ind AS. This also applies to entity that voluntarily follows
Ind- AS However in no case Banking/Insurance/NBFC will be covered under
Ind- AS prior to the date When Ind AS have been mandated for them.
Tata Capital ltd. (Stock Broker) not before 01.04.2018

Parent of
Tata BPO (listed Co.) Ind AS applicability on 01.04.2016 as

Net worth > 500 cr.
• Tata BPO to prepare alternate FS as per Ind AS AS till 31.03.2018 to facilitate
preparation of Consolidated F.S. by Tata Capital using same
accounting policies as that of Parent
Q. Are fellow Subsidiaries also covered? Walmart

India Ltd (H)
Ans. No
Flipkart Ltd
Best Price Shops Ltd
(Ind AS Applicable)
(FS) (Ind AS-n/a,
unless company itself is
listed or has Net Worth
> 250 Cr.)
Jabong Myntra Ltd
Ltd (S) (S)
Chain Subs.
Ltd (S)

CHAPTER: 1
Definitions
(i) Net Worth (Section 2 (57) of Companies Act,2013) :
Paid up + Reserves (-)

+P & L Cr. Accumulated
share made out + SPR Balance
losses and
(- )P & L Dr.
Capital of Profits SP balance Fictitious
assets
• Includes : ESC,PSC,GR, P&L (cr), ESOS Reserves, Capital Grants forming part of net worth
• Excludes: Revaluation Reserve, Amalgamation Capital Reserve, Write back of Depreciation
1. Net worth is to be checked on Last Day of preceding F.Y. (but starting from
31.03.14 / for NBFC – 31.03.16)
E.g.
a) A is an Unlisted Company
Net Worth: 31.03.14 = 550 Cr.
31.03.15 = 200 Cr.
31.03.16 = 150 Cr.
Is Ind AS Applies on A from 01.04.16?
Ans:- Yes applicable from 01.04.16
b) What if in above case company was NBFC?

Ans Ind AS not applicable on 01.04.18
2. What will be the treatment of profit on sale in the given situation and how much
profit will be included in reserves?
Fixed Asset Rs 100 Cr. (Crore)
Carrying Amount Rs 40 Cr.
Sold for Rs 110 Cr.
Profit on Sales Rs 70 Cr.
(a) P&L 70 Cr.

Options:
(b) P&L 60 Cr. (d) Any

(Hence Full 70 (c) Cap. Res. 70 Cr.
Cap. Res. 10 Cr. of these
Added to Reserves)
Ans: (a)

INTRODUCTION
3. Net Worth to be checked as per “AS” or “Ind AS” based F.S.?
Ans Net Worth as per F.S. made as per “AS”
(ii) Listing:
(i) Listed or to be
(iii)
listed (i.e.Application (ii)
Debt or Equity
filed for listing but in India or
(i.e. Debentures or
listing is pending Outside India
Equity Shares)
on Recognised stock
exchange)
Excludes: Companies listed on SME & ITP without Public Issue. (ITP- Institutional
Trading Platform nowknown as Innovator’s Growth Platform)
Q. Can a Private Company be listed company?

Ans: Private Company can never list shares, but it may list debentures hence in rare
cases even a private company can be a listed company.
(iii) Banking Company: Banking Company as per Banking Regulation Act.
(iv) Insurance Company: Insurance Company registered under Insurance Act,1934
(v) NBFC’s: As per:
Companies (Ind AS)

RBI
Rules,2015
Income > 50% from NBFC INCLUDES:

Financial Nature Income, and > Core Investement
Assets > 50% assets being Company
Financial Assets > Mutual Funds- AMC
(Asset mgt Company)
Certain Category of Business > Stock Brokers
have been excluded from NBFC > Nidhi Company
like MFs, VCFs, Nidhi Co., Chit
Fund Co., Stock Brokers etc by > Chit Fund Funds,
RBI Company Venture
Capital etc.
> + NBFC as per RBI

CHAPTER: 1
(VI) Holding/Subsidiary/JV/Associates (As per Companies Act, 2013)
Holding Subsidiary Joint Venture Associates
Parent
Company Controlled 2 or More Companies
(Control over by a Parent Companies > 20%
Subsidiary) + Company Contractu- Voting
(includes + Body ally agree to power
Body Corporate share control (usually)
Corporate)
V.IMP: H/S/JV/A or Listing are to be checked during the year (i.e. First date
of F.Y. until end of F.Y.), unlike Net worth that is to be checked on last day of
preceeding F.Y.
Eg. 31.03.15 H had Subsidiary S, which was covered under Ind AS from 01.04.2017 thru
Net worth Criteria. On 31.03.16, H Sold its Investment in S therefore H need not follow
Ind AS as S is no more H’s Subsidiary.
(VII) Imp. Note: Ind AS once applicable are applicable forever. (no EXIT from Ind AS)
(VIII) Date of Transition: Beginning of P.Y. from when Ind AS adopted.(cannot be changed)
(Company has to restate comparatives as per Ind AS)
31.03.18(C.Y.) 31.03.17 (Restated 01.04.16 (P.Y.) also as

Particulars
as per Ind AS as per Ind AS) per Ind AS
Liabilities: PSC
Dividend Payable X X X
Companies not adopting Ind AS :

• Companies (Ind AS) Rules, 2015 : Companies not covered under roadmap to
follow AS as prescribed in Companies (Accounting Standard) Rules, 2006.
• Rule 4 (Ind AS) : Companies covered under roadmap to follow
Ind AS as prescribed.

CHAPTER: 1
(c) Applicability of Ind AS and AS : Companies (AS) Rules,2006
• AS 1 to 29 to be followed by all companies.
• Except SMC’s to be exempted for certain AS.
• SME/SMC Classification:-
LEVEL I (Non-SMC) LEVEL II (SMC) LEVEL III (SMC)
Turnover (P.Y.), or >50 Cr. >1 Cr.
Borrowings
>10 Cr. >1 Cr.
(Any time in P.Y.), or
Bank, F.I. or Insurance
Nature of Entity, or - Remaining
company
Listing, or Listed or to be Listed -
Holding or Subsidiary Holding or
Group
of above Subsidiary of above
SME(As per Preface SMC (AS per Companies

Exemption
to AS given by ICAI) (AS) Rules,2006)
Completely Exempt 3,17,18,24 3,17

Exempted from certain
accounting & disclosure 15,28 15,28
requirements
Exempted from certain
19,20,29 19,20,29
disclosure requirement
Ind AS, if Applicable/Adopted :

• All Ind AS are mandatory to be followed (if Relevant)
• Ind AS 1: Companies following Ind AS to:
a) Follow all Ind AS (and no option to follow Ind AS selectively); and
b) Make an “Explicit Unreserved Statement” that it is following Ind AS for
preparing & presenting F.S.

CHAPTER: 2
Ind AS Based Financial Statements
Fundamental Principles of Ind AS
Substance of Over Form

Fundamental
Fair Value Acccounting
Principles
Retrospective Restatement and Reclassification
of Ind AS
Financial Instruments
1. Substance over form

1.1. Substance of transaction or event shall prevail over the legal form
Example:
• Redeemable preference share capital should be treated as a liability and not capital
• Purchase of company with a single asset and no separate business should not be
accounted for under amalgamation but as purchase of fixed assets
• Convertible debentures have equity characteristics
1.2. As per Ind AS 1 entity to achieve fair presentation may deviate from prescribed
Ind AS with necessary disclosures
2. Fair Value Accounting

2.1. The Fair Value Bases: Ind AS uses fair value bases for measurement of assets at
reporting date and even at initial recognition in some cases
Asset Initial Recognition Reporting Date Measurement

Property, Plant and Equipment
Investment Property
Cost
Cost
O
Cost or Fair Value
Cost
Investment in securities Fair Value Fair Value
Goodwill Cost Cost subject to impairment check
E
E
Other Intangible assets Cost Cost or Fair Value
Biological Assets Fair Value less cost to sell Fair Value less cost to sell
Bearer Plants (Plantation Assets) Cost Cost or Fair Value
Trade receivables Fair Value (Face Value) Face Value
Loans Fair Value Cost or Fair Value
Deferred Tax Assets Accounting Value Accounting Value
Illustrative list of recognition and measurement bases under Ind AS

IND AS BASED FS
2.2. Definition
• Fair value under Ind AS is the exit price that is the price at which the asset
can be sold or a liability can be settled between market participants in
ordinary course of business.
• Further Ind AS 113 gives principles for determination of fair value.
2.3. Choice of Accounting Policy

• Use of fair value bases for measurement of assets, wherever choice is given,
like for PPE, Intangibles other than goodwill, etc is a matter of choice of
accounting policy.
2.4. Accounting for Fair Value Gain / Loss

• When asset is measured at fair value, the resultant fair value gain or loss in
certain cases is transferred to OTHER COMPREHENSIVE INCOME instead of
Profit or Loss a feature specific to Ind AS Based Financial Statements
• OCI is a section of Statement of Profit and Loss (and not a separate
statement, as permitted under IFRS) which segregates other comprehensive
incomes from profits or losses
• Total of Profit and OCI are termed as Total Comprehensive Income (TCI)
• However, different Ind AS provide different basis for accounting for gains and
losses
Examples:
• Profit on Sale of Fixed Assets (PPE) – Credited to Profit or Loss
• Profit on Revaluation of Fixed Assets (PPE) – Credited to Other Comprehensive
Income (OCI)
•
O
Profit on net assets acquired under business combination – Directly credited to
reserves
3. Retrospective Restatement and Reclassification –

Ind AS 1 and Schedule III – Division 2 prescribes accounting and presentation for:

CHAPTER: 2
Retrospective Restatement 3.3 Reclassification
3.1 Retrospective Application 3.2 Retrospective

of Accounting Policy Change Restatement of Errors
3.1. Retrospective Application of Accounting Policy Change

3.1.1. Under IndAS change in accounting policy is accounted for retrospectively (unless other
Ind AS requires otherwise as if the revised policy had been in use since the company
initially recorded the financial item or event and condition. The same has been prescribed
under Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
3.1.2. However, unlike AS, under retrospective accounting the company restates (revises)
previous year figures and previous opening balance of financial asset or liability
or equity instead of accounting for the complete difference due to retrospective
change in the current year
3.1.3. Illustration : Company changes its method of depreciation from SLM to WDV in
the year 2015-16. Asset was purchased for 1000 on 01 April 2012, SLM 20% pa and
from 1 April 2015 company wishes to apply WDV method with 30% p.a.
depreciation. Show financial statements of 2015-16 with previous year figures.
(Consider change in method of depreciation as change in accounting policy only
for illustration purpose, as in Ind AS this is not considered so)
Solution: If change in policy is from 2015-16

Date / Period Particulars SLM -20% WDV – 30% Difference
1.4.2012 Purchase Cost 1000 1000
2012-13 Depreciation 200 300 100
1.4.2013 Carrying Amount 800 700 Total 100
2013-14 Depreciation 200 210 10
2014-15 Depreciation 200 147 (53)
Short Depreciation (as per old AS) 57 Nil
2015-16
Balance 343
2015-16 Depreciation for the year 103
31.03.2016 Carrying Amount 240

IND AS BASED FS
Under AS earlier, short depreciation of 57 would be charged in the year 2015-16 as

an expense.
However, under Ind AS, in financial statements of 2015-16, company will have to:
a. restate in its SPL the previous figure of depreciation expense from 200 to 147; and
b. differences relating to earlier years of 110 shall be restated by preparing the
previous year opening BS in which Asset would be reduced by 110, from 600 to 490
alongwith corresponding reduction in opening reserves (subject to tax adjustments)
Following presentation in financial statements further explains difference between

AS and Ind AS:
Statement of Profit and Loss (As per Statement of Profit and Loss (As per
AS) (For 2015-16) (Extract) Ind AS) (For 2015-16) (Extract)
Particulars 2015-16 2014-15 Particulars 2015-16 2014-15
147
Depreciation Depreciation
103 200 103 (200-53)
Expense Expense
(as per wdv)
Short Depreciation 57 -
Expenses
Balance Sheet (As per AS) Balance Sheet (As per Ind AS)
(As on 31.03.2016) (Extract) (As on 31.03.2016) (Extract)
Particulars 31.03.16 31.03.15 Particulars 31.03.16 31.03.15 01.04.14
PPE 240 400 PPE 240 343 490
Recognise Reduce by 57
Recognise
No current (Opening re-
current Reduce
Reserves adjust- Reserves year dep duced by 110
year dep by 110
ments exp of 103 & CY increase
exp of 160
only by 53)
3.1.4. Previous Year Opening Balance Sheet

Ind AS 1 requires that in case of retrospective restatements having material affect
on balances of previous to previous years, then company should additionally prepare
previous year opening balance sheet as a third balance sheet amount column. Such
balance sheet to be prepared as if the company would have prepared if it followed
the revised accounting policy right from the beginning with corresponding

CHAPTER: 2
adjustment to reserves (subject to tax effect)
Such Balance sheet is also required in the year of FIRST TIME ADOPTION of FS.
3.2. Retrospective Restatement of Errors

3.2.1. Errors and its accounting adjustments are given under Ind AS 8 Accounting
Policies, Changes in Accounting Estimates and Errors
3.2.2. Unlike AS, in case of Ind AS errors are rectified by restating previous year figures
giving effect of rectification of errors in the year to which the error relates
3.2.3. If error relates to :
a. Previous Year – Corresponding Year Figures are changed, as in case of
change in accounting policy
b. Year prior to Previous Year – Previous Year Opening Balance Sheet (if Material)
is presented adjusting assets and liabilities and reserves with effect of rectification
of errors
3.3. Reclassification of Profits (OCI to P or L)

3.3.1. Reclassification of profits is to be done as per the requirements of respective
Ind AS and presented as per the requirements of Ind AS 1.
3.3.2. Reclassification refers transferring of profits or losses earlier recognised in OCI to PorL
3.3.3. This is presented by reversing cumulative gain / loss earlier recognised in OCI and
recognising that cumulative gain / loss in PorL on derecognition of asset or liability.
3.3.4. Certain Ind AS prohibit reclassification of profits from OCI to PorL and in such cases
balance of OCI may be transferred to Reserves directly in Statement of Changes in
Equity
3.3.5. Schedule III Division II prescribes the presentation of OCI and PorL as a part of
Statement of Profit and Loss
3.3.6. Illustration:
Investment in securities purchased on 25 March 2021 for 100
Company values such investment at Fair Values and transfers profit to OCI with
reclassification on sale of investments.
Fair Value on 31 March 2021 – 120
Fair Value on 31 March 2022 – 135
Investment sold on 05 April 2022 – 132

IND AS BASED FS
Journal Entries
Date Particulars Amount Dr Amount Cr

25.03.2021 Investment A/c 100
To Bank A/c 100
To Fair Value Change A/c 20
31.03.2021 Fair Value Change A/c 20
To OCI 20
To Fair Value Change A/c 15
31.03.2022 Fair Value Change A/c 15
To OCI 15
05.04.2022 Bank A/c 132
Profit or Loss 3
To Investment A/c 135
Year End OCI 35
To Profit or Loss 35
Statement of Profit and Loss for the year ended 31.03.2022(Extract)
Particulars 2021-22 2020-21

Profit or Loss
Profit on Sale of Investment (3) -
Reclassification of Cumulative
35 -
Fair Value Change from OCI
Profit for the year 32 -
OCI – Reclassifiable
Fair Value Change (35) 15
Total Comprehensive Income (3) 15

CHAPTER: 2
3.4. Financial Instruments
3.4.1. Financial Instrument is a Financial Asset for one and a Financial Liability
or Equity Instrument for another party
3.4.2. Ind AS 32, 109 and 107 deals with Financial Instruments Presentation,
Recognition and Measurement and Disclosures
3.4.3. In SIMPLE TERMS it can be understood as:
Financial
Instruments
Financial Financial Liability or

Asset Equity
Cash or Financial
Equity
Investment in Liability
Equity Shares
or Right to
receive the Contractual Residual
same obligation to Interest in NET
pay cash or ASSETS of the
other FA company
I learned that courage was not the absence of fear,

but the triumph over it. The brave man is not he who
does not feel afraid, but he who conquers that fear.
– Nelson Mandela

S.III-D.II
Schedule III - Division II: Ind AS based F.S.
ICAI-Guidance Note on Ind AS F.S.
1. Applicability (Section 129 of Companies Act,2013):
a) Schedule III, Division II applies to companies following Ind AS
b) Schedule III, Division I applies to companies following AS & Division III to NBFCs.
C) Not applicable to:
• Banking Companies • Insurance Companies
• Companies exempted by CG from S.III requirements
d) Applies to:
• NBFCs- Division III
• Section 8 Companies (Statement of Income & Expenditure in Place
of Statement of Profit & Loss)
• Govt. Companies
e) Company having Subsidiary/JV/Associate to prepare and present ‘Consolidated F.S.’
as well.(As per schedule III)
Law Ind AS Schedule III
2. Authority:
a) Ind AS prevail over S.III
b) When Ind AS has an option wherein one option is in line with Schedule III & other
contradicts schedule III, then follow the former option.
E.g. Investments purchased on 01.01.2016 (Debenture-3 years)
SCHEDULE III (12M AS (DATE OF

CLASSIFICATION PURCHASE < REMARKS
FROM BS DATE) 12M OR < 12M)
31.03.2016 Non-Current Non-Current
(2 Year & 9 months)
31.03.2017 Non-Current Non-Current

(1Year &9 months)
No Contradiction: As per AS
investment to be classified as
permanent investment (i.e. at
31.03.2018 Current (9 months) Non-Current cost) Whereas as per S.III such
Investment is to be presented
under Current Assets, this will
ensure compliance with both.

CHAPTER: 3
3. Structure :
I. General Instructions (G.I.)
II. Part I: Format of Balance Sheet and Schedule of Changes in Equity (SOCIE)
III. General Instruction on Balance Sheet and SOCIE
IV. Part II : Statement of Profit & Loss-Format (SPL)
V. General Instruction on Statement of Profit & Loss
VI. General Instruction on Consolidated F.S.
* Section 2(27) Financial Statements includes:
Format & G.I. given in schedule III

Balance Sheet alongwith Comparitives (S.iii and Ind AS1) +
P.Y. Opening Balance Sheet (Ind AS1)
Statement of
Format & G.I. given in schedule III
Profit & Loss
SOCIE if applicable
Cash Flow Statement Ind AS 7
Notes to F.S.
3.1 General Instructions F.S.
• Flexible format of Schedule III
• Rounding off: (mandatory)
Turnover > 100 Cr., Only then rounding off in crore is permitted else Hundreds (00),
Thousands (000),Lacs (00000), Millions (000000)
• Notes to Accounts Financial Statements:
I. Narrative Descriptions – E.g. Contingent Liabilities
II. Disaggregation of items presented in F.S.-
E.g. BS-PPE-Notes to PPE-Disaggregation
III. Disclosure of items not otherwise presented in F.S.
E.g. Charge on assets
3.2 Balance Sheet

i. Current Assets
• Expected to be realised or intended to be sold or consumed within entity’s
normal operating cycle (OC); or

S.III-D.II
• (Primarily) held for trading in ordinary course of business; or
• Expected to be realised within 12 months after the reporting period; or
• Cash or cash equivalent, unless it is restricted from being used/exchanged to
settle a liability for a period> 12 months from reporting date (as that asset is
not a Current Asset hence it will be classified as NCA)
Examples:-
Date Particulars Case i Case ii

(1) 01.01.18 Credit sales-Debtor 16 months 16 months
Operating Cycle 16 months 15 months
31.03.18 Classification Current Non-Current
Date Particulars Case I Case ii

(2) 01.01.18 Machine purchased 15 months (Life) 15 months (Life)
Operating Cycle 12 months 15 months
31.03.18 Classification Non-Current Non-Current
Date Particulars Details

Advance given for
(3) Raw Material
Goods Delivery After 6 months
01.01.18 Manufacturing 3 months
Sale 3 months
Amount Realised 3 months
Operating Cycle 12 months
Current, Since expected to be realised in 15
31.03.18 Classification months but expected to be consumed in 9 months
which is less than operating cycle (12 months)
Goods expected to be sold in 15 months and will be

31.03.18
realised after 3 months of sale.
(4)
Cases Particulars Classification
I Operating Cycle- 12 months Non-Current Current
2 Operating Cycle- 15 months Current
3 Operating Cycle- 18 months Current

CHAPTER: 3
Generalisation of above definition of Current Asset:
• Rule (i):
a) Only relevant for operating (working capital) items like Raw material, WIP,
Finished goods, Debtors, Prepaid expenses, Advance to supplier of goods etc.
b) If above items are expected/intended to be realised or consumed or sold (any
of these and not just realised) with operating cycle then classification to be current
c) To be tested not on Balance Sheet date but on date when asset is recognised in F.S.
• Rule (ii)
a) Applies to all inventory items like stock of raw material, WIP, Finished Goods,
By-products, Spares classifiable as inventory
b) Spare parts classifiable as Fixed Assets/PPE will not be covered under this rule
c) Inventory is Always Current whether it is slow-moving or not
* Slow moving or Non moving but if it is inventory, classify it as current
• Rule(iii)
a) Relevant for all assets
b) Realised means encashed (under this rule)
c) Any asset, expected to be encashed within 12 month from balance sheet
date will be ‘Current’
Eg. A 6 months capital advance for Fixed Asset with 10 months life will not
necessarily classified as current, as they are not expected to be realised
(encashed) within 12 months
d) Fixed Assets will only be classified as current:
(i) When they have been classified as held for sale, and
(ii) Are expected to be sold and realised within 12 month of balance sheet date
e) Prepaid expense, Advance to supplier etc. are not classifiable under this rule
as such assets are not encashed, unless contract is cancelled & money becomes
refundable (as we will receive services/goods against these and not cash)
f) Eg. Loan given to borrower for 50 lacs, repayable 10 lacs p.a., what
will be classification?
Hint: Classification:
• 10 lacs- Current maturities of long-term loans will be classified as current
• 40 lacs- Non-Current

S.III-D.II
• An Asset may be Partly classified as Current and partly as Non-current
g) Eg. Debtors on balance sheet date:
As per contract- credit period remaining is 10 months, but as per practise, expected
to be realised in 15 months, what will be the classification?
Hint: Classification: Non-current, as expected to be realised after 12 months
• Expected to be realised is more important than contractual right to realise
h) Eg. 31.03.2018 share issue expenses (Asset) 30,000 to be written off eventually
in next 3 years (assume shown under asset for illustration purpose)
Balance Sheet (extract)
Particulars Amount
Non-Current Assets
30000
Other Non-Current Assets: Share issue expenses
Fictitious Assets, if any, are always Non-Current.

• Rule (iv)
a) Cash & Cash equivalents means:
Alternate form of keeping cash, and + In readily realisable asset +Having
insignificant risk of changes in value
Readily realisable asset means realisable within 3 months (ICAI Clarification)
ii. Current & Non-Current Liabilities
Current liabilities:
Expected to be settled within entity’s normal operating cycle + primarily held
for trading in ordinary course of business (eg. Derivative Financial Liability) +
Due to be settled within 12 months after the reporting period (i.e. Due date is
tobe seen and not expected settlement date)
Liability that cannot be deferred for settlement beyond 12 months from
reporting date [Not in the hands of the entity to defer (postpone) Settlement
beyond 12 months from reporting date]
Liability that is to be unconditionally deferred by the company for settlement >
12months from reporting date will be classified as ‘Non-Current’
Classification is not affected by the fact that settlement is to be made in Cash
or through Equity shares
Eg. Debentures issued, redeemable in 12 months from balance sheet date and
holder can convert the debentures into equity shares instead of redeeming.

CHAPTER: 3
what will be the classification? [Assuming such debenture is classified as liability
in F.S.]
Hint: Current, as it does not matter whether settlement is in cash or equity shares
(discussed later in Ind AS 32)
iii. Liquidity based Presentation

Under IAS-1 if Liquidity based presentation of Asset and Liability gives more
appropriate information to users of Financial Statement, it is permitted to use
Liquidity Based Presentation of Asset and liability in Balance Sheet
Carve However, in India, Liquidity based Presentation of F.S. is not permitted
In However, when Current-Noncurrent classification of Asset and Liability is used
in presenting Financial Statements, both Ind AS and IAS requires entity to dis
close information about assets realisable after 12 months, if such assets are
presented along with assets realisable within 12 months under any line item
of Balance Sheet. (This disclosure is subject to materiality concept)
Eg. Inventories of 50 lacs includes non-moving stock of 20 lacks not expected
to be realised in 12 months. What will be the classification?
Hint: Classify Inventory of Rs 50 Lacs as ‘Current’.
However in notes to Financial Statements disclose- Inventory includes 20 lacs of
inventory that is not liquid (i.e. not expected to be realised within 12 months).
Disclosure: If any item of current asset or current liability includes asset or
liability not realisable or payable within 12 months of reporting date separate
disclosure of amount of such items to be given in Notes to Financial Statement
(Subject to Materiality)
iv. Tax Assets/ Liabilities
Deferred Tax Assets/Liabilities Current Tax Asset/Liabilities
(Such as Temporary Differences,

Carried forward losses, (Provision for Tax,
and MAT credit) Tax refundable)
“Always Non-Current Assets/

Non-Current Liabilities” (Carve out “Usually Current”
from IAS where DTA/DTL can be Exceptionally may be non-current
Current or Non-Current)

S.III-D.II
v. Operating Cycle:
Means time taken from acquisition of assets to realisation in cash
Operating Cycle:
Order Raw material Manufacturing and Sales/ Cash

Given Received and stored Finished goods store Debtors Realisation
Lead time for acquisition of goods

+ Storage time of Raw material
+ Processing time Gross* Operating
+ Storage time for Finished Goods Cycle (This to be Net Operating
before sale considered) Cycle (Not
+ Credit period given to Trade Considered)
Receivables on sale of goods
- Credit Period received from

supplier of goods
* As the obligation is to determine time taken to complete one cycle of business and
not to determine working capital blocked in business
Normal operating Cycle is to be considered :
w Normal or Average operating cycle is considered and not contract specific
operating cycle
One business to have one Operating Cycle only
w But if Company has Multiple Business, then it can have separate normal Operating
Cycle for each business and accordingly current/non-current classification of asset/
liabilities of each business will be determined
If Operating Cycle is not determinable, then assume to be 12 months

CHAPTER: 3
vi. Breach of Loan Covenants (Conditions of loan agreement)(C/NC classification):
Case 1 Case 2 Case 3 Case 4

Loan Jan Jan Jan Jan
Conditions to be fulfilled Feb Feb Feb Feb
Material breach Yes Yes Yes No#
Not
Not Repayable
Balance Sheet Date Repayable Repayable Repayable
immediately
immediately
Renegotiations on April* June* March* -(No)
F.S. Approved on May May May May
Classification on
Balance Sheet date
- Ind AS Non-Current Current Non-Current Non-Current
- IAS Current Current Non-Current Non-Current
* Loan renegotiated such that extension of 12 months from balance sheet date is at least allowed
# Because before the due date of loan convenant extention for compliance was obtained
In case of material breach of conditions of Long Term/Non-Current Loan

agreements (prior to Balance Sheet date) loan may become repayable
immediately In such case such loans will be classified as “Current Liabilities” on
balance sheet date unless the breach has been rectified or terms have been
renegotiated before the approval of financial statements, such that the loan is not
repayable, post renegotiation, within 12 month from balance sheet date
Amendment
In the Illustration to Notes:
Plain Vanilla (term pre-fixed) Redeemable preference shares to be classified as
borrowings.
Amendment
DIVISION III: NBFCs:
Ind AS based financial statements prescribed for NBFCs

S.III-D.II
A. Non-Current Assets
I. Property, Plant and Equipment (PPE):

(i) Classification shall be given as:
(a) Land (b) Buildings (c) Plant and Equipment
(d) Furniture and Fixtures (e) Vehicles
(f) Office equipment (g) Bearer Plants
(h) Others (specify nature)
(ii) Assets under lease shall be separately specified under each class of assets.
(iii) A reconciliation of the gross and net carrying amounts of each class of assets
at the beginning and end of the reporting period showing additions, disposals, ac
quisitions through business combinations and other adjustments and the related
depreciation and impairment losses or reversals shall be disclosed separately.
I (A). Capital Work in Progress (CWIP):

a) PPE under construction
b) Capital advance shown separately not as a part of PPE
II. Investment Property:

A reconciliation of the gross and net carrying amounts of each class of property at
the beginning and end of the reporting period showing additions, disposals, acquisi-
tions through business combinations and other adjustments and the related depre-
ciation and impairment losses or reversals shall be disclosed separately.
III. Goodwill:
A reconciliation of the gross and net carrying amount of goodwill at the
beginning and end of the reporting period showing additions, impairments,
disposals and other adjustments.
IV. Other Intangible assets:

(i) Classification shall be given as:
(a) Brands or trademarks
(b) Computer software
(c) Mastheads and publishing titles

CHAPTER: 3
(d) Mining rights
(e) Copyrights, patents, other intellectual property rights, services and operating
rights
(f) Recipes, formulae, models, designs and prototypes
(g) Licenses and franchises
(h) Others (specify nature)
(ii) A reconciliation of the gross and net carrying amounts of each class of assets
at the beginning and end of the reporting period showing additions, disposals,
acquisitions through business combinations and other adjustments and the re
lated amortization and impairment losses or reversals shall be disclosed separately.
V. Biological Assets other than bearer plants:

A reconciliation of the carrying amounts of each class of assets at the beginning
and end of the reporting period showing additions, disposals, acquisitions through
business combinations and other adjustments shall be disclosed separately.
VI. Financial Asset - Investments:

(i) Investments shall be classified as:
(a) Investments in Equity Instruments;
(b) Investments in Preference Shares;
(c) Investments in Government or trust securities;
(d) Investments in debentures or bonds;
(e) Investments in Mutual Funds;
(f) Investments in partnership firms; or
(g) Other investments (specify nature).
Under each classification, details shall be given of names of the bodies corporate that are-
(i) subsidiaries,
(ii) associates,
(iii) joint ventures, or
(iv) structured entities,
In whom investments have been made and the nature and extent of the
investment so made in each such body corporate (showing separately
investments, which are partly paid). Investments in partnership firms along with

S.III-D.II
names of the firms, their partners, total capital and the shares of each partner
shall be disclosed separately.
(ii) The following shall also be disclosed:

(a) Aggregate amount of quoted investments and market value thereof.
(b) Aggregate amount of unquoted investments and
(c) Aggregate amount of impairment in value of investments.
VII. Financial Asset -Trade Receivables:

(i) Trade receivables shall be sub-classified as:
(a) Secured, considered good;
(b) Unsecured considered good; and Refer amendment given ahead
(c) Doubtful.
(ii) Allowance for bad and doubtful debts shall be disclosed under the relevant heads
separately.
(iii) Debts due by directors or other officers of the company or any of them either sev
erally or jointly with any other person or debts due by firms or private companies
respectively in which any director is a partner or a director or a member should be
separately stated.
VIII. Financial Asset -Loans: (Given)

(i) Loans shall be classified as-
(a) Security Deposits;
(b) Loans to related parties (giving details thereof); and
(c) Other loans (specify nature).
(ii) The above shall also be separately sub-classified as-

(b) Unsecured, considered good; and Refer amendment given ahead
(c) Doubtful.
(iii) Allowance for bad and doubtful loans shall be disclosed under the relevant
heads separately.

CHAPTER: 3
(iv) Loans due by directors or other officers of the company or any of them either
severally or jointly with any other persons or amounts due by firms or private
companies respectively in which any director is a partner or a director or a mem
ber should be separately stated.
IX. Financial Asset -Bank deposits: Bank depositswith more than 12 months
maturity shall be disclosed under ‘Otherfinancial assets’;
X. Other non-current assets: Other non-current assets shall be classified as-

(i) Capital Advances; and
(ii) Advances other than capital advances;
(1)Advances other than capital advances shall be classified as:
(b) Advances to related parties (giving details thereof); and
(c) Other advances (specify nature).
(2)Advances to directors or other officers of the company or any of them either
severally or jointly with any other persons or advances to firms or private
companies respectively in which any director is a partner or a director or a
member should be separately stated. In case advances are of the nature of a
financial asset as per relevant Ind AS, these are to be disclosed under ‘other
financial assets’ separately.
(iii) Others (specify nature).
B. Current Assets
I. Inventories:
(i) Inventories shall be classified as-
(a) Raw materials;
(b) Work-in-progress;
(c) Finished goods;
(d) Stock-in-trade (in respect of goods acquired for trading);
(e) Stores and spares;
(f) Loose tools; and
(g) Others (specify nature).

S.III-D.II
(ii) Goods-in-transit shall be disclosed under the relevant sub-head of inventories.
(iii) Mode of valuation shall be stated.
II. Investments: (disclosure similar to non-current investments)

(i) Investments shall be classified as-
(a) Investments in Equity Instruments;
(b) Investment in Preference Shares;
(c) Investments in government or trust securities;
(d) Investments in debentures or bonds;
(e) Investments in Mutual Funds;
(f) Investments in partnership firms; and
(g) Other investments (specify nature).
Under each classification, details shall be given of names of the

bodies corporate that are-
(i) subsidiaries,
(ii) associates,
(iii) joint ventures, or
(iv) structured entities,
In whom investments have been made and the nature and extent of the investment
so made in each such body corporate (showing separately investments, which are
partly paid).
(ii) The following shall also be disclosed-
(a) Aggregate amount of quoted investments and market value thereof.
(b) Aggregate amount of unquoted investments.
(c) Aggregate amount of impairment in value of investments.
III. Trade Receivables: (disclosure similar to non-current trade receivables)

(i) Trade receivables shall be sub-classified as:
(b) Unsecured considered good; and Refer amendment given ahead
(c) Doubtful.
(ii) Allowance for bad and doubtful debts shall be disclosed under the
relevant heads separately.

CHAPTER: 3
(iii) Debts due by directors or other officers of the company or any of them either
severally or jointly with any other person or debts due by firms or private
companies respectively in which any director is a partner or a director or
a member should be separately stated.
Amendment
Trade Receivables and Loan Receivables (under Financial Assets in CA /NCA) –
Classified now as: Now provisioning done
based on credit risk
(i) Considered good and secured changes of the debtor
(ii) Considered good and unsecured / borrower and not just
based on past
(iii) Doubtful Which have significant increase in Credit Risk performance of
(iv) Credit Impaired recovery
IV. Cash and cash equivalents: Cash and cash equivalents shall be classified as-
a. Balances with Banks (of the nature of cash and cash equivalents);
b. Cheques, drafts on hand;
c. Cash on hand; and d. Others (specify nature).
V. Loans: (disclosure similar to non-current loans)

(i) Loans shall be classified as:
(a) Security deposits;
(b) Loans to related parties (giving details thereof); and
(c) Others (specify nature).
(ii) The above shall also be sub-classified as-

(a) Secured, considered good; Refer
(b) Unsecured, considered good; and amendment
(c) Doubtful. given above
(iii) Allowance for bad and doubtful loans shall be disclosed under the
relevant heads separately.
(iv) Loans due by directors or other officers of the company or any of them either
severally or jointly with any other person or amounts due byfirms or private
companies respectively in which any director is a partner or a director or a
member shall be separately stated.

S.III-D.II
VI. Other current assets (specify nature):
This is an all-inclusive heading, which incorporates current assets that do not fit
into any other asset categories.
Other current assets shall be classified as-
(i) Advances other than capital advances
(1) Advances other than capital advances shall be classified as:
(b) Advances to related parties (giving details thereof);
(c) Other advances (specify nature).
(2) Advances to directors or other officers of the company or any of them either severally
or jointly with any other persons or advances to firms or private companies respectively in
which any director is a partner or a director or a member should be separately stated.
(ii) Others (specify nature)
C. Cash and Bank balances
The following disclosures with regard to cash and bank balances shall be made:
(a) Earmarked balances with banks (for example, for unpaid dividend) shall be separately stated.
(b) Balances with banks to the extent held as margin money or security against the
borrowings, guarantees, other commitments shall be disclosed separately.
(c) Repatriation restrictions, if any, in respect of cash and bank balances shall be
separately stated. Cash and Cash Equivalents seggregated. Bank overdraft not reduced.
D. Equity
I. Equity Share Capital: For each class of equity share capital:
(a) The number and amount of shares authorized;
(b) The number of shares issued, subscribed and fully paid, and subscribed but not fully paid;
(c) Par value per share;
(d) A reconciliation of the number of shares outstanding at the beginning and at the
end of the period;
(e) The rights, preferences and restrictions attaching to each class of shares
including restrictions on the distribution of dividends and the repayment of capital;
(f) Shares in respect of each class in the company held by it sholding company or its ultimate
holding company including shares held by subsidiaries or associates of the holding company or
the ultimate holding company in aggregate;
(g) Shares in the company held by each shareholder holding more than five per cent. Shares speci-
fying the number of shares held;

CHAPTER: 3
(h) Shares reserved for issue under options and contracts or commitments for the sale
of shares or disinvestment, including the terms and amounts;
(i) For the period of five years immediately preceding the date at which the Balance Sheet
is prepared-
• aggregate number and class of shares allotted as fully paid up pursuant to contract
without payment being received in cash;
• aggregate number and class of shares allotted as fully paid up by way of bonus
shares; and
• aggregate number and class of shares bought back;
(j) terms of any securities convertible into equity shares issued along with the earliest date
of conversion in descending order starting from the farthest such date;
(k) Calls unpaid (showing aggregate value of calls unpaid by directors and officers);
(l) Forfeited shares (amount originally paid up).
Equity Share Capital
SJ ry
m ma
Su Disclosures
Shares Shareholders Options on SC & Other
1. Authorised
2. Issued, sub- Shares (under Options on SC
scribed, called each class) held (Eg EXOPs)
up, paid up by:
Convertible Instruments
3. Call in arrears a) Holding Com-
(Eg. Conb. Deb./PSC) Other than
4. Forfeiture pany
5. Each class of b) Ultimate Hold- a) Shares
share ing Company Sequence of furthest to issued for
- No. of shares, c) Held by Subs./ nearest conversion date cash con-
per / face sideration
Associates of
value, paid up Shares issued for other than (OR )
H/UH Com- b) Shares
6. Reconciliation pany cash
7. Rights of any OR issued to
special right Share holder > Bonus Issue repay on
shares 5% of holding OR existing
of ESC (Name + Buy Back liability
Holding) In proceeding 5 FYS.
II. Instruments entirely/completely classifiable as equity:

A separate line item to be added to the Balance Sheet, if entity has such instruments.
E.g. Compulsorily convertible preference share capital, compulsorily convertible debentures etc.

S.III-D.II
III. Other Equity: Amendment
Securities Premium Reserve is Now just Securities Premium
a) Includes
• Share application money pending Statutory Reserves
allotment (and not refund) Foreign Currency translation Re
• Share warrants serves, etc. (Additions and deductions since
• Compound Financial Instruments last balance sheet to be shown under each of the
(Equity Component) specified heads)
• Reserves & Surplus • Reserves are appropriation of profit, this
a. Capital Redemption Reserve; allocates profits to specific/generic purpose
b. Debenture Redemption Reserve; such that after such appropriation profits are
c. Revaluation Reserve not available freely for distribution
d. Share Options Outstanding • When the company invests an amount
Account;(ESOP) equivalent to the amount appropriated
e. Securities Premium Reserve (SP) to reserves, this leads to:
f. General Reserves; and i. Allocation of profits to reserves; and
g. Others– (specify the nature and pur- ii. Investment of funds from business to a
pose of each reserve and the amount specific investment In such cases “re-
in respect thereof); E.g.- serves” are termed as “funds”
Types of Reserves
Revenue Reserves Capital Reserves
Available for distribution Reserves other than

of dividends revenue reserves
b) Retained Earnings represents surplus i.e. balance of the relevant column in the
Statement of Changes in Equity;
c) A reserve specifically represented by earmarked investments shall disclose the fact
that it is so represented;
d) Debit balance of Statement of Profit and Loss shall be shown as a negative figure
under the head ‘retained earnings’. Similarly, the balance of ‘Other Equity’, after
adjusting negative balance of retained earnings, if any, shall be shown under the
head ‘Other Equity’ even if the resulting figure is in the negative; and

CHAPTER: 3
e) Under the sub-head ‘Other Equity’, disclosure shall be made for the nature and
amount of each item.
f) Reserves & Surplus would also include “OCI Reserves” like Revaluation Reserve,
Fair Value Change Reserve etc. under Ind AS based Financial Statements. (though
such heading is not used)
g) Company is required to provide disclosure of change in equity (i.e. Equity
Share Capital, Instruments Entirely Classifiable as Equity, Other Equity)
which is presented in Schedule of Changes in Equity (SOCIE)
E. Non-Current Liabilities
(Shown under Financial Liabilities)
I. Borrowings:
(i) Borrowings shall be classified as-
(a) Bonds or debentures
(b)Term loans
(I) From banks (II) From other parties
(c) Deferred payment liabilities
(d) Deposits
(e) Loans from related parties
(f) Long term maturities of finance lease obligations
(g) Liability component of compound financial instruments
(h) Other loans (specify nature)
(ii) Borrowings shall further be sub-classified as secured and unsecured. Nature of
security shall be specified separately in each case.
(iii) Where loans have been guaranteed by directors or others, the aggregate amount
of such loans under each head shall be disclosed.
(iv) Bonds or debentures (along with the rate of interest, and particulars of redemp
tion or conversion, as the case may be) shall be stated in descending order of
maturity or conversion, starting from farthest redemption or conversion date, as
the case may be. Where bonds/debentures are redeemable by installments, the
date of maturity for this purpose must be reckoned as the date on which the first
installment becomes due.
(v) Particulars of any redeemed bonds or debentures, which the company has power
to reissue,shall be disclosed.

S.III-D.II
(vi) Terms of repayment of term loans and other loans shall be stated; and
(vii) Period and amount of default as on the balance sheet date in repayment of
borrowings and interest shall be specified separately in each case.
II. Provisions: The amounts shall be classified as-

(a) Provision for employee benefits; and
(b) Others (specify nature).
III. Other non-current liabilities:

(a) Advances; and
(b) Others (specify nature).
F. Current Liabilities
I. Borrowings: (disclosure similar to non-current borrowings)
(i) Borrowings shall be classified as-
(a) Loans repayable on demand
(I) From banks
(II) From other parties
(b) Loans from related parties
(c) Deposits
(d) Other loans (specify nature);
(ii) Borrowings shall further be sub-classified as secured and unsecured. Nature of secu
rity shall be specified separately in each case;
(iii) Where loans have been guaranteed by directors or others, the aggregate amount of
such loans under each head shall be disclosed;
(iv) Period and amount of default as on the balance sheet date in repayment of bor
rowings and interest shall be specified separately in each case
.
II. Trade Payables [Shown under Financial Liabilities]
(i) A payable shall be classified as a ‘trade payable’ if it is in respect of the MSMI
amount due on account of goods purchased or services received in the normal

CHAPTER: 3
course of business;
(ii) amounts payable on account of contractual obligations (except towards goods
purchased or services received in the normal course of business) can no longer
be included in the trade payables;
(iii) The following details relating to Micro, Small and Medium Enterprises shall
be disclosed in the notes:-
(a) The principal amount and the interest due thereon (to be shown separately)
remaining unpaid to any supplier at the end of each accounting year;
(b) the amount of interest paid by the buyer in terms of section 16 of the Micro,
Small and Medium Enterprises Development Act, 2006, along with the amount
of the payment made to the supplier beyond the appointed day during each
accounting year;
(c) The amount of interest due and payable for the period of delay in making
payment (which have been paid but beyond the appointed day during the
year) but without adding the interest specified under the Micro, Small and
Medium Enterprises Development Act, 2006;
(d) The amount of interest accrued and remaining unpaid at the end of each
accounting year; and
(e) The amount of further interest remaining due and payable even in the
succeeding years, until such date when the interest dues above are actually paid to
the small enterprise, for the purpose of disallowance of a deductible expenditure
under section 23 of the Micro, Small and Medium Enterprises Development Act,
2006.
Amendment
Trade Payables –Micro and Small Enterprises:
On Face of BS classify Trade Payables as –
i. To Micro and Small Enterprises
ii. To creditors other than Micro and Small Enterprises
Notes to BS
i. Related Disclosures as in Schedule III Div 1 (as given above)

S.III-D.II
III. Other Financial Liabilities: Other Financial liabilities shall be classified as-
(a) Current maturities of long-term debt;
(b) Current maturities of finance lease obligations;
(c) Interest accrued;
(d) Unpaid dividends;
(e) Application money received for allotment of securities to the extent refundable
and interest accrued thereon;
(f) Unpaid matured deposits and interest accrued thereon;
(g) Unpaid matured debentures and interest accrued thereon; and
(h) Others (specify nature).
‘Long term debt’ is a borrowing having a period of more than twelve
months at the time of origination
IV. Tax Assets & Liabilities:

Current tax liability (C.Y. Provision for tax) and corresponding Advance tax (includ-
ing TDS) is to be netted off.
V. Other current liabilities: (FL)

The amounts shall be classified as-
(a) Revenue received in advance;
(b) Other advances (specify nature); and
(c) Others (specify nature);
VI. Provisions: The amounts shall be classified as-

(i) Provision for employee benefits; and
(ii) Others (specify nature).
G. The presentation of liabilities associated with group of assets classified as held

for sale and non-current assets classified as held for sale shall be in accordance
with the relevant Indian Accounting Standards (Ind AS).

CHAPTER: 3
H. Balance Sheet Related Disclosures
Contingent Liabilities and Commitments: (to the extent not provided for)
I.
P
Contingent Liabilities shall be classified as-
(a) Claims against the company not acknowledged as debt;
am shownas in Bs
f
(b) Guarantees excluding financial guarantees; and
(c) Other money for which the company is contingently liable.
0
II. Commitments shall be classified as-
(a) Estimated amount of contracts remaining to be executed on capital account
and not provided for;
(b) Uncalled liability on shares and other investments partly paid; and
(c) Other commitments (specify nature)
IMPORTANT NOTES
Proposed Dividend:
Proposed dividend is not a liability until it is approved/declared by sharehold-
ers Hence ‘Dividend Payable’ is a current liability but proposed dividend is only
shown in notes to financial statements.
Arrears of preference dividend if any to be also disclosed in notes.
Cumulative Preference Share Capital:

Cumulative preference shares have preference over dividends but they have no
right to demand dividends. It is discretionary i.e. payable only if company wishes
to declare dividends.
Therefore, unless contract with preference shareholders specifies otherwise,
Preference dividend is not mandatory even on cumulative preference shares.
Hence, arrears of preference dividend is not a liability and is only disclosed in the
notes to financial statements.

O
Funds raised-End use disclosure:
o
When funds are raised through issue of securities and if any amount is not used
for the intended purpose then disclose the amount not so used along with where it
has been used. (Remember! No specific need to disclose amount utilised)

S.III-D.II
The amount of dividends proposed to be distributed to equity and preference
shareholders for the period and the related amount per share shall be disclosed
separately. Arrears of fixed cumulative dividends on irredeemable preference
shares shall also be disclosed separately.
Where in respect of an issue of securities made for a specific purpose the whole
or part of amount has not been used for the specific purpose at the Balance
Sheet date, there shall be indicated by way of note how such unutilized amounts
have been used or invested.
Application of an accounting policy retrospectively or restatement of items:

When a company applies an accounting policy retrospectively or makes a
restatement of items in the financial statements or when it reclassifies items in its
financial statements, the company shall attach to the Balance Sheet, a “Balance
Sheet” as at the beginning of the earliest comparative period presented.
h

TÉÉqwy
Share application money pending allotment:
Share application money pending allotment shall be classified into equity or
liability in accordance with relevant Indian Accounting Standards. Share
application money to the extent not refundable shall be shown under the head
Equity and share application money to the extent refundable shall be separately
shown under ‘Other financial liabilities’.
Preference shares including premium received on issue:

Preference shares including premium received on issue, shall be classified and pre-
sented as ‘Equity’ or ‘Liability’ in accordance with the requirements of the relevant
Indian Accounting Standards. Accordingly, the disclosure and presentation require-
ments in this regard applicable to the relevant class of equity or liability shall be
applicable mutatis mutandis to the preference shares. For instance, redeemable
preference shares shall be classified and presented under ‘non-current liabilities’ as
‘borrowings’ and the disclosure requirements in this regard applicable to such bor-
rowings shall be applicable mutatis mutandis to redeemable preference shares.

CHAPTER: 3

Ee
Compound financial instruments:
Compound financial instruments such as convertible debentures, where split into
equity and liability components, as per the requirements of the relevant Indian
Accounting Standards, shall be classified and presented under the relevant heads
in ‘Equity’ and ‘Liabilities’
Regulatory Deferral Account Balances: [Ind AS 114] Not in course

Regulatory Deferral Account Balances shall be presented in the Balance Sheet in
accordance with the relevant Indian Accounting Standards.
GENERAL INSTRUCTIONS FOR PREPARATION OF

STATEMENT OF PROFIT AND LOSS
1. The provisions of this Part shall apply to the income and expenditure account, in
like manner, as they apply to a Statement of Profit and Loss.
2. The Statement of Profit and Loss shall include:

(1) Profit or loss for the period;
(2) Other Comprehensive Income for the period.
The sum of (1) and (2) above is ‘Total Comprehensive Income’.
3. Revenue from operations shall disclose separately in the notes

(a) Sale of products;
(b) Sale of services; and (c) Other operating revenues.
4. Finance Costs: Finance costs shall be classified as-

(a) Interest;
(b) Dividend on redeemable preference shares;
I
(c) Exchange differences regarded as an adjustment to borrowing costs; and
(d) Other borrowing costs (specify nature).
5. Other income: Other income shall be classified as-

(a) Interest Income; (b) Dividend Income; and
(c) Other non-operating income (net of expenses directly attributable to such
income).

S.III-D.II
6. Other Comprehensive Income shall be classified into-

(A) Items that will not be reclassified to profit or loss:
(i) Changes in revaluation surplus;
Octad
(ii) Re-measurements of the defined benefit plans;
(iii)
(iv)
Is
Equity Instruments through Other Comprehensive Income;
Fair value changes relating to own credit risk of financial liabilities desig-
nated at fair value through profit or loss;
(v) Share of Other Comprehensive Income in Associates and Joint Ventures, to the
extent not to be classified into profit or loss; and
(vi) Others (specify nature).
(B) Items that will be reclassified to profit or loss:

OCAD
(i) Exchange differences in translating the financial statements of a foreign operation;
o
e
(ii) Debt Instruments through Other Comprehensive Income;
o
(iii) The effective portion of gains and loss on hedging instruments in a cash flow hedge;
(iv) Share of Other Comprehensive Income in Associates and Joint Ventures, to the
extent to be classified into profit or loss; and
(v) Others (specify nature).
7. Additional Information: A Company shall disclose by way of notes, additional

information regarding aggregate expenditure and income on the following items:
(a) Employee benefits expense [showing separately]
(i) salaries and wages,
(ii) contribution to provident and other funds,
(iii) share based payments
E to employees,
(iv) Staff welfare expenses.
(b) depreciation and amortisation expense;
(c) any item of income or expenditure which exceeds one per cent of the revenuefrom
operations or `10,00,000, whichever is higher, in addition to the consideration of ‘ma
teriality’ as specified in clause 7 of the General Instructions for Preparation of Fi
nancial Statements of a Company;
(d) interest Income;
(e) interest Expense;

CHAPTER: 3
(f) dividend income;
(g) net gain or loss on sale of investments;
(h) net gain or loss on foreign currency transaction and translation (other than
considered as finance cost);
(i) payments to the auditor as
(i) auditor,
(ii) for taxation matters,
(iii) for company law matters,
(iv) for other services, L
(v) for reimbursement of expenses;
(j) in case of companies covered under section 135, amount of expenditure incurred
on corporate social responsibility activities; and
(k) details of items of exceptional nature;
8. Changes in Regulatory Deferral Account Balances shall be presented in the

Statement of Profit and Loss in accordance with the relevant Indian
Accounting Standards. [Not in Syllabus]
General Instructions for the Preparation of

Consolidated Financial Statements
1. Consolidated Financial Statements to have same format as Standalone
Financial Statements
Except:
a) Share of Non-Controlling Interest (NCI) in Equity of the subsidiary, to be
shown separately in balance sheet under heading of Equity.
b) Share of Non-Controlling Interest (NCI) in profit and loss (Profit after tax and
Other Comprehensive Income) to be shown separately in Standalone Financial
Statement
2. Statement of particulars of investment in Subsidiary/JV/Associate, which is to be
disclosed as notes to consolidated Financial Statements

S.III-D.II
ILLUSTRATIVE STANDALONE FINANCIAL STATEMENTS
Balance Sheet as at
Figures as at the Figures as at the end of
Note
Particulars end of current the previous reporting
No.
reporting period period
1 2 3 4
ASSETS
(1) Non-current assets
(a) Property, Plant
and Equipment
(b) Capital work-in-progress
(c) Investment Property
(d) Goodwill
(e) Other Intangible assets
(f) Intangible assets
under development
(g) Biological Assets other than
bearer plants
(h) Financial Assets
(i) Investments
(ii) Trade receivables
(iii) Loans
(iv) Others (to be specified)
(i) Deferred tax assets (net)
(j) Other non-current assets
(2) Current assets
(a) Inventories
(b) Financial Assets
(i) Investments
(iii) Cash and cash equivalents
(iv) Bank balances other than
(iii) above

CHAPTER: 3
(v) Loans
(vi) Others (to be specified)
(c) Current Tax Assets (Net)
(d) Other current assets
Total Assets
EQUITY AND LIABILITIES Equity
(a) Equity Share capital
(b) Other Equity
LIABILITIES
(1) Non-current liabilities
(a) Financial Liabilities
(i) Borrowings
(ii) Trade payables
(iii Other financial liabilities
(other than those specified in
item (b), to be specified)
(b) Provisions
(c) Deferred tax
liabilities (Net)
(d) Other non-current liabilities
(2) Current liabilities
(i) Borrowings
(ii) Trade payables
(iii) Other financial liabilities
(other than those specified
in item(c))
(b) Other current liabilities
(c) Provisions
(d) Current Tax
Liabilities (Net)
Total Equity and Liabilities

S.III-D.II
STATEMENT OF CHANGES IN
EQUITY for the year ended
A. Equity Share Capital
Balance at the beginning FChanges in equity share Balance at the end of the
of the reporting period capital during the year reporting period
B. Instruments entirely equity in nature

a. Compulsorily Convertible Preference Shares
Balance at the Changes in compulsorily

Balance at the end of the
beginning of the convertible preference
reporting period
reporting period shares during the period
b. Compulsorily Convertible Debentures
Balance at the beginning Changes in compulsorily convert- Balance at the end of

of the reporting period ible debentures during the period the reporting period
c. [Instrument] (Any other instrument entirely equity in nature)
Balance at the beginning of Changes in Instrument] Balance at the end of

the reporting period during the period the reporting period

OTHER EQUITY : SOCIE (1st page, for remainig part P.T.O.)
i
Equity compo- Reserves and Surplus
Share application
nent of compo-und
pf
money pending
financial instru- Capital Other Reserves Retained
allotment Securities Premium
ments Reserve (specify nature) Earnings
Balance at the
beginning of the
reporting period
Changes in
accounting
Restated balance
at the beginning
lied
of the reporting
period
Total
CA FINAL - FINANCIAL REPORTING

Comprehensive
Income for the year
Dividends
Transfer to
retained earnings
Any other
100
change (to be
specified)
Balance at the
end of the
45
reporting
CHAPTER: 3
SOCIE (Continued from last page)
46
S.III-D.II
Exchange Other items

Debt Equity differences of Other
instruments Instruments Effective on translating Money received
Revaluation Compre-
through Other through Other portion of Cash the financial against share Total
Surplus hensive Income
O
Comprehensive Comprehensive Flow Hedges statements warrants
of a foreign (specify
Income Income
operation nature)
i
É
CA FINAL - FINANCIAL REPORTING

ie
CHAPTER: 3
Statement of Profit and Loss for the year ended
Figures for
Figures for
the
Note the current
Particulars previous
No. reporting
reporting
period
period
I Revenue From Operations
II Other Income
III Net gain on de-recognition of financial
assets at amortized cost
IV Net gain on reclassification of financial assets**
V Total Income (I + II + III+ IV)
VI EXPENSES
yj
Cost of materials consumed
Excise Duty
Purchases of Stock-in-Trade
Changes in inventories of finished goods,
Stock-in-Trade and work-in- progress
post Employee benefits expense

Finance costs
ayyy
I
Depreciation and amortization expense
Impairment losses
Net loss on de-recognition of financial
assets at amortized cost
Net loss on reclassification of financial assets**
Other expenses If It of total Income or Ioc whicheverishigher
Total expenses (VI)
VII
O
Profit/(loss) before exceptional
o
VIII 0
items and tax (V- VI)
Exceptional Items
IX Profit/(loss) before tax(VII+VIII)
X Tax expense: (1) Current tax (2) Deferred tax
XI Profit (Loss) for the period from
continuing operations (IX-X)
XII Profit/(loss) from discontinued operations IndAs
f
XIII Tax expense of discontinued operations

S.III-D.II
XIV Profit/(loss) from Discontinued operations

(after tax) (XII – XIII)
XV Profit/(loss) for the period (XI+XIV)
XVI Other Comprehensive Income
A (i) Items that will not be reclassified to
profit or loss EYE
(ii) Income tax relating to items that will not

be reclassified to profit or loss
B (i) Items that will be reclassified to profit or
loss
(ii) Income tax relating to items that will be
reclassified to profit or loss
XVII Total Comprehensive Income for the period
(XV+ XVI) (Comprising Profit/(Loss) and Other
Comprehensive Income for the period)
XVIII Earnings per equity share
(for continuing operation):
(1) Basic
(2) Diluted
XIX Earnings per equity share
(for discontinued operation): g
(1) Basic
(2) Diluted
XX Earnings per equity share
(for discontinued & continuing operations)
(1) Basic
(2) Diluted
IT No
Your true success in life begins only when you make

the commitment to become excellent at what you do.
— Brian Tracy

CHAPTER: 3
Illustrative Consolidated Financial Statements
Consolidated Balance Sheet as at
Figures as at
Figures as
the end of
at the end
Particulars Note No. the previous
of current
reporting
reporting period
period
1 2 3 4
ASSETS
(1) Non-current assets
(a) Property, Plant and Equipment Bearer plants
(b) Capital work-in-progress
Cap adux
(c) Investment Property
(d) Goodwill
(e) Other Intangible assets Brands I patent license
(f) Intangible assets under
development under research
(g) Biological Assets other
than bearer plants livestock
(h) Investments accounted for using
7
the equity method
(i) Financial Assets
(i) Investments
(iii) Loans
(iv) Others (to be specified)
(2)
(j) Deferred tax assets (net)
(k) Other non-current assets
Current assets
I
(a) Inventories
(b) Financial Assets
(i) Investments
(iii) Cash and cash equivalents
am

S.III-D.II
(iv) Bank balances other than (iii)
E
above
(v) Loans
(vi) Others (to be specified)
t
(c) Current Tax Assets (Net)
Bepaid
f
(d) Other current assets
Total Assets
Expensesetc
EQUITY AND LIABILITIES
O
Equity
(a) Equity Share capital
(b) Instruments entirely equity in
nature
D
(c) Other Equity
Sh W Oct
(1)
(d) Non-controlling interests
LIABILITIES
gyres
Non-current liabilities
(i) Borrowings
(ii) Trade payables
m
e
(iii) Other financial liabilities (other
than those specified in item (b), to be
specified)
(b) Provisions
(c) Deferred tax liabilities (Net)
(d) Other non-current liabilities
É
(2) Current liabilities
I
(i) Borrowings
(ii) Trade payables
(iii) Other financial liabilities (other
than those specified in item (c)
(b) Other current liabilities
(c) Provisions
(d) Current Tax Liabilities (Net)
Total Equity and Liabilities

CHAPTER: 3
PART III- GENERAL INSTRUCTIONS FOR THE PREPARATION
Et OF CONSOLIDATED FINANCIAL STATEMENTS
Net Assets, i.e.,

Share in
Share in other Share in total
Name of the total assets minus comprehensive comprehensive
profit or loss
entity in the total liabilities income income
Group As % of If As % of As % of As %
Amt. Amt. Amt. Amt.
consolidated consolidated consolidated of total
Parent
Subsidiaries
Indian
I
1.
2.
3.
.
.
Foreign
1.
2.
3.
.
.
Non-
controlling
Interests
in all
Subsidiaries
Associates
(Investment
as per the
equity
method)
Indian
1.
2.

S.III-D.II
3.
.
.
Foreign
1.
2.
3.
.
.
Joint
Ventures
(investment
as per the
equity
method)
Indian
1.
2.
3.
.
.
Foreign
1.
2.
3.
.
.
Total

CHAPTER: 4
Ind AS 1
Presentation of Financial Statements
General
Applicability Structure Disclosures
Instructions
Materiality and Similar to Accounting

Aggregation Schedule Policies
III-Division II
Off-Setting Estimation
Except formats Uncertainity
(Estimates)
True & Fair View/ Talks about,

Fair Presentation Balance Sheet,
Statement of Capital
Profit & Loss, Management
SOCIE, Current/ Policies
Going Concern Non Current,
Operating Cycle,
Notes to
Financial Puttable Financial
Statement, Instruments
Accrual
Liquidity based (Discussed in
Presentation etc Ind AS 32)
Remember
Comparitives Reference of Ind
AS 1 along with Other
Schedule III Disclosures
Division 2 may be
Consistency required in
Question relating
to SIII Schedule III
Division 2
Restatement and Re-classification
along with Impracticability exemption
Frequency of Reporting
Exceptional Items / Material Items

requiring separate disclosure

IND AS 1
1. Applicability
1) Ind AS applies to Standalone/Separate and Consolidated F.S.
Standalone F.S. Separate F.S.
F.S. of company that has no subsidiary Individual F.S. of holding company
2) Section 8 companies etc. also to follow Ind AS with flexibility to change “Nomenclature
of items” (E.g. Profit-Surplus, SPL- SIE etc)
3) Interim F.S. (Condensed format)- Ind AS 1 not applicable
4) Ind AS applies on General Purpose Financial Statements
2. General Instructions
2.1 Materiality & Aggregation :
• Definition of Materiality: Transaction or other events and information is material if omitting
misstating or obscuring it could reasonably be expected to influence decisions that the
primary users of general purpose financial statement (FS for generic users and not for spe-
cific use of any user) make on the basis of those financial statements, which provide finan-
cial information about a specific reporting entity.(Amendment)
• Materiality is based on magnitude and/or nature of transaction or other events and
conditions judged in surrounding circumstances
• Ind AS 1 requires that: Items of Dissimilar nature (e.g. CSR & Donation) Or Items of Similar
Nature, Different class (Donation to political & non-political parties) Should not be
aggregated to obscure material information being presented/disclosed to users of Financial
Statements (except if required by law)
• Ind AS 1 also states that company should not combine immaterial information with
material information
• Dis-aggregate information of material items may be given on Face of F.S. or Notes to F.S.
Obscuring (New) Amendment
Information regarded as obscuring (misguiding)
Vague/ Scattered Clubbing Similar items in- Information is hidden Eg. Mate-
Unclear across the FS dissimilar items appropriately dis-aggregate rial info shown as immaterial
Who do not get information directly from management and hence, primarily rely on FS for
Primary user taking their decision like investors, govt, shareholders etc. These users do have experience &
understanding of reading & interpreting FS
2.2 Off-Setting (Netting-Off) :

• Meaning: Netting off income & expense or asset & liability while presenting financial information.

CHAPTER: 4
• Ind AS 1:
Rule (i): Off setting is permitted only when any Ind AS requires( E.g. Ind AS 32,
Financial Instruments: Presentation, requires that a Financial Asset and Financial
Liability should be off-set if:
» Entity has a legal right to off-set it
And
» It intends to off-set it or Realise the asset & settle liability simultaneously).
Rule (ii): Setting off ‘Provision on Assets’ with carrying amount of asset is not
off-setting (E.g. Trade receivables and Provision for Bad Debts, Property, Plant
and Equipment and Provision for Depreciation)
Rule (iii): Off-Setting is required when it represents substances of transactions

(E.g. Reimbursement for payments on behalf of 3rd parties, setting-off contin-
gent asset with liabilities [Ind AS 37], Setting-off insurance claim with loss)
Rule(iv): As a practice information like foreign exchange gain/loss, profit/loss on

sale of investment/PPE etc. are presented on net basis, unless the information is
material in which case it should be presented separately
(Refer SMI 9 and CE33) (Cash Flow off-setting : Ind AS 7)
2.3 Fair Presentation :

• Transaction or other events and conditions are presented fairly as per the
framework for preparation of Financial Statements.
• Explicit Unreserved Statement (EUS):
Entity complying with Ind AS to make an EUS of the fact that F.S. are pre-
pared as per Ind AS (no choice of selective application of Ind AS)
Q.1 Company makes a statement in Financial Statement that it has complied

with all Ind AS except Ind AS 7 Cash Flow Statements, Comment.
Hint: In such case it will be considered company has not adopted Ind AS, as it is
selectively applying Ind AS. Hence F.S. will not be considered to be prepared as per
Ind AS.

IND AS 1
Q.2 Company makes a statement in Financial Statement that it has ‘Prepared &
Presented Financial Statement as per Ind AS’, while doing audit, you found cash
flow statement is not prepared as per Ind AS
Hint: Financial Statements will be considered to be prepared as per Ind AS &auditor
would qualify his report w.r.t Cash flow statements.
• Disclosure of inappropriate accounting treatments would not be a basis for
achieving fair presentation.
• In Extremely Rare Circumstances :
In Extremely Rare Circumstances
Entity may have to deviate from

Entity may have to deviate from
Ind AS requirements to achieve fair
Ind AS requirements to achieve
presentation but legal requirements
fair presentation
prohibit such deviation
Ind AS permits such departure and

requires following disclosures: In such case F.S. may not be prepared
(a) Name & number of Ind AS not to give fair presentation due to
complied limitation imposed by law.
(b) Reasons thereof & Description of In such circumstances disclosures to
alternate accounting treatment be given to achieve fair presentation
followed (Follow Law + use Disclosures to give
(c) Financial effect in Current Year & on fair representation of F.S. for each
Comparitive, of non-compliance with period presented, disclosing
Ind AS apart from disclosure that adjustment required for fair
i) Company has achieved T & F presentation) further also disclose the
presentation and name, number of Ind AS in question,
ii) Complied with all Ind AS except and reason of conflict
given departure
2.4 Going Concern :

• Business/Entity will continue till foreseeable future.
• Entity is required to test whether it is a going concern

CHAPTER: 4
If entity concludes it is
Going Concern Entity Not a Going Concern Entity
Entity is going Disclose the fact

Events or Conditions concern without (Ind AS 105 will be
exist that cast “Material any Material very relevant)
Uncertainity” on Entity’s Uncertainity
ability as going concern
but management has No Disclosure
taken measures to required
ensure entity remains
Going Concern
Such Material uncertainity &
Manangement measures to be
disclosed in notes to F.S.
• If Company has been made for a specified period, only disclosure required (refer
‘Other Disclosure’ of Ind AS 1).
2.5 Accrual :
Entities following Ind AS to follow accrual basis of accounting only (section 128 of
Companies Act,2013 requires Books of account to be prepared as per accrual basis)
2.6 Comparatives :
• Minimum 1 year + in case of First Balance Sheet
time Adoption and Restatement
Comparatives are required for
(retrospective) having material

Statement of Profit
effect – Previous Year Opening
and Loss
Balance sheet.
• Entity can disclose comparatives
Cash Flow
for > 1 Year as per Ind AS 1; Statement
• Entity may also give > 1 year
comparative for Statement for Schedule of Changes
Profit and Loss & 1-year only in Equity (SOCIE)
comparative for Balance Sheet and
Cash flow Statement or Vice Versa. Information given
in notes to F.S.

IND AS 1
2.7 Consistency
• Company to use consistent basis of accounting for similar items or items of
similar class.
• Changes to be made only if:
a) Provides better presentation; or
b) Change in nature of operations; or
c) Required by any Ind AS
• Disclosures are required for changes in accounting policies giving the financial
effect. (Refer Ind AS 8 for details)
2.8 Restatement and Reclassification & Impracticability Exemptions

Restatement Errors/Policy Changes
OCI to E.g. Expense

P or L now
Reclassification categorised as
finance cost,
Reclassification earlier shown
If material, under EBE;
of a presentation/
Corresponding Deposits
classification of
Comparitives shown in P.Y.
Restatement Asset/Liability/
to be also now shown as
and Income/
restated Loans (as per
Classification & Expenditure
their nature)
Impracticability
Exemptions If in any case, it is
impracticable to
retrospectively restate Impracticable: Disclosure is
Previous year/Previous Not required where
Impracticability Year’s balances as determinable restatement
Exemption the financial effect is with is not
- Ind AS 1 impractical to be reasonable made due to
determined then costs & efforts impracticability
company to restate
from earliest practical
date.

CHAPTER: 4
2.9 Frequency of Reporting:
• At least Annually; or
• If Reporting period is > 12 months or < 12 months; then disclose:
a) The reporting period; and
b) Fact that Current Year figures are not entirely comparable with Previous year figures
3. Disclosures under Ind AS 1

3.1 Accounting Policies
• Disclose significant accounting policies regarding:
a) Bases of Measurement ( Cost/Fair Value/Else); and
b) Other accounting policies
• Changes in Accounting Policies (See Consistency)
• Deviations from Ind AS in choice of accounting policies (See Fair Presentation)
• Significant Judgements of Managements (Other than estimates) to be disclosed
(E.g. Materiality, Impracticability, Going Concern etc.)
3.2 Accounting Estimates
Disclose any material uncertainty/Estimates involving significant uncertainty to be
disclosed providing information on:
a) Estimates used;
b) Sensitivity involved;
c) Range of Possible Outcomes; and
d) Basis of Selection of Estimates.
E.g. discounting factor, fair values, expected loss on legal cases etc.
3.3 Capital Management Policies
a) Qualitative aspects of capital;
b) Quantitative aspects of capital;
c) Management of both the above aspects;
d) Externally imposed restrictions on capital; and
e) Any violations of those restrictions during the year.
3.4 Puttable Financial Instruments : Discussed in Ind AS 32
3.5 Other Disclosures:
a) Proposed Dividend;
b) Arrears of Preference Dividend;
c) Other:

IND AS 1
• Legal form +Domicile (Registered at) + Registered Address;
• Holding & Ultimate holding company name;
• Nature of Operations;
• If it has specified life then disclose.
Framework for Preparation & Presentation

of Financial Statements
1) ICAI has given a framework (i.e. Guideline for Preparation & Presentation
of Financial Statements)
2) Framework covers matters like:
a) Qualitative characteristics of F.S. (like Understandability, Comparability,
Relevance and Reliability)
b) Provides definitions for Asset, Liability, Capital, Income and Expenditure
c) Measurement basis (Like Cost, Realisable value, NRV, Replacement Cost, Present
Value etc.)
d) Underlying Assumptions (Accrual& Going Concern)
3) Capital Maintenance:
Financial Capital Maintenance Physical Capital Maintenance

(Nominal Growth) (Real Growth)
Whether closing capital at cur-

Whether closing capital is >
rent cost > opening capital at
Opening capital excluding any
current cost excluding
dividends/fresh
dividends/fresh issue/buy
issue/buy backs
backs [Inflation adjusted]
E.g.(1) E.g.(2)
Opening Capital Rs 50,000 Opening Capital Rs 56,250 (50000x 112.50%)
C.Y.Profits RS 5,000 Closing Capital Rs 55,000
Inflation 12.5% Whether physical capital maintained?
Whether financial capital maintained? Hint: No, Physical capital not maintained as
Hint: Yes, it has increased by Rs 5,000 closing capital < opening capital (by ` 1250)

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VERSION 3.

Author : CA. Sarthak Niraj Jain

02 IND AS BASED F.S. : FUNDAMENTALS 09

Whether in class or at house"

Join our Telegram Channel for all updates &

CA FINAL- FINANCIAL REPORTING (NEW SYLLABUS)

fast.edu.in Student login S-ID + LMS Board Notes

For WhatsApp Broadcasts and Telegram groups, WhatsApp- 9522564050

(4) Paper Pattern: Of 4 to 15 mar

(5) ICAI Material on Ind AS:

CA FINAL - FINANCIAL REPORTING 1

(7) How to write answers to objective questions/case study based questions:

• Quote the Name and Number of

• Start with facts of the case

(8) Sequence to Study:

2 CA FINAL - FINANCIAL REPORTING

(a) Ind AS : Introduction of Ind AS in India

Q. Are Ind AS 100% as per IFRS?

Course Coverage FR (New Course) GFRS FR(Old)

(b) Applicability of Ind AS and AS : Companies (Ind AS) Rules,2015 (RULE 4)

CA FINAL - FINANCIAL REPORTING 3

Q. Is Voluntarily early adoption of Ind AS Possible ?

Tata Capital ltd. (Stock Broker) not before 01.04.2018

Tata BPO (listed Co.) Ind AS applicability on 01.04.2016 as

Q. Are fellow Subsidiaries also covered? Walmart

4 CA FINAL - FINANCIAL REPORTING

Paid up + Reserves (-)

b) What if in above case company was NBFC?

(a) P&L 70 Cr.

(b) P&L 60 Cr. (d) Any

CA FINAL - FINANCIAL REPORTING 5

Q. Can a Private Company be listed company?

Companies (Ind AS)

Income > 50% from NBFC INCLUDES:

6 CA FINAL - FINANCIAL REPORTING

Holding Subsidiary Joint Venture Associates

31.03.18(C.Y.) 31.03.17 (Restated 01.04.16 (P.Y.) also as

Companies not adopting Ind AS :

CA FINAL - FINANCIAL REPORTING 7

LEVEL I (Non-SMC) LEVEL II (SMC) LEVEL III (SMC)

Turnover (P.Y.), or >50 Cr. >1 Cr.

SME(As per Preface SMC (AS per Companies

Completely Exempt 3,17,18,24 3,17

Ind AS, if Applicable/Adopted :

8 CA FINAL - FINANCIAL REPORTING

Substance of Over Form

1. Substance over form

2. Fair Value Accounting

Asset Initial Recognition Reporting Date Measurement

CA FINAL - FINANCIAL REPORTING 9

2.3. Choice of Accounting Policy

2.4. Accounting for Fair Value Gain / Loss

3. Retrospective Restatement and Reclassification –

10 CA FINAL - FINANCIAL REPORTING

Retrospective Restatement 3.3 Reclassification

3.1 Retrospective Application 3.2 Retrospective

3.1. Retrospective Application of Accounting Policy Change