Indian Accounting Standards

Done by
Jijoraj RS
Indian Accounting Standards

● Converged standards for International Financial Reporting standards (IFRS).

● In simple terms, Ind AS came into existence to meet requirements of IFRS.

● governs the accounting and recording of financial transactions as well as the presentation of
statements such as balance sheet and profit and loss account of a company in India.

● These standards have introduced several changes in the way companies report financials,
including how they account for income and expenditure and items in the balance sheet.
 Who issues Ind-AS

● Central Government in supervision and consultation with ICAI and NACAS.

● NACAS recommend these standards to the Ministry of Corporate Affairs who then spells out the standards applicable
to the companies in India.
Ind AS 101 - First Time adoption of Indian Accounting Standards.

Ind AS 34 - Interim Financial Reporting.

Ind AS 27 - Separate Financial Statements

 IND AS 101

● Ind AS 101 - First Time Adoption of Indian Accounting Standards.

● To ensure entity’s first Ind AS based financial statements, interim financial reports for the part of
the period covered by those financial statements contain high quality information that is;
○ transparent and comparable over all periods presented.
○ Provides suitable starting point for accounting in accordance with Indian Accounting
Standards
○ Can be generated at a cost that does not exceed benefits.
Purpose of IND AS 101

The purposes of Ind AS 101 are to;

● explain the process of transition to Ind AS

● remove the difficulties of retrospective applications of certain Ind AS
● explain the accounting treatment of the resultant difference, if any, in the carrying amount of
various assets and liabilities.
Process of Ind AS

● Selection/mandatory adoption of the accounting period in which Ind AS based Financial

Statements shall be prepared.

● Based on adoption period, Date of transition is determined

● Explain how transition from previous GAAP to Ind AS affected reported Balance Sheet,
Financial performance and Cash Flows.
 Scope of Ind AS 101
● An entity shall apply Ind AS in;
○ Its first Ind AS financial statements

○ Each interim financial report , if any, that it presents in accordance with Ind AS 34 (Interim
Financial Reporting) for part of the period covered by its first Ind AS financial statements.

● Does not apply to changes in accounting policies made by an entity that already applies Ind AS,
such as
○ Requirements or changes in accounting policies in Ind AS 8 (Accounting policies, Changes
in Accounting Estimates and Errors.
○ Specific transitional requirements in other Ind AS.
 Exemptions from other Ind AS
● Exemptions for business combinations.
● Exemptions from other Ind AS

a. Exemptions for business combinations.

● First time adopters may elect not to apply Ind AS 103 retrospectively to past business combinations that
occurred before the date of transition.

● An entity need not apply Ind AS 21, The Effects of Changes in Foreign Exchange Rates to fair value
adjustments and goodwill arising in business combinations that occurred before the date of transition to Ind AS.

● May apply Ind AS 21 to fair value adjustments and goodwill arising in either in all business combinations that
occurred before the date of transition or all business combinations that entity elects to restate to comply with Ind
AS 103.

● The exemption for past business combinations also applies to past acquisitions of investments in associates,
interests in joint ventures and interests in joint operations in which the activity of the joint operation constitutes
a business
b. Exemptions from other Ind AS

● Share based transactions

● Insurance contracts

● Deemed cost

● Leases

● Cumulative translation differences

● Investments in subsidiaries, joint ventures and associates

● Assets and liabilities of subsidiaries, joint ventures and associates

● Compound financial instruments

● Designation of previously recognized financial instruments

● Fair value measurement of financial assets or financial liabilities at initial recognition

● Decommissioning liabilities included in the cost of property, plant and equipment
● Financial assets or intangible assets accounted for in accordance with business combinations to
Ind AS 115
● Borrowing costs
● Extinguishing financial liabilities with equity instruments
● Severe hyperinflation
● Joint arrangements
● Stripping costs in the production phase of a surface mine
● Designation of contracts to buy or sell a non financial item
● Revenue from contracts with customers
● Non current assets held for sale and discontinued operations.
 Ind AS 34

● Ind AS 34 - Interim Financial Reporting

● Financial report containing either a complete set of financial statements for an interim period.

● Standard defines the minimum content of an interim financial report as including condensed
financial statements and selected explanatory notes.

● Intends to provide and update on the latest complete set of annual financial statements.
Contents of an Interim Financial Report

● A balance sheet as at the end of the period

● Statement of profit and loss for the period

● Statement of changes in equity for the period

● Notes, comprising a summary of significant accounting politics and other explanatory

information

● Balance sheet as at the beginning of the preceding period when an entity applies an accounting
policy or makes restatement of items in its financial statements
Minimum components of an Interim
Financial Report

● A condensed balance sheet

● Condensed statement of profit or loss

● Condensed statement of changes in equity

● Condensed statement of cash flow

● Selected explanatory notes.

Form and contents of Interim Financial
Statements

● If an entity publishes a complete set of financial statements in its interim financial report, the
form and content of those statements shall conform to the requirements of Ind AS1 for a
complete set of financial statements.

● If publishes a set of condensed financial statements, it shall include each of the headings and
subtotals that were included in its most recent annual financial statements and the selected
explanatory notes as required by this standard.

● In the statement that presents the components of profit or loss for an interim period, an entity
shall present basic and diluted earnings per share for that period when the entity is within the
scope of Ind AS 33, Earnings per Share.
 Periods for which Interim Financial
Statements are required to be presented
● Balance sheet - current interim period
Competitive Balance Sheet- immediately preceding financial year.

● Statements of P&L - current interim period

Comparative P&L - immediately preceding financial year.

● Statement of changes in equity - current financial year to date

Comparative Statement - immediately preceding financial year

● Statement of cash flows - current financial year to date

Comparative Statement - immediately preceding financial year.
 Ind AS 27

● Ind AS 27 - Separate Financial Statements.

● Shall be applied in accounting for investment in subsidiaries, joint ventures and associates when
an entity elects, or is required by law to present separate financial statements.

● Prepared in addition to

○ Consolidated Financial Statements

○ Financial statements where equity method is followed for
accounting investments in associates and joint ventures.
A parent entity does not need to prepare consolidated financial statements and can apply equity method if it meets all
following conditions

a. Wholly owned or partially owned of other entity who do not object to parent company not presenting consolidated
financial statements.

b. Debt or equity instruments are not traded in the market.

c. Did not file nor is it in the process of filing its financial statements with a securities commission for the purpose of
issuing any class of instruments in a public market.

d. Any intermediate parent company produces consolidated Financial statements.

 Requirement for separate financial
statements
● Does Not mandate for public use, mandatory only when complying with International Financial Reporting Standards.

● Financial statements using Equity method are not separate financial statements

● Financial statements that does not have a subsidiary, associate or joint venture are not separate financial statements.
Dividend Income from Subsidiary, Associate or Joint Venture
Recognize in profit or loss when its right to receive the dividend is established.

Reorganization of structure of the Parent

Should satisfy following criteria.
a. By issuing equity instruments
b. Assets and Liabilities are same immediately before and after reorganization
c. Owners have same interests in the net assets before and after reorganization

New parent shall measure cost at the carrying amount of its share of equity items shown in the separate financial statements of
the original parent at the date of the reorganization.
 Disclosure
Entity shall disclose the following;
a. Fact of using exemption; name and principal place of the business entity whose consolidated financial statements that
comply with Ind AS have been produced for public use; and address.

b. A list of significant investments in subsidiaries, joint ventures and associates including

i. Name of investees
ii. Principal place of business of those investees
iii. Its proportion of ownership interest held in those investees.
c. A description method used to account for the investments listed under (b)
References

● http://www.adms.co.in/ind-as-implementation.php

● https://www.mca.gov.in/Ministry/pdf/INDAS101.pdf

● https://www.mca.gov.in/Ministry/pdf/INDAS34.pdf

● https://caknowledge.com/ind-as-34/

● https://www.mca.gov.in/Ministry/pdf/Ind_AS27.pdf

● https://www.iasplus.com/en/standards/ias/ias27-2011

● https://www.taxmann.com/post/blog/guide-to-ind-as-27-separate-financial-statements/
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