Journey from AS to Ind AS...15 (indAs 101 to 115 corresponding to IFRS 1 to15) 39 ( 4 IndAS...

Journey from AS to Ind AS

1

- N P Sarda

10th June, 2015

Bombay Chartered Accountants Society

2

Indian Accounting Standards

AS - Existing mandatory Indian Accounting standards

(notified u/s 211 of the Companies Act, 1956 )

The Companies (Accounting Standards) Rules, 2006.

Ind AS - Indian Accounting Standards converged with IFRS

– with certain carve -outs (notified u/s 133 of the

Companies Act, 2013)

The Companies (Indian Accounting Standards)Rules,2015

Journey from AS to Ind AS

Scope of the discussion

Developments in Accounting Standards (AS) in India

Revised Roadmap for Ind AS implementation

Differences between existing Indian Accounting Standards(AS) and Accounting Standarda converged with IFRS (IndAS)

Carve-outs in converged Indian Accounting Standards (IndAS) from IFRS

Amendments in Carve-outs

Income Computation & Disclosure Standards

New IFRS project on Leasing

3

Developments in Accounting Standards (AS) in India

Developments

-- 1977 to 2007 ( New Concepts during 2000 to 2007)

-- 2007 to 2011

-- 2011 to 2014

-- 2015

Companies Act, 2013

Schedule III - ( Revised Schedule VI )

Schedule II

4

Revised Roadmap

Roadmap 2011

Budget Speech of FM in July, 2014

Adoption / Convergence

Revised Roadmap

-- Applicability -- Criteria based on Net Worth

-- Mandatory Application ( 2 phases ) / Voluntary Application

-- Comparatives / Previous GAAP Accounts

-- Transition Date / Reconciliation

-- other Conditions

Ind AS bridging gap with moving Target of IFRS

Carve-outs being reviewed and amended

5

Conceptual Differences

Varying degree of focus on / importance of :-

‒ Fair value - merits and demerits

‒ Time value of money

‒ Substance over Form

‒ Legal control / control in substance

‒ Legal obligation / constructive obligation

‒ Acconting treatment - based on judgment

Wide coverage of several new Issues and Situations.

6

Changing Concepts

Formulation of IndAS

-- Objective - Convergence with IFRS

IFRS -- Moving Target

-- Concepts in IFRS are changing

e.g. 1. Concept of Control in Consolidation (IFRS 10 )

2. Measurements of Financial Instruments (IFRS 9

Financial Instruments (IAS 39)

Investments (IAS 25)

7

Changing Concepts

IFRS -- Moving Target

-- Concepts in IFRS are changing (Contd..)

3. Revenue from Contracts ( IFRS 15)

Revenue in Construction Contracts ( IAS11)

Revenue from contracts for Goods and Services (IAS18)

4. Accounting for JV ( Equity Method / Proportionate

Consolidation)

5. Exception from Consolidation – for Investments by

Investment Co.

8

IFRS V/s IndAS

IFRS :-

28 IAS ( out of AS 1 to AS 41)

12 IFRS ( out of IFRS 1 to IFRS 15 )

40

3 IFRS 9,14 &15 will be effective from a later date

43

IndAS :-

24 (out of IndAS 1 to IndAS 41)

15 (indAs 101 to 115 corresponding to IFRS 1 to15)

39 ( 4 IndAS corresponding to IAS 11,18,39 and

26 not issued)

9

Differences between Ind AS and existing Indian

Accounting Standards (AS) – Contd…

Presentation of financial statements (Ind AS 1 / AS 1)

• Components of financial statements

-- Statement of Changes in Equity

‒ Profit & Loss a/c / Other Comprehensive Income

-- items included in Other Comprehensive Income

-- items to be / not to be later reclassified in P&L a/c

• Format of financial statements (Schedule VI / Schedule III)

• Classification of assets & liabilities

-- Current - non current

10


Accounting Standards (AS) (Contd…)

Presentation of financial statements (Ind AS1 / AS 1) Contd.

• Classification of expenses

(Nature of Expenses v/s their Function )

• Extraordinary items

• Reclassification in financial statements

(Nature, Amount and Reason)

• Critical judgments

• Estimation of uncertainty

11



Inventories (Ind AS 2 / AS2 )

* Work-in-progress

- in the business of Service Providers

* Purchase on deferred settlement terms

- interest expense)

* Same Cost Formula

- inventories having a similar nature and Use )

* Reversal of Write-down of Inventory.

12



Cash Flow Statements (Ind AS 7 / AS 3)

* Bank Overdrafts

- integral part of Cash Management

* No Extra-Ordinary items

* Interest and Dividend

- classified as Operating, Investing, or Financing activities

in a consistent manner.

13



Accounting policies & Changes in Accounting Estimates

and Errors (Ind AS 8 / AS 5)

• Accounting treatment of changes in accounting policies

- Retrospective Application

- Adjustment to Opening Reserves

• Accounting treatment of changes in accounting estimates

- Impact in the Current Period

• Errors

- corrected retrospectively

14



Events After the Reporting Period ( Ind AS 10 / AS 4 )

Treatment of Proposed Dividend

-- Current AS / Schedule III

Breach of Long-Term Loan Arrangement

-- Agreement by Lender - after the B/S date

-- adjusting event – classified as Non- Current Liability

( Carve – Out )

15



Income taxes (Ind AS 12 / AS 22)

• Timing differences v/s temporary differences

(P&L approach v/s Balance Sheet Approach)

• C/F unused income-tax Losses & other Tax Credits

--Recognition as deferred tax assets

- Virtual Certainty - Convincing Evidence

- Reasonable Certainty - Probable

• Def. Tax Liability on Assets Revaluation

- Based on Sale (not Use)

16

Income taxes (Ind AS 12 / AS 22) (contd…)



• Def. Tax Liability on Unrealised Intra-Group Profits

-- on Consolidation

• Potential Tax Benefits of Acquiree’s C/F Losses and other Tax

Benefits

-- in Business Combination

• Classification of Deferred Tax Assets/Liabilities

Non-Current – (AS 22 / Sch. III)

• Tax effect of Income/Expenses recognized outside P&L a/c

• Numerical / tax rate reconciliation

17



Property Plant and Equipment (Ind AS 16 / AS 6 / AS 10)

Componentisation of PPE

-- Depreciation based on major components

Replacements costs

Cost of major inspections / overhauls

Major Spare Parts

18



Property Plant and Equipment (Ind AS 16 / AS 6 / AS 10)

( Contd.)

Revaluation – Cost / Fair Value Model

-- Sufficient Regularity

Treatment of revaluation reserve

Methods of Depreciation - (Sch.II)

Changes in method of depreciation

Decommissioning, Dismantling, restoration and similar

liabilities19



Leases (Ind AS 17 / AS 19)

• Interest in leasehold land

• Initial direct costs / lease incentives

• Appendix A , B and C

20



Employee benefits (Ind AS 19 / AS 15)

• Treatment of actuarial gains and losses

- Other comprehensive income

- Corridor approach (deleted)

- AS 15 – P&L a/c

• Discount rates

- Government bonds / high quality corporate bonds

• Termination Benefit Liability (V.R.S. Liability)

- Substance v/s Form

21



Accounting for Government Grants and

Disclosure of Government Assistance ( Ind AS 20 / AS12)

* Deals with Disclosures of Govt. Assistance (Appendix A)

* Recognised as Deferred Income

-- to match related expenses

-- Not credited to Capital Reserve

-- Not deducted from Cost of Assets (Carve-out)

* Non-Monetary Grants

-- Fair Value v/s Nominal Value

-- Only Fair Value option – (Carve-out)

* Govt. Loans with below market Rate of Interest.

22



The effects of changes in foreign exchange rates

(Ind AS 21 / AS 11)

Concept -- Functional and presentation currency

Treatment of exchange differences

- Financing cost in P&La/c

- Previous History -- Schedule VI - Para 46 of AS 11

Carve – out in Ind AS

- On Transition to continue Policy adopted prior to Transition to

Ind AS

23



The effects of changes in foreign exchange rates

(Ind AS 21 / AS 11) ( Contd. )

Accounting Treatment for Exchange Difference on

Net Investment in a Foreign Operation

Forward Exchange Contracts -- Accounting Treatment provided in As11

-- Under Ind AS accounted as Derivatives

24



Borrowing Costs ( Ind As 23 / AS16 )

* Not Capitalised

(a) for qualifying assets valued at FV

(e.g. Biological Assets)

(b) for Inventories – produced in large quantities on a

repetitive basis

* Concept of “Effective Interest Rate” used

25



Related Party Disclosures (Ind AS24 / As 18)

Different Definition of Related Party

No. of Differences in Disclosures

Complex Requirements of Companies Act,2013

26



Separate Financial Statements ( Ind AS 27)

Separate Financial Statements of the Parent

Accounting for Investments in Subsidiary

IFRS :- Accounted at Cost or in accordance with IAS39/IFRS9

or using the Equity method as described in IAS 28

Ind AS :- Equity method not permitted in separate financial

statements ( Carve-out )

27



Investments in Associates and Joint Ventures

(Ind AS 28 / AS 23)

Investments by Joint Venture Org. MFs,Unit Trusts etc.

-- If elected to FVTPL under Ind AS 109, exempted from

applying Equity Method

In Separate Financial Statements of Investor

-- Equity Method not permitted -- ( Carve-out )

Gain on Bargain Purchase

-- credited to Capital Reserve -- ( Carve-out )

Potential Voting Rights

-- considered in assessing Significant Influence

28



Financial Reporting in Hyper-Inflationary Economies

(Ind AS 29)

No equivalent AS

Where cumulative Inflation Rate in 3 years

-- is approaching or exceeds 100%

Measuring Unit Current as at BS Date

29



Financial Instruments

AS 30,31,&32 -- Never notified, Recommendatory – AS13

Evolution of IFRS 9 –2008 crisis-G20 Declaration – 3 Issues-

Last Version of IFRS 9 issued in July,2014

IFRS 9 – Applicable from 1-1-2018

IndAS 109- Applicable from Transition to IndAS (1-4-2015)

Ind AS – Transition directly to IndAS 109 (IAS 39-skipped)30

AS IFRS Ind AS

Presentation 31 IAS 32 32

Disclosure 32 IFRS 7 107

Recognition and

Measurement

30 IAS 39

IFRS 9

109



Financial Instruments – Presentation ( IndAS 32 / AS31 )

What is Financial Instrument ?

-- Distinction with Investments

Classification as a Liability or Equity

-- Substance over Form

-- Red. Pref. Shares / Convertible Debentures

Conversion Option embedded in Foreign Currency Conv. Bonds

-- FCCBs – to acquire fixed no. of Equity Shares for a fixed amount

-- In IFRS – Functional Currency - Equity

Foreign Currency - Debt

-- In IndAS - even Foreign Currency considered as Equity

Hence, no translation on B/s Date (Carve-out)

31



Financial Instruments : Disclosures (Ind AS 107)

Requires Enhanced Disclosures of Information about

-- Significance of Financial Instruments on

Financial Information and Performance.

Requires :

-- Qualitative Disclosures

-- about exposures to each type of Risk

and how those Risks are managed

-- Quantitative Disclosures

-- about exposures to each type of Risk, seperately

for Credit Risk, Liquidity Risk, Market Riak etc

( including Sensivity Analysis )

32



Financial Instruments - ( Ins AS 109 / AS13&AS30 )

Deals with Recognition and Measurement

A Contract – Financial Asset of one Entity

Financial Liability or Equity of another Entity

Covers three Issues :

(1) Classification of Financial Assets and Financial Liabilities

(2) Impairment

(3) Hedging

Initial Measurement

-- AT Fair Value

-- common to Financial Assets and Financial Liabilities

33



Financial Instruments – (InsAS 109 / AS13&AS30 ) (Contd.)

Subsequent Measurement

Financial Assets

-- Amortised Cost or

-- Fair Value

-- FVTPL / FVTOCI

Debt Instruments

-- Business Model

-- to collect Contract cash flow - at Amortised Cost

-- to collect Contract cash flow

or to sell - at FVTOCI

34



Financial Instruments – (IndAS 109 / AS13&AS30 ) (Contd.)

Option to designate Debt Inst. At FVTPL

Equity Shares / Instruments - At F V (Cost option not available)

-- normally valued at FVTPL

-- option to designate strategic Inv. In Equity Shares at FVTOCI

Measurement of Financial Liabilities

-- Initial

-- Subsequent Measurement

-- at Amortised Cost

-- at FVTPL ( option – conditions )

If Option for FVTPL exercised

Change in FV split in 2 parts

(Change attributable to own credit risk & the remaining amt.)35



Financial Instruments - (Ind AS 109 / AS13&AS30 ) (Contd.)

Change in FV of Liabilities on a/c of Own Credit Risk

-- recognised in OCI

earlier IFRS – in P&L a/c – Carve out

now IFRS -- in OCI -- Carve out deleted

Reclassification of Financial Assets -change in business model

-- Not permitted – Eqity Inst. Opted for FVTOCI

-- FV option exercised for FA/FL

No Reclassification of Financial Liabilities permitted

Derecognition – Financial Assets

-- Financial Assets on Securitisation

-- Financial Liabilities36




Impairment of Financial Assets

-- on the basis of Expected Credit Losses

( not Incorred Credit Losses )

-- Differs from Prudential Norms of RBI

Interest Revenue

-- Application of Effective Interest Rate on Amortised Cost of

Impaired Assets ( other Assets on Gross carrying amount )

Derivatives

-- valuation at Fair Value

Embedded Derivatives - Hybrid Contracts

-- If host Fin.Inst. , Embedded Derivative not separated 37




Hedge Accounting - Risk Management Activity

Matching gains/losses on Hedging Instrument

with losses/gains on the Hedged Assets & Liabilities

Elaborate rules for Hedge Accounting

38



Earning per Share ( Ind AS 33 / AS 20 )

Seperate Disclosure of EPS

-- from Continuing and Dis-continuing Operations

Extra-Ordinary items

-- no consideration

Mandatory Convertible Instruments (Debentures)

-- considered in computation of EPS

39



Interim Financial Reporting (Ind AS 34 / AS25 )

Applicability to Quarterly Financial Information

-- under Clause 41

Recognition and Measurement Pinciples

40



Impairment of Assets (Ind AS 36 / AS28 & AS26 )

Impairment Loss recognised for Goodwill

-- Prohibited from Reversal in a subsequent period

Goodwill impaired in an interim period

-- not reversed in subsequent interim/annual Financial

Statements.

41



Provisions, Contingent Liabilities and Contingent Assets

( Ind AS 37 / AS 29 )

Legal v/s Constructive Obligations

Termination Liability / Restructuring Plan

--- Constructive Obligation

Discounting of Liability

--- if time value of Money considered material

Appendix A,B and C

-- covers special situations42



Intangible Assets (Ind AS 38 / AS 26 )

Measurement at Cost or Revalued Amount

Useful Life may be finite or infinite

-- AS 26 - Rebuttable presumption-10 years

Amortization or Impairment ? Or Both

-- Impairment but not Amortisation

-- AS14 – amortisation – 5 years

Intangible Assets arising in Service Concession Arrangements

-- can continue policy of amortisation adopted prior to

Transition to Ind AS ( Carve-out )

Appendix A – Intangible Assets-Web Site Costs

43



Investment Property (Ind AS 40 / AS13 )

Land or Building or both

-- to earn rental or capital appreciation or both

Measured initially at Cost

Subsequent measurement

-- IFRS 40 -- Option for Cost or Fair Value Model

-- Ind AS 40 -- Fair Value Model not allowed – (Carve-out)

( Detailed Disclosures of FV required)

44



Agriculture ( Ind AS 41 )

Biological Assets

-- measured at Fair Value (less cost to sell)

Cost Model as an exception to FV Model

-- No active market

-- FV can not be reliably measured

Bearer Plants

-- PPE -- IFRS amended – Carve-out in Ind AS dropped.

45



First Time Adoption of Ind AS (Ind AS 101)

* Date of transition

* Comparatives

-- Definition of Previous GAAP Accounts

* Reconciliation to explain transition to Ind AS

* Previous GAAP carrying value can be considered as

deemed cost

( for PPE, Intangible assets and Investment properties)

* Other Exemptions

46



Share-based payments ( Ind AS 102 )

Guidance Note of ICAI / SEBI

-- applicable to Employees only

Ind AS 102 covers share-based payments

-- to employees and to others for goods and services

Recognised as expense over the vesting period

Computation at Fair Value

-- GN of ICAI gave option of Cost / FV

( recommended FV )47


Accounting Standards (AS) (Contd…

Business Combinations ( Ind AS103 / AS14 )

Acquirer obtains control over other Entity

IFRS does not cover Amalgamation between entities under

common control -- Ind AS 103 covers -- ( Carve-out )

Acquisition Method v/s Pooling of Interest Method

-- Pooling of Interest Method not permitted

( except for Common Control transactions )

48


Accounting Standards (AS) (Contd…

Business Combinations ( Ind AS103 / AS14 ) (Contd.)

Assets and liabilities acquired -- Valued at Fair Value -- ( all identifiable A/L)

Excess of A/L acquired over Consideration

-- if Bargain Purchase, recognized in Other Comprehensive

Income and accumulated in Equity as Capital Reserve

-- Otherwise directly in Equity as Capital Reserve

Business combination achieved in stages

49



Insurance Contracts ( Ind AS 104 )

Liability Adequacy Test

-- to assess that recognised insurance liabilities are adequate

Re-insurance assets are tested for Impairment

Insurance liabilities

-- not to offset against the related re-insurance assets

50



Non-Current Assets held for Sale

and Discontinued Operations (Ind AS 105 / AS 24& AS10 )

Measured at lower of :

-- its carrying value

-- Fair Value less Cost to Sale

Statement of Comprehensive Income

-- is effectively divided into two Sections :

(Continuing Operations and Discontinuing Operations)

51



Exploration for and Evaluation of Mineral Resources

( Ind AS 106 )

Measured at Cost or Revaluation

( less accumulated amortisation and Impairment Loss)

52



Operating Segments (Ind AS 108 / AS17 )

Identification of Segments

-- based on the Financial Information that is regularly reviewed

by the Chief Operating Decision Maker in deciding how

(a) to allocate resources and

(b) in assessing performance.

( AS 17 covered Risk and Rewards approach and internal financial

reporting to KMP. )

53



Consolidated Financial Statements (IndAS 110 / AS 21)

• Changes the criteria for determination of control

‒ Earlier – Power to govern operating and financial policies

‒ Now – Whether the investor is exposed or has rights, to variable

returns from its involvement with the investee and has the ability

to affect those returns through its power over the investee

• Prescribes‒ The criteria for preparation of consolidated financial statements

‒ Consolidation procedures

‒ Presentation of Non-controlling interests

‒ Treatment for changes in ownership interests

54



Consolidated Financial Statements (IndAS 110 / AS 21)

(Contd..)

Applicability :

-- Earlier SEBI requirements for Listed Companies

Now Companies Act,2013 for all the Companies

-- Exemptions in AS21 not available

-- Intermediate Holding Company

Investment Companies ( New Concept )

-- No Consolidation

Investments valud at FV under INDAS109

Uniform Accounting Policies

Reporting Dates – interval – not more than 3 months

55



Consolidated Financial Statements ( IndAS 110 / AS 21)

(Contd.)

Substantive Potential Voting Rights

Dual Control

Partial Disposal of Inv. In Subsidiary

-- When Control retained

-- When Control lost

Presentation of Non-Controlling Interest

Special Purpose Entities

56



Joint Arrangements ( Ind AS 111 & Ind AS 28 / AS 27 )

* Joint Arrangement -- has two characteristics

- A contractual arrangement and

- 2 or more parties have joint control

* Joint arrangement ‒ Is either a Joint Operation / a Joint Venture

* Joint Operation‒ The parties that have a Joint Control have rights to the assets

and obligations for the liabilities relating to the arrangement

* Joint Venture‒ The parties that have Joint Control have rights to the Net

Assets of the arrangement57



Joint Arrangements (Ind AS 111 ) (Contd…)

• Existence of a separate vehicle - Joint operation / Joint venture ?

‒ A joint arrangement that is not structured through a separatevehicle is a Joint Operation

‒ If assets and liabilities held in a separate vehicle, it can be eithera Joint Venture or Joint Operation

• Accounting treatment under Joint operation Each Operator recognises in its separate accounts -- assets it controls,expenditure and liabilities it incurs and its share of income earned

• Accounting Treatment under Joint Venture In Separate Accounts :- At Cost or FV (under Ind AS 109)

Equity Method not permitted (Carve-out)In CFS :- Valued at Equty Method

( Proportionate Consolidation ruled out) 58



Disclosure of Interests in Other Entities Ind AS 112

• Disclosure of interest in any of the following

‒ Subsidiaries

‒ Joint arrangements (Joint operations or Joint ventures)

‒ Associates

‒ Unconsolidated structured entities

• Disclosure requirements excluded from Ind AS 110 and

Ind AS 111 - combined in this standard

59



Disclosure of Interests in Other Entities. Ind AS 112(Contd.)

• Significant judgments and assumptions made in

determining

‒ Control

‒ Joint Control or Significant Influence

‒ The type of joint arrangement (i.e. Joint operation or Joint

venture) when arrangement has been structured through a

separate vehicle

• Prescribes separate lists of requirements of disclosure

in case of

‒ Interest in Subsidiaries

‒ Interest in Joint arrangements & Associates

‒ Interest in unconsolidated structured entities60



Fair Value Measurements ( Ind AS 113)

• Ind AS 113

‒ Defines Fair Value

‒ Sets out in a single IFRS a framework for measuring fair value

‒ Requires disclosures about fair value measurement

• Definition of Fair Value

‒ Exit price

‒ To sell asset or paid to transfer a liability

‒ An orderly transaction

‒ At the measurement date

61



Fair Value Measurements (Ind AS 113) (Contd.)

• Objective of IFRS 13

‒ To increase consistency and comparability through “Fair Value

hierarchy”

‒ Fair Value hierarchy categorizes and describes the inputs

used in valuation techniques in 3 levels - Level 1 Input, Level

2 Input and Level 3 Input

• Overview of Fair Value measurement approach

• Guidance on Measurement

• Valuation techniques

‒ Market approach / Cost approach / Income approach

• Elaborate disclosure requirements

62



Regulatory Deferral Accounts Ind AS 114

Interim Solution – limited scope Standard

First time adopters can continue

-- to account “Regulatory Deferral Account balances”

as per previous GAAP.

( Guidance Note of ICAI on the subject considered as previous GAAP )

63



Revenue from Contracts with customers Ind AS 115

(Contd..)

The Standard replaces the following Standards :

AS 9 Revenue Recognition IAS18

AS 7 Construction Contracts IAS 11

Includes : Revenue from Contracts with Customers

-- for sale of goods

-- for sale of services

-- for other income

-- for construction

Scopes out : lease contracts

insurance contracts

financial instruments etc64



Revenue from Contracts with Customers (Ind AS 115)

• Uniform revenue recognition in complex transactions such

as long term service contracts and multiple element

arrangements

• A company should recognise revenue when it satisfies a

performance obligation by transferring a good or service to

a customer. A good or service is transferred to a customer

when the customer obtains control of that good or service.

65



Revenue from Contracts with customers Ind AS 115 (Contd .)

When multiple elements / contracts are bundled together, apply

the following steps :

‒ Identify the contract(s) with the customer

‒ Identify the separate performance obligations in the

contract

‒ Determine the transaction price

‒ Allocate the transaction price to the separate performance

obligations

‒ Recognise revenue when (or as) the entity satisfies each

performance obligation

66



Revenue from Contracts with customers Ind AS 115 (Contd..)

Combination of Contracts

Guidance for evaluation of performance obligations

Allocation of the transaction price to separate obligations

Revenue recognised :

as “ Control “ of the goods and services underlying the performance

obligation is transferred to the customer

Need to determine - Whether control is transferred

over time, if not, at a point of time

67




If performance obligation satisfied over time,

revenue is recognised by measuring progress towards complete

satisfaction ( by using either output or input methods )

---- and only if it can reasonably measure its progress, else,

revenue should be recognised,

only to the extent of contract costs incurred of which recovery is

probable

Application guidance for transactions, such as,

-- Sale with a right to return,

-- Warranties etc.

68




Service Concession Arrangements (Appendix C & D )

Private sector operators

involved in provision of

public sector infrastructure assets and services

Grantor specifies the services for public

-- controls the infrastructure and the price

Recognition :

-- a financial asset (right to cash/other financial asset)

-- an intangible asset (right to receive cash from public on use

-- both.69

Carve-outs in Ind AS from IFRS

Carve-outs (continuing)

Conversion option embedded in FCCB (IndAs32/109)

Previous GAAP carrying value of PPE, Intangible Assets and

Investment Properties

--- deemed cost (IndAS 101)

Unrealised foreign exchange difference on long term monetary

assets and liabilities (Ind AS 21)

70


Carve-outs (continuing)

Business Combinations ( Ind AS 103)

-- common control transactions

-- Gain on Bargain Purchase ( carve-out continuing in

Ind AS 28 also)

Statement of cash flows (Ind AS 7)

-- Interest and Dividend

71


Options granted in IFRS deleted in Ind AS

Presentation in Financial Statements (Ind AS1)

-- classification of expenses

Nature of expense / functional ---- Nature of expense

-- Profit & Loss a/c and Other Comprehensive Income

Single or separate statement ---- Single

Employee Benefits ( IndAS 19)

-- Discount rates for Defined Benefit liabilities

market yields on Govt. Bonds or high quality corporate bonds

--- Market yields on Govt. Bonds

Investment Property (Ind AS 40)

-- Cost Model or Fair Value Model --- Cost Model

72


Options granted in IFRS deleted in Ind AS (contd.)

Government Grants ( Ind AS 20)

--- Non-monetary Grants

Fair value or Nominal Value --- Fair Value

--- Govt, Grants releted to Assets

credited to Asset a/c or treated as deferred income

---- treated as deferred income

73


Major Carve-outs proposed to be removed

(as these have been addressed by IASB)

* Revenue recognition from real estate sale agreement

(IAS 18, IAS11, IFRIC15, Ind AS 115)

* Accounting for Bearer Plants

(IAS 41, IAS16, Ind AS 41, Ind AS 16)

* Gains on Own Credit Deterioration

(IAS 39, Ind AS 39, IFRS 9, Ind AS 109)

74

Carve-outs in Ind AS from IFRS (contd.)

Major Carve-outs proposed to be removed

(on reconsideration by the ICAI)

* Accounting for Associates ( Ind AS 28)

* Forex Gains/Losses on Long Term Monetary Items

(para 29 of Ind AS21)

* Comparatives in First Ind AS Financial Statements

(IndAS101)

New Carve-outs proposed

* Current/Non-Current classification in case of breach of loan

covenants – lender’s agreement after the B/S date (IndAs10 )

* Straight lining of inflation based lease rentals in Operating

Leases : ( ind AS 17)

75

Income Computation and Disclosure Standards

* Income Computation & Disclosure Standards :

-- notified under Section 145 (2)

-- 10 Standards covered

( based on AS not IndAS )

* Conflict in Concepts under Ind As v/s

Concepts under Income Computation & Disclosure Standards

* Computation of Profits

-- Court judgements in Tax cases

76

New IFRS Project on Leases

Leases

(Joint Proposal under consideration)

• According to the World Leasing Yearbook 2010, leasing

activity in 2008 amounted to US$ 640 billion. However, the

assets and liabilities arising from many of those contracts

are not shown in a lessee’s Statement of Financial Position

(Balance sheet)

• In the books of Lessee

‒ New project envisages that a lessee would recognise a liability

to make lease payments and a corresponding right to use

asset upon lease commencement

77

New IFRS Project on Leases (Contd.)

Leases (Contd.)

In the books of Lessor

‒ There was a proposal to adopt “the receivable and residual

approach” (i.e. to allocate the carrying value of underlying asset

being leased between the right of use granted to the lessee and

the residual asset. However, at present the consensus is against

this approach in the books of lessor.)

78

Thank you

79

Journey from AS to Ind AS...15 (indAs 101 to 115 corresponding to IFRS 1 to15) 39 ( 4 IndAS...

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Transcript of Journey from AS to Ind AS...15 (indAs 101 to 115 corresponding to IFRS 1 to15) 39 ( 4 IndAS...