IND-AS & IFRS

INDIAN ACCOUNTING STANDARDS (IND-AS).

This paper has been divided into four parts :—

PART I – General Discussions

PART II – Companies (Indian Accounting Standards) Rules, 2015

PART III – List of 40 Ind-AS as notified

PART I – GENERAL DISCUSSIONS

Finally Ind-AS has now become a reality. The much awaited day has come, bringing "Achhe Din" for the accounting fraternity.

Companies (Indian Accounting Standards) Rules, 2015 notified Ind-AS.

Companies (Indian Accounting Standards) Rules, 2015. hereafter referred to as the Rules 2015 notified on 16th February, 2015

The Rules 2015 shall come into force from 1st day of April, 2015

Ind-AS will be implemented in three phases (For Corporate and Entities):

Ind-AS will be implemented in three phases (For Bank)

NBFCs having net worth below ₹ 250 crore and not covered under the above provisions shall continue to apply the Accounting Standards specified in the Annexure to the Companies (Accounting Standards) Rules, 2006.

Applicability of Ind-AS to Housing Finance Companies is not explicitly covered under the roadmap for banks, insurance companies and NBFCs. MCA is expected to clarify this position. The definition of net worth and dates for consideration of net worth have not been clarified by the MCA/regulators in the above roadmap.

Net worth (NW) means as defined u/s. 2(57) of the Act, 2013

NW is to be calculated in accordance with standalone financial statements (SFS) and not consolidated financial statements (CFS)

Other Issues of Applicability

Once the company adopts Ind-AS, either voluntarily or mandatorily, it has to apply Ind-AS for ever, regardless of reduction of net worth.

Subsidiaries – Overseas Rule 4(5)

Overseas subsidiary, associate, joint venture and other similar entities of an Indian company, need not follow Ind-AS for its standalone financial statements, but may follow requirements of the specific jurisdiction:

Indian company shall prepare its consolidated financial statements in accordance with the Indian Accounting Standards (Ind-AS) either voluntarily or mandatorily if it meets the criteria as specified in sub-rule (1).

Indian Subsidiaries – of foreign company 4(6)

Indian company which is a subsidiary, associate, joint venture and other similar entities of a foreign company shall prepare its financial statements in accordance with the Indian Accounting Standards (Ind-AS) either voluntarily or mandatorily if it meets the criteria as specified in sub-rule (1) above

PART II – COMPANIES (INDIAN ACCOUNTING STANDARDS) RULES, 2015

1. Obligation to comply with Indian Accounting Standards (Ind AS)
   1. The Companies and their auditors shall comply with the Indian Accounting Standards (Ind-AS) specified in Annexure to these rules in preparation of their financial statements and audit respectively, in the following manner, namely:— Refer Table in Part I- General Discussion
   2. For the purposes of calculation of net worth of companies under sub-rule (1), the following principles shall apply, refer table above
   3. Standards in Annexure to these rules once required to be complied with in accordance with these rules, shall apply to both standalone financial statements and consolidated financial statements.
   4. Companies to which Indian Accounting Standards (Ind-AS) are applicable as specified in these rules shall prepare their first set of financial statements in accordance with the Indian Accounting Standards (Ind-AS) effective at the end of its first Indian Accounting Standards (Ind-AS) reporting period.
      Explanation.– For the removal of doubts, it is hereby clarified that the companies preparing financial statements applying the Indian Accounting Standards (Ind-AS) for the accounting period beginning on 1st April, 2016 shall apply the Indian Accounting Standards (Ind-AS) effective for the financial year ending on 31st March, 2017.
   5. Overseas subsidiary, associate, joint venture and other similar entities of an Indian company may prepare its standalone financial statements in accordance with the requirements of the specific jurisdiction:
      Provided that such Indian company shall prepare its consolidated financial statements in accordance with the Indian Accounting Standards (Ind-AS) either voluntarily or mandatorily if it meets the criteria as specified in sub-rule (1).
   6. Indian company which is a subsidiary, associate, joint venture and other similar entities of a foreign company shall prepare its financial statements in accordance with the Indian Accounting Standards (Ind-AS) either voluntarily or mandatorily if it meets the criteria as specified in sub-rule (1).
   7. Any company opting to apply the Indian Accounting Standards (Ind-AS) voluntarily as specified in sub-rule (1) for its financial statements shall prepare its financial statements as per the Indian Accounting Standards (Ind-AS) consistently.
   8. Once the Indian Accounting Standards (Ind-AS) are applied voluntarily, it shall be irrevocable and such companies shall not be required to prepare another set of financial statements in accordance with Accounting Standards specified in Annexure to Companies (Accounting Standards) Rules, 2006.
   9. Once a company starts following the Indian Accounting Standards (Ind-AS) either voluntarily or mandatorily on the basis of criteria specified in sub-rule (1), it shall be required to follow the Indian Accounting Standards (Ind-AS) for all the subsequent financial statements even if any of the criteria specified in this rule does not subsequently apply to it.
2. Exemptions*

   The insurance companies, banking companies and non-banking finance companies shall not be required to apply Indian Accounting Standards (Ind-AS) for preparation of their financial statements either voluntarily or mandatorily as specified in sub-rule (1) of rule

1. General Instruction. –
   1. Indian Accounting Standards, which are specified, are intended to be in conformity with the provisions of applicable laws. However, if due to subsequent amendments in the law, a particular Indian Accounting Standard is found to be not in conformity with such law, the provisions of the said law shall prevail and the financial statements shall be prepared in conformity with such law.
   2. Indian Accounting Standards are intended to apply only to items which are material.
   3. The Indian Accounting Standards include paragraphs set in bold italic type and plain type, which have equal authority. Paragraphs in bold italic type indicate the main principles. An individual Indian Accounting Standard shall be read in the context of the objective, if stated, in that Indian Accounting Standard and in accordance with these General Instructions.

PART III : LIST OF IND-AS

Ind-AS 101 First-time Adoption of Indian Accounting Standards – effective from

1. Appendix B – Exceptions to the retrospective application of other Ind-ASs
2. Appendix C – Exemptions for business combinations
3. Appendix D – Exemptions from other Ind-ASs

Ind-AS 102 Share-based Payment

Ind-AS 103 Business Combinations

1. Appendix C – Business combinations of entities under common control

Ind-AS 104 Insurance Contracts – effective from the date to be separately announced.

Ind-AS 105 Non-current Assets Held for Sale and Discontinued Operations

1. Appendix B – Extension of the period required to complete a sale

Ind-AS 106 Exploration for and Evaluation of Mineral Resources

Ind-AS 107 Financial Instruments: Disclosures

1. Appendix B - Classes of financial instruments and level of disclosure

Ind-AS 108 Operating Segments

Ind-AS 109 Financial Instruments

Ind-AS 110 Consolidated Financial Statements

Ind-AS 111 Joint Arrangements

Ind-AS 112 Disclosure of Interests in Other Entities

Ind-AS 113 Fair Value Measurement

Ind-AS 114 Regulatory Deferral Accounts

Ind-AS 115 Revenue from Contracts with Customers (Deferred in India)

Ind-AS 116 Leases*

1. Appendix C – Service Concession Arrangements
2. Appendix D – Service Concession Arrangements: Disclosures

* On 28th April, 2015, the International Accounting Standards Board (IASB) had voted to publish an exposure draft (ED) proposing a one-year deferral of the effective date of IFRS 15, Revenue from Contracts with Customers to 1st January, 2018.

Ind-AS 1 Presentation of Financial Statements

Ind-AS 2 Inventories

Ind-AS 7 Statement of Cash Flows

Ind-AS 8 Accounting Policies, Changes in Accounting Estimates and Errors

Ind-AS 10 Events after the Reporting Period

1. Appendix A – Distribution of Non-cash Assets to Owners

Ind-AS – 11 – Construction Contract

APPENDICES

1. Service Concession Arrangements
2. Service Concession Arrangements: Disclosures
3. References to matters contained in other Indian Accounting Standards

Ind-AS 12 Income Taxes

1. Appendix A – Income Taxes – Changes in the Tax Status of an Entity or its Shareholders

Ind-AS 16 Property, Plant and Equipment

1. Appendix A – Changes in Existing Decommissioning, Restoration and Similar Liabilities
2. Appendix B – Stripping Costs in the Production Phase of a Surface Mine

Ind-AS 17 Leases

1. Appendix A – Operating Leases—Incentives
2. Appendix B – Evaluating the Substance of Transactions Involving the Legal Form of a Lease
3. Appendix C – Determining whether an Arrangement contains a Lease

Ind-AS 18 Revenue

APPENDICES

1. Revenue—Barter Transactions Involving Advertising Services
2. Customer Loyalty Programmes
3. Transfers of Assets from Customers
4. References to matters contained in other Indian Accounting Standards

Ind-AS 19 Employee Benefits

1. Appendix B – Ind-AS 19 —The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

Ind-AS 20 Accounting for Govt. Grants and Disclosure of Govt. Assistance

1. Appendix A – Government Assistance – No Specific Relation to Operating Activities

Ind-AS 21 The Effects of Changes in Foreign Exchange Rates

Ind-AS 23 Borrowing Costs

Ind-AS 24 Related Party Disclosures

Ind-AS 27 Separate Financial Statements

Ind-AS 28 Investments in Associates and Joint Ventures

Ind-AS 29 Financial Reporting in Hyperinflationary Economies

1. Appendix A – Applying the Restatement Approach under Ind-AS 29 Financial Reporting in Hyperinflationary Economies

Ind-AS 32 Financial Instruments: Presentation

Ind-AS 33 Earnings Per Share

Ind-AS 34 Interim Financial Reporting

1. Appendix A – Interim Financial Reporting and Impairment

Ind-AS 36 Impairment of Assets

1. Appendix A – Using present value techniques to measure value in use
2. Appendix C – Impairment testing cash-generating units with goodwill and non-controlling interests

Ind-AS 37 Provisions, Contingent Liabilities and Contingent Assets

1. Appendix A – Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds
2. Appendix B – Liabilities arising from Participating in a Specific Market— Waste Electrical and Electronic Equipment
3. Appendix C – Levies

Ind-AS 38 Intangible Assets

1. Appendix A - Intangible Assets—Web Site Costs

Ind-AS 40 Investment Property

Ind-AS 41 Agriculture