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IFRS/ Ind AS Updates : July 2018

International Accounting Standard Board (IASB) Updates

An overview of Exposure Draft Accounting Policy Changes (Proposed amendments to IAS 8)

The International Financial Reporting Standards (IFRS) Foundation has published a document to accompany Exposure Draft Accounting Policy Changes (Proposed amendments to IAS 8). It provides an overview of the proposed amendments to International Accounting Standards (IAS) 8 and its intended application in practice. The proposed amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors would simplify the application of accounting policy changes resulting from agenda decisions published by the IFRS Interpretations Committee.

For details refer: https://www.ifrs.org/-/media/project/accounting-policy-changes/ias8exposuredraftoverview.pdf

IASB consults on the accounting for Financial Instruments with Characteristics of Equity

The IASB has published for public comment a Discussion Paper (DP) on how companies issuing financial instruments should classify them in their financial statements. (FS) IAS 32 Financial Instruments: Presentation currently sets out how a company that issues financial instruments should distinguish financial liabilities from equity instruments. That distinction is important because the classification of the instruments affects how a company’s financial position and performance are depicted.

IAS 32 works well for most financial instruments. However, continuing financial innovation means that some companies find it challenging to classify some complex financial instruments that combine some features of both debt—liabilities—and ordinary shares—equity instruments. Challenges in classifying these instruments can result in diverse accounting in practice, which in turn makes it difficult for investors to assess and compare companies’ financial position and performance. In addition, investors have been calling for better information, particularly about equity instruments.

The IASB has considered previous work on the topic to propose an approach that would:

  • provide a clear rationale for why a financial instrument would be classified as either a liability or equity without fundamentally changing the existing classification outcomes of IAS 32; and
  • enhance the information provided through presentation and disclosure.

This approach would provide investors with richer and more comparable information about financial instruments issued by companies. Clearer principles will help companies accounting for financial instruments they issue both now and as financial instruments continue to evolve.

This DP does not address other accounting requirements for financial instruments, such as:

  • recognition and measurement requirements in IFRS 9 Financial Instruments; or
  • disclosure requirements in IFRS 7 Financial Instruments: Disclosures.

For details refer: https://www.ifrs.org/news-and-events/2018/06/iasb-consults-on-the-accounting-for-financial-instruments-with-characteristics-of-equity/

Indian Accounting Standard (Ind AS)
(IFRS as applicable in India with certain carve-outs)

Deferment of Ind AS implementation for Schedule Commercial Banks

RBI vide its circular no RBI/2015-16/315 dated 11th February 2016  had mentioned that Scheduled Commercial Banks (SCBs), excluding Regional Rural Banks (RRBs), were required to implement Indian Accounting Standards (Ind AS) from 1st April 2018.

However, necessary legislative amendments – to make the format of FS, prescribed in the 3rd Schedule to Banking Regulation Act 1949, compatible with accounts under Ind AS – are under consideration of the Government. In view of this, as also the level of preparedness of many banks, it has been decided to defer implementation of Ind AS by 1 year i.e. 1st April 2019.

For details refer: https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=43574

ICAI Releases

Ind AS Transition Facilitation Group (ITFG) issues bulletin 15
ITFG has been constituted for providing clarifications on timely basis on various issues related to the applicability and /or implementation of Ind AS under the Companies (Ind AS) Rules, 2015, raised by preparers, users and other stakeholders. ITFG considered some issues received from members and decided to issue clarifications on 10 Ind AS issues through its bulletin 15 on 4th April 2018.

For details refer: https://resource.cdn.icai.org/49554indas39277.pdf

Education Materials on Ind AS 103 Business Combinations
This educational material contains a summary of Ind AS 103 discussing the key requirements of the Standard and the Frequently Asked Questions explaining the principles enunciated in the Standard and covering the issues that are expected to be encountered frequently while implementing Ind AS 103

For details refer: https://resource.cdn.icai.org/49531indas39251.pdf

Educational Material on Ind AS 27 Separate Financial Statements & Ind AS 28 Investment in Associates and Joint Ventures

This publication will provide guidance in how an entity accounts for the investments in its subsidiaries, associates and joint ventures. Ind AS 27 prescribes the accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates when an entity prepares separate FS and Ind AS 28 set out how to determine if an investment is an associate and prescribes the use of the equity method of accounting for investments in associates and joint ventures.

This Educational Material contains summary of Ind AS 27 and Ind AS 28 discussing the key requirements of the Standards and the Frequently Asked Questions (FAQs) covering the issues, which are expected to be encountered frequently while implementing these Standards.

For details refer: https://resource.cdn.icai.org/50756indas40425edmat.pdf

Announcement for withdrawal of the Guidance Note on Accounting for Real Estate Transactions (for entities to whom Ind AS is applicable)

The ICAI had issued a Guidance Note (GN) on Accounting for Real Estate Transactions (for entities to whom Ind AS is applicable), in May 2016, applicable to all projects in real estate by entities to whom Ind AS were applicable.

The aforementioned GN is based on principles of Ind AS 11- Construction Contracts and Ind AS 18-Revenue. On issuance of Ind AS 115-Revenue from Contracts with Customers; the Ind AS 11 and Ind AS 18 stand omitted. Accordingly, the GN on Accounting for Real Estate Transactions (for entities to whom Ind AS is applicable) also stands withdrawn.

For details refer: https://www.icai.org/new_post.html?post_id=14815&c_id=219

Ind AS :An Overview (Revised 2018)

This is the 3rd edition of the earlier issued publication which contains an overview of various aspects related to IFRS-converged Ind AS such as roadmap for the applicability of Ind AS, carve-outs from IFRS/IAS, changes in financial reporting under Ind AS compared to financial reporting under accounting standards, summary of all the Ind AS etc. It captures all the recent amendments to Ind AS notified by the MCA in March 2018 specifically issuance of new revenue standard (Ind AS 115) and other consequential amendments thereto.

For details refer: https://resource.cdn.icai.org/50757indas40425indas.pdf

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