Ind AS : Indian Accounting Standards

Indian Accounting Standard : Ind AS 1: Presentation of Financial Statements

Indian Accounting Standard 1 sets out the overall framework and responsibilities for the presentation of financial statements, guidelines for their structure and minimum requirements for the content of the financial statements. It does not however prescribe any fixed format for presentation of Financial Statements. It applies to all general purpose financial statements based on Ind AS.

To meet that objective, financial statements provide information about an entity's Assets; Liabilities; Equity; Income and expenses, including gains and losses; Other changes in equity; and Cash flows. This information, along with other information in the notes, assists users of financial statements in predicting the entity's future cash flows and, in particular, their timing and certainty.

Components of financial statements

Indian Accounting Standard 1 defines a complete set of Financial Statements to include the following:

  a Balance Sheet as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements
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Objective and Scope

The objective of Indian  Accounting Standard i.e Ind AS 113 is to define fair value and set out a single framework for measurement of fair value. It also prescribes disclosure requirements about fair value measurement. 

It applies when another Ind AS requires or permits fair value measurements or disclosures about fair value measurements (and measurements, such as fair value less costs to sell, based on fair value or disclosures about those measurements)

The essential features of fair value as set out in Ind AS 113 are as follows:

The Indian Accounting Standard 113 explains how to measure fair value for financial reporting.

Fair value is a market-based measurement, not an entity-specific measurement.

Fair value should be determined based on the Exit price i.e. the price to sell the asset or to transfer the liability (from the perspective of a market participant that holds the asset or owes the liability).

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Indian Accounting Standard - Ind AS 18: Revenue

Revenue is defined as the gross inflow of economic benefits (cash, receivables, other assets) arising from the ordinary operating activities of an enterprise (such as sales of goods, sales of services, interest, royalties, and dividends). Revenue excludes:

 Lease agreements (Indian Accounting Standard 17 Leases);
 Changes in the value of other current assets;
 Initial recognition and from changes in the fair value of biological assets Related to agricultural activity (Ind AS 41 Agriculture);

Initial recognition of agricultural produce (Ind AS 41); and

The extraction of mineral ores.
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Ind AS 36 Impairment Of Assets

An asset is impaired when its carrying amount exceeds its recoverable amount. Ind AS 36 is intended to ensure that assets are carried at no more than their recoverable amount, and to define how recoverable amount is calculated.
Ind AS 36 applies to all assets except inventories; assets arising from construction contracts; deferred tax assets; assets arising from employee benefits; financial assets; certain agricultural assets carried at fair value less cost to sell; insurance contract assets; assets held for sale.

Identifying an Asset that may be impaired  Continue Reading Ind AS 36

Ind AS 33: Earnings Per Share

Objective & Scope: The principal objective of this standard is to prescribe principles for determining and presenting earnings per share (EPS) amounts in order to improve performance comparisons between different entities in the same period and between different accounting periods for the same entity. However, the prime focus of this Standard is on the denominator of the earnings per share calculation.

This standard is not mandatory on all entities. However, in Indian context, this standard must be applied to all companies that have issued ordinary shares and to which Ind AS notified under Companies Act applies. Any other entity that voluntarily presents EPS must comply with this standard. In case where both consolidated and separate statements are prepared, disclosures pertaining to this standard must apply to both statements Continue Reading Ind AS 33

Ind AS 109 : Financial Instruments

Ind AS 109 is based on IFRS 9 which will replace IAS 39 and has not yet been made effective though earlier adoption has been allowed by IASB. This is one standard that would be adopted in early in India than rest of the world.The standards’ scope is broad. The standards cover all types of financial instruments, including receivables, payables, investments in bonds and shares, borrowings and derivatives.
They also apply to certain contracts to buy or sell non-financial assets (such as commodities) that can be net-settled in cash or another financial instrument.Ind AS 109 introduces single classification and measurement model for financial assets dependent on both:
  • The entity’s business model objective for managing financial assets;
  • The contractual cash flow characteristics of financial assets. Important Definitions Continue Reading Ind AS 109