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Thread: 01 Indian Accounting Standard (Ind AS) 1 - Presentation of Financial Statements

  1. #11
    IND-AS
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    Thumbs up Frequency of reporting of Indian Accounting Standard (Ind AS) 1 - Presentation of Financial Statements

    Frequency of reporting of Indian Accounting Standard (Ind AS) 1


    Presentation of Financial Statements

    General features


    Frequency of reporting


    36. An entity shall present a complete set of financial statements (including comparative information) at least annually. When an en tity changes the end of its reporting period and presents financial statements for a period longer or shorter than one year, an entity shall disclose, in addition to the period covered by the financial statements:

    (a) the reason for using a longer or shor ter period, and

    (b) the fact that amounts presented in the financial statements are not entirely comparable.

    37. [Refer to Appendix 1]


  2. #12
    IND-AS
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    Thumbs up Comparative information of Indian Accounting Standard (Ind AS) 1- Presentation of Financial Statements

    Comparative information of Indian Accounting Standard (Ind AS) 1


    Presentation of Financial Statements

    General features


    Comparative information

    38. Except when Ind ASs permit or require otherwise, an entity shall disclose comparative information in respect of the previous period for all amounts reported in the current period’s financial statements. An entity shall include comparative information for narrative and descriptive information when it is relevant to an understanding of the current period’s financial statements.

    39. An entity disclosing comparative information shall present, as a minimum, two balance sheets, two of each of the other statements, and related notes. When an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements or when it reclassifies items in its financial statements, it shall present, as a minimum, three balance sheets, two
    of each of the other statements, and related notes. An entity prese nts balance sheets as at:

    (a) the end of the current period,
    (b) the end of the previous period (which is the same as the beginning of the current period), and
    (c) the beginning of the earliest comparative period.

    40. In some cases, narrative information provided in the financial statements for the previous period(s) continues to be relevant in the current period. For example, an entity discloses in the current period details of a legal dispute whose outcome was uncertain at the end of the immediately preceding reporting period and that is yet to be resolved. Users benefit from information that the uncertainty existed at the end of the immediately preceding reporting period, and about the steps that have been taken during the period to resolve the uncertainty.

    41. When the entity changes the presentation or classification of items in its financial statements, the entity shall reclassify comparative amounts unless reclassification is impracticable. When the entity reclassifies comparative amounts, the entity shall disclose:

    (a) the nature of the reclassification;
    (b) the amount of each item or class of items that is reclassified; and
    (c) the reason for the reclassification.

    42. When it is impracticable to reclassify comparative amounts, an entity sh all disclose:

    (a) the reason for not reclassifying the amounts, and
    (b) the nature of the adjustments that would have been made if the amounts had been reclassified.

    43. Enhancing the inter-period comparability of information assists users in making economic decisions, especially by allowing the assessment of trends in financial information for predictive purposes. In some circumstances, it is impracticable to reclassify comparative information for a particular prior period to achieve comparability with the current period. For example, an entity may not have collected data in the prior period(s) in a way that allows reclassification, and it may be impracticable to recreate the information.

    44. Ind AS 8 sets out the adjustments to comparative information required when an entity changes an accounting policy or corrects an error.


  3. #13
    IND-AS
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    Thumbs up Consistency of presentation of Indian Accounting Standard (Ind AS) 1 - Presentation of Financial Statements

    Consistency of presentation of Indian Accounting Standard (Ind AS) 1


    Presentation of Financial Statements

    General features


    Consistency of presentation


    45. An entity shall retain the presentation and classification of items in the financial statements from one period to the next unless:

    (a) it is apparent, following a significant change in the nature of the entity’s operations or a review of its financial statements, that another presentation or classification would be more appropriate having
    regard to the criteria for the selection and application of accounting policies in Ind AS 8; or

    (b) an Ind AS requires a change in presentation.

    46. For example, a significant acquisition or disposal, or a review of the presentation of the financial statements, might suggest that the financial statements need to be presented differently. An entity changes the presentation of its financial statements only if the changed presentation provides information that is reliable and more relevant to users of the financial statements and the revised structure is likely to continue, so that comparability is not impaired. When making such changes in presentation, an entity reclassifies its comparative information in accordance with paragraphs 41 and 42.


  4. #14
    IND-AS
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    Thumbs up Introduction 0f Structure and content of Indian Accounting Standard (Ind AS) 1 - Presentation of Financial Statements

    Introduction 0f Structure and content of Indian Accounting Standard (Ind AS) 1

    Presentation of Financial Statements



    Structure and content


    Introduction


    47. This Standard requires particular disclosures in the balance sheet (including statement of changes in equity which is a part of the balance sheet) or in the statement of profit and loss and requires disclosure of other line items either in those statements or in the notes. Ind AS 7 Statement of Cash Flows sets out requirements for the presentation of cash flow information.

    48. This Standard sometimes uses the term ‘disclosure’ in a broad sense, encompassing items presented in the financial statements. Disclosures are also required by other Ind ASs. Unless specified to the contrary elsewhere in this Standard or in another Ind AS, such disclosures may be made in the financial statements.


  5. #15
    IND-AS
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    Thumbs up Identification of the financial statements of Indian Accounting Standard (Ind AS) 1 - Presentation of Financial Statements

    Identification of the financial statements of Indian Accounting Standard (Ind AS) 1

    Presentation of Financial Statements


    Structure and content


    Identification of the financial statements

    49. An entity shall clearly identify the financial statements and distinguish them from other information in the same published document.

    50 Ind ASs apply only to financial statements, and not necessarily to other information presented in an annual report, a regulatory filing, or another document. Therefore, it is important that users can distinguish information that is prepared using Ind ASs from other information that may be useful to users but is not the subject of those requirements.

    51 An entity shall clearly identify each financial statement and the note s. In addition, an entity shall display the following information prominently, and repeat it when necessary for the information presented to be understandable:

    (a) the name of the reporting entity or other means of identification, and any change in that information from the end of the preceding reporting period;

    (b) whether the financial statements are of an individual entity or a group of entities;
    (c) the date of the end of the reporting period or the period covered by the set of financial statements or notes;
    (d) the presentation currency, as defined in Ind AS 21; and
    (e) the level of rounding used in presenting amounts in the financial statements.

    52. An entity meets the requirements in paragraph 51 by presenting appropriate headings for pages, statements, notes , columns and the like. Judgement is required in determining the best way of presenting such information. For example, when an entity presents the financial statements electronically, separate pages are not always used; an entity then presents the above it ems to ensure that the information included in the financial statements can be understood.

    53. An entity often makes financial statements more understandable by presenting information in thousands, lakhs, millions or crores of units of the presentation currency. This is acceptable as long as the entity discloses the level of rounding and does not omit material information.


  6. #16
    IND-AS
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    Thumbs up Information to be presented in the balance sheet of Indian Accounting Standard (Ind AS) 1 - Presentation of Financial Statements

    Information to be presented in the balance sheet of Indian Accounting Standard (Ind AS) 1


    Presentation of Financial Statements

    Balance Sheet



    Information to be presented in the balance sheet


    54. As a minimum, the balance sheet shall include line items that present the following amounts:

    (a) property, plant and equipment;
    (b) investment property;
    (c) intangible assets;
    (d) financial assets (excluding amounts shown under (e), (h) and (i));
    (e) investments accounted for using the equity method;
    (f) biological assets;
    (g) inventories;
    (h) trade and other receivables;
    (i) cash and cash equivalents;
    (j) the total of assets classified as held for sale and assets included in disposal groups classified as held for sale in accordance with Ind AS 105 Non-current Assets Held for Sale and Discontinued Operations;
    (k) trade and other payables;
    (l) provisions;
    (m) financial liabilities (excluding amounts shown under (k) and (l));
    (n) liabilities and assets for current tax, as defined in Ind AS 12 Income Taxes;
    (o) deferred tax liabilities and deferred tax assets, as defined in Ind AS 12;
    (p) liabilities included in disposal groups classified as held for sale in accordance with Ind AS 105;
    (q) non-controlling interests, presented within equity; and
    (r) issued capital and reserves attributable to owners of the parent.

    55. An entity shall present additional line items, headings and subtotals in the balance sheet when such presentation is relevant to an understanding of the entity’s financial position.

    56. When an entity presents current and non-current assets, and current and non-current liabilities, as separate classifications in its balance sheet, it shall not classify deferred tax assets (liabilities) as current assets (liabilities).

    57. This Standard does not prescribe the order or format in which an entity presents items. Paragraph 54 simply lists items that are sufficiently different in nature or function to warrant separate presentation in the balance sheet. In addition:

    (a) line items are included when the siz e, nature or function of an item or aggregation of similar items is such that separate presentation is relevant to an understanding of the entity’s financial position; and

    (b) the descriptions used and the ordering of items or aggregation of similar items may be amended according to the nature of the entity and its transactions, to provide information that is relevant to an understanding of the entity’s financial position. For example, a financial institution may amend the above descriptions to provide info rmation that is relevant to the operations of a financial institution.

    58. An entity makes the judgement about whether to present additional items separately on the basis of an assessment of:

    (a) the nature and liquidity of assets;
    (b) the function of assets within the entity; and
    (c) the amounts, nature and timing of liabilities.

    59. The use of different measurement bases for different classes of assets suggests that their nature or function differs and, therefore, that an entity presents them as separate line items. For example, different classes of property, plant and equipment can be carried at cost or at revalued amounts in accordance with Ind AS 16.

    Last edited by IND-AS; 27-01-2011 at 06:12 PM.

  7. #17
    IND-AS
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    Thumbs up Current/non-current distinction of Indian Accounting Standard (Ind AS) 1 - Presentation of Financial Statements

    Current/non-current distinction of Indian Accounting Standard (Ind AS) 1


    Presentation of Financial Statements

    Balance Sheet


    Current/non-current distinction

    60. An entity shall present current and non -current assets, and current and non-current liabilities, as separate classifications in its balance sheet in accordance with paragraphs 66–76 except when a presentation based on liquidity provides information that is reliable and more relevant. When that exception applies, an entity shall present all assets and liabilities in order of liquidity.

    61. Whichever method of presentation is adopted, an entity shall disclose the amount expected to be recovered or settled after more than twelve months for each asset and liability line item that combines amounts expected to be recovered or settled:

    (a) no more than twelve months after the reporting period, and

    (b) more than twelve months after the reporting period.

    62. When an entity supplies goods or services within a clearly identifiable operating cycle, separate classification of current and non -current assets and liabilities in the balance sheet provides useful information by distinguishing the net assets that are continuously circulating as working capital from those used in the entity’s long-term operations. It also highlights assets that are expected to be realised within the current operating cycle, and liabilities that are due for settlement within the same period.

    63. For some entities, such as financial institutions, a presentation of assets and liabilities in increasing or decreasing order of liquidity provides information that is reliable and more relevant than a current/non -current presentation because the entity does not supply goods or services within a clearly identifiable operating cycle.

    64. In applying paragraph 60, an entity is permitted to present some of its assets and liabilities using a current/non-current classification and others in order of liquidity when this provides information that is reliable and more relevant . The need for a mixed basis of presentation might arise when an entity has diverse operations.

    65. Information about expected dates of realisation of assets and liabilities is useful in assessing the liquidity and solvency of an entity. Ind AS 107 Financial Instruments: Disclosures requires disclosure of the maturity dates of financial assets and financial liabilities. Financial assets include trade and other receivables, and financial liabilities include trade and other payables. Information on the expected date of recovery of non-monetary assets such as inventories and expected date of settlement for liabilities such as provisions is also useful, whether assets and liabilities are classified as current or as non - current. For example, an entity discloses t he amount of inventories that are expected to be recovered more than twelve months after the reporting period.



  8. #18
    IND-AS
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    Thumbs up Current assets of Indian Accounting Standard (Ind AS) 1 - Presentation of Financial Statements

    Current assets of Indian Accounting Standard (Ind AS) 1


    Presentation of Financial Statements

    Balance Sheet



    Current assets

    66 An entity shall classify an asset as current when:

    (a) it expects to realise the asset, or intends to sell or consume it, in its normal operating cycle;
    (b) it holds the asset primarily for the purpose of trading;
    (c) it expects to realise the asset within twelve months after the reporting period; or
    (d) the asset is cash or a cash equivalent (as defined in Ind AS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

    An entity shall classify all other assets as non -current.


    67. This Standard uses the term ‘non-current’ to include tangible, intangible and financial assets of a long-term nature. It does not prohibit the use of alternative descriptions as long as the meaning is clear.

    68. The operating cycle of an entity is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. When the entity’s normal operating cycle is not clearly identifiable, it is assumed to be twelve months. Current assets include assets (such as inventories and trade receivables) that are sold, consumed or realised as part of the normal operating cycle even when they are not expected to be realised within twelve months after the reporting period. Current assets also include assets held primarily for the purpose of trading (examples include some financial assets classified as held for trading in accordance with Ind AS 39) and the current portion of non-current financial assets.


  9. #19
    IND-AS
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    Thumbs up Current liabilities of Indian Accounting Standard (Ind AS) 1 - Presentation of Financial Statements

    Current liabilities of Indian Accounting Standard (Ind AS) 1


    Presentation of Financial Statements

    Balance Sheet


    Current liabilities


    69. An entity shall classify a liability as current when
    :

    (a) it expects to settle the liability in its normal operating cy cle;

    (b) it holds the liability primarily for the purpose of trading;

    (c) the liability is due to be settled within twelve months after the reporting period; or

    (d) it does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period (see paragraph 73). Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

    An entity shall classify all other liabilities as non-current.


    70. Some current liabilities, such as trade payables and some accruals for employee and other operating costs, are part of the working capital used in the entity’s normal operating cycle. An entity classifies such operatin g items as current liabilities even if they are due to be settled more than twelve months after the reporting period. The same normal operating cycle applies to the classification of an entity’s assets and liabilities. When the entity’s normal operating cycle is not clearly identifiable, it is assumed to be twelve months.

    71. Other current liabilities are not settled as part of the normal operating cycle, but are due for settlement within twelve months after the reporting period or held primarily for the purpose of trading. Examples are some financial liabilities classified as held for trading in accordance with Ind AS 39, bank overdrafts, and the current portion of non-current financial liabilities, dividends payable, income taxes and other non-trade payables. Financial liabilities that provide financing on a long-term basis (ie are not part of the working capital used in the entity’s normal operating cycle) and are not due for settlement within twelve months after the reporting period are non-current liabilities, subject to paragraphs 74 and 75.

    72. An entity classifies its financial liabilities as current when they are due to be settled within twelve months after the reporting period, even if:

    (a) the original term was for a period longer than twelve mont hs, and
    (b) an agreement to refinance, or to reschedule payments, on a long -term basis is completed after the reporting period and before the financial statements are approved for issue.

    73. If an entity expects, and has the discretion, to refinance or r oll over an obligation for at least twelve months after the reporting period under an existing loan facility, it classifies the obligation as non -current, even if it would otherwise be due within a shorter period. However, when refinancing or rolling over the obligation is not at the discretion of the entity (for example, there is no arrangement for refinancing), the entity does not consider the potential to refinance the obligation and classifies the obligation as current.

    74. When an entity breaches a provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand, it classifies the liability as current, even if the lender agreed, after the reporting period and before the approval of the financial statements for issue, not to demand payment as a consequence of the breach. An entity classifies the liability as current because, at the end of the reporting period, it does not have an unconditional right to defer its settlement for at least twelve months after that date.

    75. However, an entity classifies the liability as non -current if the lender agreed by the end of the reporting period to provide a period of grace ending at least twelve months after the reporting period, within which the entity can rectify the breach and during which the lender cannot demand immediate repayment.

    76. In respect of loans classified as current liabilities, if the following events occur between the end of the reporting period and the date the financ ial statements are approved for issue, those events are disclosed as non -adjusting events in accordance with Ind AS 10 Events after the Reporting Period:
    (a) refinancing on a long-term basis;
    (b) rectification of a breach of a long-term loan arrangement; and

    (c) the granting by the lender of a period of grace to rectify a breach of a long - term loan arrangement ending at least twelve months after the reporting period.


  10. #20
    IND-AS
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    Thumbs up Information to be presented either in the balance sheet or in the notes of Indian Accounting Standard (Ind AS) 1- Presentation of Financial Statement

    Information to be presented either in the balance sheet or in the
    notes of Indian Accounting Standard (Ind AS) 1



    Presentation of Financial Statements

    Balance Sheet


    Information to be presented either in the balance sheet or in the notes

    77. An entity shall disclose, either in the balance sheet or in the notes, further subclassifications of the line items presented, classified in a manner appropriate to the entity’s operations.

    78. The detail provided in subclassifications depends on the requirements of Ind ASs and on the size, nature and function of the amounts involved. An entity also uses the factors set out in paragraph 58 to decide the basis of subclassification.

    The disclosures vary for each item, for example:

    (a) items of property, plant and equipment are disaggregated into classes in accordance with Ind AS 16;

    (b) receivables are disaggregated into amounts receivable from trade customers, receivables from related parties, prepayments and other amounts;

    (c) inventories are disaggregated, in accor dance with Ind AS 2 Inventories, into classifications such as merchandise, production supplies, materials, work in progress and finished goods;

    (d) provisions are disaggregated into provisions for employee benefits and other items; and

    (e) equity capital and reserves are disaggregated into various classes, such as paid-in capital, share premium and reserves.

    79. An entity shall disclose the following, either in the balance sheet or in the statement of changes in equity which is part of the balance sheet , or in the notes:

    (a) for each class of share capital:

    (i) the number of shares authorised;
    (ii) the number of shares issued and fully paid, and issued but not fully paid;
    (iii) par value per share, or that the shares have no par value;
    (iv) a reconciliation of the number of shares outstanding at the beginning and at the end of the period;
    (v) the rights, preferences and restrictions attaching to that class including restrictions on the distribution of dividends and the repayment of capital;
    (vi) shares in the entity held by the entity or by its subsidiaries or associates; and
    (vii) shares reserved for issue under options and contracts for the sale of shares, including terms and amounts; and

    (b) a description of the nature and purpose of eac h reserve.

    80. An entity whose capital is not limited by sharese.g., a company limited by guarantee, shall disclose information equivalent to that required by paragraph 79(a), showing changes during the period in each category of equity interest, and the rights, preferences and restrictions attaching to each category of equity interest.

    80A If an entity has reclassified

    (a) a puttable financial instrument classified as an equity instrument,
    or
    (b) an instrument that imposes on the entity an o bligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation and is classified as an equity instrument between financial liabilities and equity, it shall disclose the amount reclassified into and out of each c ategory (financial liabilities or equity), and the timing and reason for that reclassification.


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