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

  1. #21
    IND-AS
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    Thumbs up Information to be presented in the statement of profit and loss of Indian Accounting Standard (Ind AS) 1 - Presentation of Financial Statements

    Information to be presented in the statement of profit and loss of Indian Accounting Standard (Ind AS) 1


    Presentation of Financial Statements

    Statement of Profit and Loss


    81. An entity shall present all items of income and expense including components of other comprehensive income recognised in a period in a single statement of profit and loss.


    Information to be presented in the statement of profit and loss

    82. As a minimum, the statement of profit and loss shall include line items that present the following amounts for the period:

    (a) revenue;
    (b) finance costs;
    (c) share of the profit or loss of associates and joint ventures accounted for using the equity method;
    (d) tax expense;
    (e) a single amount comprising the total of:
    (i) the post-tax profit or loss of discontinued operations a nd
    (ii) the post-tax gain or loss recognised on the measurement to fair value less costs to sell or on the disposal of the assets or disposal group(s) constituting the discontinued operation;
    (f) profit or loss;
    (g) each component of other comprehens ive income classified by nature (excluding amounts in (h));
    (h) share of the other comprehensive income of associates and joint ventures accounted for using the equity method; and
    (i) total comprehensive income.

    83. An entity shall disclose the following items in the statement of profit and loss as allocations for the period:

    (a) profit or loss for the period attributable to:
    (i) non-controlling interests, and
    (ii) owners of the parent.

    (b) total comprehensive income for the period attrib utable to:
    (i) non-controlling interests, and
    (ii) owners of the parent.

    84. [Refer to Appendix 1]

    85. An entity shall present additional line items, headings and subtotals in the statement of profit and loss, when such presentation is relevant to an understanding of the entity’s financial performance.

    86. Because the effects of an entity’s various activities, transactions and other events differ in frequency, potential for gain or loss and predictability, disclosing the components of financial performa nce assists users in understanding the financial performance achieved and in making projections of future financial performance. An entity includes additional line items in the statement of profit and loss, and it amends the descriptions used and the order ing of items when this is necessary to explain the elements of financial performance. An entity considers factors including materiality and the nature and function of the items of income and expense. For example, a financial institution may amend the descriptions to provide information that is relevant to the operations of a financial institution. An entity does not offset income and expense items unless the criteria in paragraph 32 are met.

    87. An entity shall not present any items of income or expense as extraordinary items, in the statement of profit and loss or in the notes.


  2. #22
    IND-AS
    Guest

    Thumbs up Profit or loss for the period of Indian Accounting Standard (Ind AS) 1 - Presentation of Financial Statements

    Profit or loss for the period of Indian Accounting Standard (Ind AS) 1


    Presentation of Financial Statements


    Statement of Profit and Loss



    Profit or loss for the period


    88. An entity shall recognise all items of income and expense in a period in profit or loss unless an Ind AS requires or permits otherwise.

    89. Some Ind ASs specify circumstances when an entity recognises particular items outside profit or loss in the current period. Ind AS 8 specifies two such circumstances: the correction of errors and the effect of changes in accounting policies. Other Ind ASs require or permit components of other comprehensive income that meet the Framework’s definition of income or expense to be excluded from profit or loss (see paragraph 7).



  3. #23
    IND-AS
    Guest

    Thumbs up Other comprehensive income for the period of Indian Accounting Standard (Ind AS) 1- Presentation of Financial Statements

    Other comprehensive income for the period of Indian Accounting Standard (Ind AS) 1


    Presentation of Financial Statements


    Statement of Profit and Loss



    Other comprehensive income for the period


    90. An entity shall disclose the amount of i ncome tax relating to each component of other comprehensive income, including reclassification adjustments, either in the statement of profit and loss or in the notes.

    91. An entity may present components of other comprehensive income either:

    (a) net of related tax effects, or

    (b) before related tax effects with one amount shown for the aggregate amount of income tax relating to those components.

    92. An entity shall disclose reclassification adjustments relating to components of other comprehensive income.

    93. Other Ind ASs specify whether and when amounts previously recognised in other comprehensive income are reclassified to profit or loss. Such reclassifications are referred to in this Standard as reclassification adjustments. A reclassification adjustment is included with the related component of other comprehensive income in the period that the adjustment is reclassified to profit or loss. For example, gains realised on the disposal of available -for-sale financial assets are included in profit or loss of the current period. These amounts may have been recognised in other comprehensive income as unrealised gains in the current or previous periods. Those unrealised gains must be deducted from other comprehensive income in the period in which the realised gains are reclassified to profit or loss to avoid including them in total comprehensive income twice.

    94. An entity may present reclassification adjustments in the statement of profit and loss or in the notes. An entity presenting reclassification adjustm ents in the notes presents the components of other comprehensive income after any related reclassification adjustments.

    95. Reclassification adjustments arise, for example, on disposal of a foreign operation (see Ind AS 21), on derecognition of available-for-sale financial assets (see Ind AS 39) and when a hedged forecast transaction affects profit or loss (see paragraph 100 of Ind AS 39 in relation to cash flow hedges).

    96. Reclassification adjustments do not arise on changes in revaluation surplus recognised in accordance with Ind AS 16 or Ind AS 38 or on actuarial gains and losses on defined benefit plans recognised in accordance with paragraph s 92 and 129A of Ind AS 19. These components are recognised in other comprehensive income and are not reclassified to profit or loss in subsequent periods. Changes in revaluation surplus may be transferred to retained earnings in subsequent periods as the asset is used or when it is derecognised (see Ind AS 16 and Ind AS 38). Actuarial gains and losses are reported in retained earnings in the period that they are recognised as other comprehensive income (see Ind AS 19).



  4. #24
    IND-AS
    Guest

    Thumbs up Information to be presented in the statement of profit and loss or in the notes of Indian Accounting Standard (Ind AS) 1

    Information to be presented in the statement of profit and loss or in the notes of Indian Accounting Standard (Ind AS) 1


    Presentation of Financial Statements


    Statement of Profit and Loss



    Information to be presented in the statement of profit and loss or in the notes


    97. When items of income or expense are material, an entity shall disclose their nature and amount separately.

    98. Circumstances that would give rise to the separate disclosure of items of income and expense include:

    (a) write-downs of inventories to net realisable value or of property, plant and equipment to recoverable amount, as well as reversals of such write - downs;

    (b) restructurings of the activities of an entity and reversals of any provisions for the costs of restructuring;
    (c) disposals of items of property, plant and equipment;
    (d) disposals of investments;
    (e) discontinued operations;
    (f) litigation settlements; and
    (g) other reversals of provisions.

    99. An entity shall present an analysis of expenses recognised in profit or loss using a classification based on the nature of expense method.

    100. Entities are encouraged to present the analysis in paragraph 99 in the statement of profit and loss.

    101. Expenses are subclassified to highlight components of financial performance that may differ in terms of frequency, potential for gain or loss and predictability. This analysis is provided in the form as described in paragraph 102.

    102. In the analysis based on the ‘nature of expense’ method, an entity aggregates expenses within profit or loss according to their nature (for example, depreciation, purchases of materials, transpor t costs, employee benefits and advertising costs), and does not reallocate them among functions within the entity. This method is simple to apply because no allocations of expenses to functional classifications are necessary. An example of a classification using the nature of expense method is as follows:


    Revenue - X
    Other income - X
    Changes in inventories of finished goods and work
    in progress - X
    Raw materials and consumables used - X
    Employee benefits expense - X
    Depreciation and amortisation expense - X
    Other expenses - X
    Total expenses - (X)
    Profit before tax -X

    103. [Refer to Appendix 1]

    104. [Refer to Appendix 1].

    105. [Refer to Appendix 1].


  5. #25
    IND-AS
    Guest

    Thumbs up Statement of changes in equity of Indian Accounting Standard (Ind AS) 1 - Presentation of Financial Statements

    Statement of changes in equity of Indian Accounting Standard (Ind AS) 1


    Presentation of Financial Statements


    Statement of changes in equity


    106. An entity shall present a statement of changes in equity as a part of balance sheet as required by paragraph 10. The statement of change s in equity includes the following information :

    (a) total comprehensive income for the period, showing separately the total amounts attributable to owners of the parent and to noncontrolling interests;

    (b) for each component of equity, the effects of retrospective application or retrospective restatement recognised in accordance with Ind AS 8;

    (c) [deleted]

    (d) for each component of equity, a reconciliation between the carrying amount at the beginning and the end of the period, separately disclosing each changes resulting from:

    (i) profit or loss;
    (ii) each item of other comprehensive income; and
    (iii) transactions with owners in their capacity as owners, showing separately contributions by and distributions to owners and changes in ownership interests in subsidiaries that do not result in a loss of control.

    Information to be presented in the statement of changes in equity which is a part of the balance sheet or in the notes


    106A. For each component of equity an entity shall present, either in the statement of changes in equity or in the notes, an analysis of other comprehensive income by item (see paragraph 106 (d) (ii)).

    107 An entity shall present, either in the statement of changes in equity or in the notes, the amount of dividends recognise d as distributions to owners during the period, and the related amount of dividends per share.


    108. In paragraph 106, the components of equity include, for example, each class of contributed equity, the accumulated balance of each class of other comprehensive income and retained earnings.

    109. Changes in an entity’s equity between the beginning and the end of the reporting period reflect the increase or decrease in its net assets during the period. Except for changes resulting from transactions with owners in their capacity as owners (such as equity contributions, reacquisitions of the entity’s own equity instruments and dividends) and transaction costs directly related to such transactions, the overall change in equity during a period represents the total amount of income and expense, including gains and losses, generated by the entity’s activities during that period.

    110. Ind AS 8 requires retrospective adjustments to effect changes in accounting policies, to the extent practicable, except when the transit ion provisions in another Ind AS require otherwise. Ind AS 8 also requires restatements to correct errors to be made retrospectively, to the extent practicable. Retrospective adjustments and retrospective restatements are not changes in equity but they are adjustments to the opening balance of retained earnings, except when an Ind AS requires retrospective adjustment of another component of equity. Paragraph 106(b) requires disclosure in the statement of changes in equity of the total adjustment to each com ponent of equity resulting from changes in accounting policies and, separately, from corrections of errors. These adjustments are disclosed for each prior period and the beginning of the period.



  6. #26
    IND-AS
    Guest

    Thumbs up Statement of cash flows of Indian Accounting Standard (Ind AS) 1 - Presentation of Financial Statements

    Statement of cash flows of Indian Accounting Standard (Ind AS) 1


    Presentation of Financial Statements

    Statement of cash flows


    111. Cash flow information provides users of financial statements with a basis to assess the ability of the entity to generate cash and cash equivalents and the needs of the entity to utilise those cash flows. Ind AS 7 sets out requirements for the presentation and disclosure of cash flow information.



  7. #27
    IND-AS
    Guest

    Thumbs up Structure of Indian Accounting Standard (Ind AS) 1 - Presentation of Financial Statements

    Structure of Indian Accounting Standard (Ind AS) 1


    Presentation of Financial Statements

    Notes



    Structure

    112 The notes shall:

    (a) present information about the basis of preparation of the financial statements and the specific accounting policies used in accordance with paragraphs 117–124;

    (b) disclose the information required by Ind ASs that is not presented elsewhere in the financial statements; and

    (c) provide information that is not presented elsewhere in the financial statements, but is relevant to an understanding of any of them.

    113. An entity shall present notes in a sys tematic manner. An entity shall cross-reference each item in the balance sheet, in the statement of changes in equity which is a part of the balance sheet and in the statement of profit and loss, and statement of cash flows to any related information in the notes.


    114. An entity normally presents notes in the following order, to assist users to understand the financial statements and to compare them with financial statements of other entities:

    (a) statement of compliance with Ind ASs (see paragraph 16);

    (b) summary of significant accounting policies applied (see paragraph 117);

    (c) supporting information for items presented in the balance sheet, in the statement of changes in equity which is a part of the balance sheet, in the statement of profit and loss, and statement cash flows, in the order in which each statement and each line item is presented; and

    (d) other disclosures, including:

    (i) contingent liabilities (see Ind AS 37) and unrecognised contractual commitments, and
    (ii) non-financial disclosures, eg the entity’s financial risk management objectives and policies (see Ind AS 107).

    115. In some circumstances, it may be necessary or desirable to vary the order of specific items within the notes. For example, an entity may combine information on changes in fair value recognised in profit or loss with information on maturities of financial instruments, although the former disclosures relate to the statement of profit and loss and the latter relate to the balance sheet. Nevertheless, an entity retains a systematic structure for the notes as far as practicable.

    116. An entity may present notes providing information about the basis of preparation of the financial statements and specific accounting policies as a separate section of the financial statements.


  8. #28
    IND-AS
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    Thumbs up Disclosure of accounting policies of Indian Accounting Standard (Ind AS) 1 - Presentation of Financial Statements

    Disclosure of accounting policies of Indian Accounting Standard (Ind AS) 1


    Presentation of Financial Statements

    Notes


    Disclosure of accounting policies

    117. An entity shall disclose in the summary of significant accounting policies:

    (a) the measurement basis (or bases) used in preparing the financial statements, and
    (b) the other accounting policies used that are relevant to an understanding of the financial statements.

    118. It is important for an entity to inform users of the measurement basis or bases used in the financial statements (for example, historical cost, current cost, net realisable value, fair value or recoverable amount) because the basis on which an entity prepares the financial statements significantly affects users’ analysis. When an entity uses more than one measurement basis in the financial statements, for example when particular classes of assets are revalued, it is sufficient to provide an indication of the categories of assets and liabilities to which each measurement basis is applied.

    119. In deciding whether a particular accounting policy should be disclosed, management considers whether disclosure would assist users in understanding how transactions, other events and conditions are reflected in reported financial performance and financial position. Disclosure of particular accounting policies is especially useful to users when those policies are selected from alternatives allowed in Ind ASs. An example is disclosure of whether a venturer recognises its interest in a jointly controlled entity using proportionate consolidation or the equity method (see Ind AS 31 Interests in Joint Ventures). Some Ind ASs specifically require disclosure of particular accounting policies, including choices made by management between different policies they allow. For example, Ind AS 16 requires disclosure of the measurement bases used for classes of proper ty, plant and equipment.

    120. Each entity considers the nature of its operations and the policies that the users of its financial statements would expect to be disclosed for that type of entity. For example, users would expect an entity subject to income t axes to disclose its accounting policies for income taxes, including those applicable to deferred tax liabilities and assets. When an entity has significant foreign operations or transactions in foreign currencies, users would expect disclosure of accounting policies for the recognition of foreign exchange gains and losses.

    121. An accounting policy may be significant because of the nature of the entity’s operations even if amounts for current and prior periods are not material. It is also appropriate to disclose each significant accounting policy that is not specifically required by Ind ASs but the entity selects and applies in accordance with Ind AS 8.

    122. An entity shall disclose, in the summary of significant accounting policies or other notes, the judgements, apart from those involving estimations (see paragraph 125), that management has made in the process of applying the entity’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements.

    123. In the process of applying the entity’s accounting policies, management makes various judgements, apart from those involving estimations, that can significantly affect the amounts it recognises in the financial statements. For example, management makes judgements in determining:

    (a) whether financial assets are held-to-maturity investments;

    (b) when substantially all the significant risks and rewards of ownership of financial assets and lease assets are transferred to other entities;

    (c) whether, in substance, particular sales of goods are financing arrangements and therefore do not give rise to revenue; and

    (d) whether the substance of the relationship between the entity and a special purpose entity indicates that the entity controls the special purpose entity.

    124. Some of the disclosures made in accordance with paragraph 122 are required by other Ind ASs. For example, Ind AS 27 requires an entity to disclose the reasons why the entity’s ownership interest does not constitute control, in respect of an investee that is not a subsidiary even though more than half of its voting or potential voting power is owned directly or indirectly through subsidiaries. Ind AS 40 Investment Property requires disclosure of the criteria developed by the entity to distinguis h investment property from owner - occupied property and from property held for sale in the ordinary course of business, when classification of the property is difficult.


  9. #29
    IND-AS
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    Thumbs up Sources of estimation uncertainty of Indian Accounting Standard (Ind AS) 1 - Presentation of Financial Statements

    Sources of estimation uncertainty of Indian Accounting Standard (Ind AS) 1


    Presentation of Financial Statements

    Notes



    Sources of estimation uncertainty

    125. An entity shall disclose information about the assumptions it makes about the future, and other major sources of estimation uncertainty at the end of the reporting period, that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year. In respect of those assets and liabilities, the notes shall include details of:

    (a) their nature, and
    (b) their carrying amount as at the end of the reporting period.

    126. Determining the carrying amounts of some assets and liabil ities requires estimation of the effects of uncertain future events on those assets and liabilities at the end of the reporting period. For example, in the absence of recently observed market prices, future -oriented estimates are necessary to measure the recoverable amount of classes of property, plant and equipment, the effect of technological obsolescence on inventories, provisions subject to the future outcome of litigation in progress, and long - term employee benefit liabilities such as pension obligatio ns. These
    estimates involve assumptions about such items as the risk adjustment to cash flows or discount rates, future changes in salaries and future changes in prices affecting other costs.

    127. The assumptions and other sources of estimation uncertainty dis closed in accordance with paragraph 125 relate to the estimates that require management’s most difficult, subjective or complex judgements. As the number of variables and assumptions affecting the possible future resolution of the uncertainties increases, those judgements become more subjective and complex, and the potential for a consequential material adjustment to the carrying amounts of assets and liabilities normally increases accordingly.

    128. The disclosures in paragraph 125 are not required for asse ts and liabilities with a significant risk that their carrying amounts might change materially within the next financial year if, at the end of the reporting period, they are measured at fair value based on recently observed market prices. Such fair values might change materially within the next financial year but these changes would not arise from assumptions or other sources of estimation uncertainty at the end of the reporting period.

    129. An entity presents the disclosures in paragraph 125 in a manner that helps users of financial statements to understand the judgements that management makes about the future and about other sources of estimation uncertainty.
    The nature and extent of the information provided vary according to the nature of the assumption and other circumstances. Examples of the types of disclosures an entity makes are:

    (a) the nature of the assumption or other estimation uncertainty;

    (b) the sensitivity of carrying amounts to the methods, assumptions and estimates underlying their calculation, including the reasons for the sensitivity;

    (c) the expected resolution of an uncertainty and the range of reasonably possible outcomes within the next financial year in respect of the carrying amounts of the assets and liabilities affec ted; and
    (d) an explanation of changes made to past assumptions concerning those assets and liabilities, if the uncertainty remains unresolved.

    130. This Standard does not require an entity to disclose budget information or forecasts in making the disclosures in paragraph 125.

    131. Sometimes it is impracticable to disclose the extent of the possible effects of an assumption or another source of estimation uncertainty at the end of the reporting period. In such cases, the entity discloses that it is reasonably possible, on the basis of existing knowledge, that outcomes within the next financial year that are different from the assumption could require a material adjustment to the carrying amount of the asset or liability affected. In all cases, the entity discloses the nature and carrying amount of the specific asset or liability (or class of assets or liabilities) affected by the assumption.

    132. The disclosures in paragraph 122 of particular judgements that management made in the process of applying the en tity’s accounting policies do not relate to the disclosures of sources of estimation uncertainty in paragraph 125.

    133. Other Ind ASs require the disclosure of some of the assumptions that would otherwise be required in accordance with paragraph 125. For e xample, Ind AS 37 requires disclosure, in specified circumstances, of major assumptions concerning future events affecting classes of provisions. Ind AS 107requires disclosure of significant assumptions the entity uses in estimating the fair values of financial assets and financial liabilities that are carried at fair value.
    Ind AS 16 requires disclosure of significant assumptions that the entity uses in estimating the fair values of revalued items of property, plant and equipment.


  10. #30
    IND-AS
    Guest

    Thumbs up Capital of Indian Accounting Standard (Ind AS) 1 - Presentation of Financial Statements

    Capital of Indian Accounting Standard (Ind AS) 1



    Presentation of Financial Statements

    Notes

    Capital


    134. An entity shall disclose information that enables users of its financial statements to evaluate the entity’s objectives, policies and processes for managing capital.

    135. To comply with paragraph 134, the entity discloses the following:

    (a) qualitative information about its objectives, policies and processes for managing capital, including:
    (i) a description of what it manages as capital;
    (ii) when an entity is subject to externally imposed capital requirements, the nature of those requiremen ts and how those requirements are incorporated into the management of capital;
    and
    (iii) how it is meeting its objectives for managing capital.

    (b) summary quantitative data about what it manages as capital. Some entities regard some financial liabilities (eg some forms of subordinated debt) as part of capital. Other entities regard capital as
    excluding some components of equity (eg components arising from cash flow hedges).

    (c) any changes in (a) and (b) from the previous period.

    (d) whether during the period it complied with any externally imposed capital requirements to which it is subject.

    (e) when the entity has not complied with such externally imposed capital requirements, the consequences of such non -compliance.

    The entity bases these disclosures on the information provided internally to key management personnel.

    136. An entity may manage capital in a number of ways and be subject to a number of different capital requirements. For example, a conglomerate may include entities that undertake insurance activities and banking activities and those entities may operate in several jurisdictions. When an aggregate disclosure of capital requirements and how capital is managed would not provide useful information or distorts a financial statement user’s understanding of an entity’s capital resources, the entity shall disclose separate information for each capital requirement to which the entity is subject.


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