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Thread: 20 - Indian Accounting Standard (Ind AS) 32 - Earlier Accounting standard - (31) - Financial Instruments: Presentation

  1. #31
    IND-AS
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    Thumbs up Treasury shares of Indian Accounting Standard (Ind AS) 32 - Earlier Accounting standard - (31) - Financial Instruments: Presentation

    Treasury shares of Indian Accounting Standard (Ind AS) 32 - Earlier Accounting standard - (31)

    Financial Instruments: Presentation

    Appendix - A


    Treasury shares (paragraphs 33 and 34)

    AG36. An entity’s own equity instruments are not recognised as a financial asset regardless of the reason for which they are reacquired. Paragraph 33 requires an entity that reacquires its own equity instruments to deduct those equity instruments from equity. However, when an entity holds its own equity on behalf of others, eg a financial institution holding its own equity on behalf of a client, there is an agency relationship and as a result those holdings are not included in the entity’s balance sheet.



  2. #32
    IND-AS
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    Thumbs up Interest,dividends,losses and gains of Indian Accounting Standard (Ind AS) 32- Earlier Accounting standard -(31) - Financial Instruments: Presentation

    Interest, dividends, losses and gains of Indian Accounting Standard (Ind AS) 32 - Earlier Accounting standard - (31)

    Financial Instruments: Presentation

    Appendix - A


    Interest, dividends, losses and gains ( paragraphs 35–41)

    AG37. The following example illustrates the application of paragraph 35 to a compound financial instrument. Assume that a non-cumulative preference share is mandatorily redeemable for cash in five years, but that dividends are payable at the discretion of the entity before the redemption date. Such an instrument is a compound financial instrument, with the liability component being the present value of the redemption amount. The unwinding of the discount on this component is recognised in profit or loss and classified as interest expense. Any dividends paid relate to the equity component and, accordingly, are recognised as a distribution of profit or loss. A similar treatment would apply if the redemption was not mandatory but at the option of the holder, or if the share was mandatorily convertible into a variable number of ordinary shares calculated to equal a fixed amount or an amount based on changes in an underlying variable (eg commodity). However, if any unpaid dividends are added to the redemption amount, the entire instrument is a liability. In such a case, any dividends are classified as interest expense.



  3. #33
    IND-AS
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    Thumbs up Offsetting a financial asset and a financial liability of Indian Accounting Standard (Ind AS) 32 - Earlier Accounting standard - (31)

    Offsetting a financial asset and a financial liability of Indian Accounting Standard (Ind AS) 32 - Earlier Accounting standard - (31)

    Financial Instruments: Presentation

    Appendix - A


    Offsetting a financial asset and a financial liability
    (paragraphs 42–50)


    AG38. To offset a financial asset and a financial liability, an entity must have a currently enforceable legal right to set off the recognised amounts. An entity may have a conditional right to set off recognised amounts, such as in a master netting agreement or in some forms of non -recourse debt, but such rights are enforceable only on the occurrence of some future event, usually a default of the counterparty. Thus, such an arrangement does not meet the conditions for offset.

    AG39. The Standard does not provide special treatment for so -called ‘synthetic instruments’, which are groups of separate financial instruments acquired and held to emulate the characteristics of another instrument. For example, a floating rate long-term debt combined with an interest rate swap that involves receiving floating payments and making fixed payments synthesises a fixed rate long-term debt. Each of the individual financial instruments that together constitute a ‘synthetic instrument’ represents a contractual right or obligation with its own terms and conditions and each may be transferred or settled separately. Each financial instrument is exposed to risks that may differ from the risks to which other financial instruments are exposed . Accordingly, when one financial instrument in a ‘synthetic instrument’ is an asset and another is a liability, they are not offset and presented in an entity’s balance sheet on a net basis unless they meet the criteria for offsetting in paragraph 42.


  4. #34
    IND-AS
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    Thumbs up Appendix - C of Indian Accounting Standard (Ind AS) 32 - Earlier Accounting standard - (31) - Financial Instruments: Presentation

    Appendix - C of Indian Accounting Standard (Ind AS) 32 - Earlier Accounting standard - (31)

    Financial Instruments: Presentation


    Appendix - C


    References to matters contained in other Indian Accounting Standards

    This Appendix is an integral part of Indian Accounting Standard (Ind AS) 32.

    This appendix lists the appendices which are part of other Indian Accounting Standards and makes reference to Ind AS 32, Financial Instruments: Presentation

    1. Appendix A, Service Concession Arrangements contained in Ind AS 11 Construction Contracts
    2. Appendix A, Consolidation - Special Purpose Entities contained in Ind AS 27, Consolidated and Separate Financial Statements.
    3. Appendix E, Extinguishing Financial Liabilities with Equity Instruments contained in Ind AS 39 Financial Instruments: Recognition and Measurement.


  5. #35
    IND-AS
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    Thumbs up Illustrative examples of Indian Accounting Standard (Ind AS) 32 - Earlier Accounting standard - (31) - Financial Instruments: Presentation

    Illustrative examples of Indian Accounting Standard (Ind AS) 32 - Earlier Accounting standard - (31)

    Financial Instruments: Presentation


    Appendix - C


    Ind AS 32 Financial Instruments: Presentation
    Illustrative examples]


    These examples accompany, but are not part of, Ind AS 32.

    For Illustrative examples you Can download this in pdf format


    Attached Files Attached Files

  6. #36
    IND-AS
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    Thumbs up Appendix - 1 of Indian Accounting Standard (Ind AS) 32 - Earlier Accounting standard - (31) - Financial Instruments: Presentation

    Appendix - 1 of Indian Accounting Standard (Ind AS) 32 - Earlier Accounting standard - (31)

    Financial Instruments: Presentation


    Appendix - 1


    Comparison with IAS 32, Financial Instruments: Presentation

    Note:
    This appendix is not a part of the Indian Accounting Standard. The purpose of this Appendix is only to bring out the differences, between Indian Accounting Standard (Ind AS) 32 and the corresponding International Accounting Standard (IAS) 3 2, Financial Instruments; Presentation issued by the International Accounting Standards Board.

    1. As an exception to the definition of ‘financial liability’ in paragraph 11 (b) (ii), Ind AS 32 considers the equity conversion option embedded in a convertible bond denominated in foreign currency to acquire a fixed number of entity’s own equity instruments is considered an equity instrument if the exercise price is fixed in any currency. This exception is not provided in IAS 32.

    2. The transitional provisions given in IAS 32 have not been given in Ind AS 32, since all transitional provisions related to Ind ASs, wherever considered appropriate have been included in Ind AS 101, First -time Adoption of Indian Accounting Standards corresponding to IFRS 1, First -time Adoption of International Financial Reporting Standards.

    3. Different terminology is used, as used in existing laws e.g .,the term ‘balance sheet’ is used instead of ‘Statement of financial position’ and ‘Statement of profit and loss. is used instead of ‘Statement of comprehensive income’.

    4. Requirements regarding presentation of d ividends classified as an expense in the separate income statement, where separate income stateme nt is presented, have been deleted. This change is consequential to the removal of option regarding two statement approach in Ind AS 1 . Ind AS 1 requires that the components of profit or loss and components of other comprehensive income shall be presented as a part of the statement of profit and loss.

    5. Example 7: IE 32 and Example 8: IE 33 are in the context of IFRIC 2, Members’ Shares in Co-operative Entities and Similar Instruments issued by IASB As only an individual can hold shares in cooperative entities, this IFRIC would not be relevant for the companies. Hence, these examples are deleted in Ind AS 32. In order to maintain consistency with paragraph numbers of IAS 32, the paragraph numbers are retained in Ind AS 32.

    5. The following paragraph numbers appear as ‘Deleted ‘in IAS 32. In order to maintain consistency with paragraph numbers of IAS 32, the paragraph numbers are retained in Ind AS 32 :

    (i) paragraph -1
    (ii) paragraph -4(c)
    (iii) paragraphs -5-7
    (iv) AG24 of Appendix - A


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