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Thread: 01 - Indian Accounting Standard (Ind-AS) 101 - First-time Adoption of Indian Accounting Standards

  1. #11
    IND-AS
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    Thumbs up Reconciliations of Indian Accounting Standard (Ind-AS) 101 - First-time Adoption of Indian Accounting Standards

    Reconciliations of Indian Accounting Standard (Ind-AS) 101

    First-time Adoption of Indian Accounting Standards


    Reconciliations

    24. To comply with paragraph 23, an entity’s first Ind -AS financial statements shall include:
    (a) reconciliation of its equity reported in accordance with Ind -ASs to its equity in accordance with previous GAAP on the date of transition to Ind-ASs.
    (b) significant differences between previous GAAP and Ind -AS in respect of its total comprehensive income (or if it did not report such a total, profit or loss).

    For example, a first time adopter for whom the first reporting period as per Ind-AS is year ending March 31, 2012; would provide significant differences explaining the impact on the total comprehensive income for the year ending on that date arising from adoption of the Ind-AS.

    (c) if the entity recognised or reversed any impairment losses for the first - time in preparing its opening Ind-AS Balance Sheet, the disclosures that Ind AS 36 Impairment of Assets would have required if the entity had recognised those impairment losses or reversals in the period beginning with the date of transition to Ind -ASs.

    (d) where however, an entity decides to provide one year comparative period in accordance with paragraph 21(b) of this Ind -AS then instead of disclosures in (b) above such an entity shall provide

    i. a reconciliation of its equity in accordance with Ind -AS as at the end of the comparative period presented to its equity reported in accordance with previous GAAP; and

    ii. a reconciliation of its total comprehensive income in accordance with Ind-AS compiled on a memorandum basis to its total comprehensive income (or if it did not report such a total, profit or loss) in accordance with previous GAAP for the comparative period. For example, a first time adopter for whom the firs t reporting period as per Ind-AS is year ending March 31, 2012 along with one year
    comparative in accordance with paragraph 21(b) of this Ind -AS. would provide a reconciliation explaining the impact on the total comprehensive income for the year ending Mar ch 31, 2011 and on the equity as at March 31, 2011 arising from adoption of the Ind -AS.

    24. A. Where an entity uses the most recent previous financial statements prepared in accordance with IFRS as permitted in paragraph 2A, it shall disclose the adjustments made for differences in Ind ASs and IFRS and explain the effect thereof on equity and/or total comprehensive income (or profit or loss where it did not report such a total).

    25. The disclosures required by paragraphs 24(a),(b) and (d) and 24A shall give sufficient detail to enable users to understand the material adjustments to the Balance Sheet and statement of profit and loss. If an entity presented a statement of cash flows under its previous GAAP, it shall also explain the material adjustments to the statement of cash flows.

    26. If an entity becomes aware of errors made under previous GAAP, the disclosures required by paragraphs 24(a),(b) and (d) and 24A shall distinguish the correction of those errors from changes in accounting policies.

    27. Ind AS 8 does not apply to changes in accounting policies an entity makes when it adopts Ind-ASs or to changes in those policies until after it presents its first Ind-AS financial statements. Therefore, Ind AS 8’s requirements about changes in accounting policies do not apply in an entity’s first Ind -AS financial statements.

    27A. If during the period covered by its first Ind -AS financial statements an entity changes its accounting policies or its use of the exemptions contained in this Ind-AS, it shall explain the changes between its first Ind-AS interim financial report and its first Ind-AS financial statements, in accordance with paragraph 23, and it shall update the disclosures required by paragraph 24(a), (b) and (d) and 24A.

    27B. If an entity adopts the first time exemption option provided in accordance with paragraph D7A, the fact and the accounting policy shall be disclosed by the entity until such time that significant block of such assets is fully depreciated or derecognised from the entity’s Balance Sheet.

    28. If an entity did not present financial statements for previous periods, its first Ind-AS financial statements shall disclose that fact.


  2. #12
    IND-AS
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    Thumbs up Designation of financial assets or financial liabilities of Indian Accounting Standard (Ind-AS)101- First-time Adoption of Indian Accounting Standards

    Designation of financial assets or financial liabilities of Indian Accounting Standard (Ind-AS) 101

    First-time Adoption of Indian Accounting Standards


    Designation of financial assets or financial liabilities

    29. An entity is permitted to designate a previously recognised financial asset or financial liability as a financial asset or financial liability at fair value through profit or loss or a financial asset as available for sale in accordance with paragraph D19. The entity shall disclose the fair value of financial assets or financial liabilities designated into each category at the date of designation and their classification and carrying amount in the previous financial statements.


  3. #13
    IND-AS
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    Thumbs up Use of fair value as deemed cost of Indian Accounting Standard (Ind-AS) 101 - First-time Adoption of Indian Accounting Standards

    Use of fair value as deemed cost of Indian Accounting Standard (Ind-AS) 101

    First-time Adoption of Indian Accounting Standards


    Use of fair value as deemed cost

    30. If an entity uses fair value in its opening Ind-AS Balance Sheet as deemed cost for an item of property, plant and equipment, an investment property or an intangible asset (see paragraphs D5 and D7), the entity’s first Ind -AS financial statements shall disclose, for each line item in the opening Ind-AS Balance Sheet:

    (a) the aggregate of those fair values; and
    (b) the aggregate adjustment to the carrying amounts reported under previous GAAP


  4. #14
    IND-AS
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    Thumbs up Use of deemed cost for investments in subsidiaries, jointly controlled entities and associates of Indian Accounting Standard (Ind-AS) 101

    Use of deemed cost for investments in subsidiaries, jointly controlled entities and associates of Indian Accounting Standard (Ind-AS) 101

    First-time Adoption of Indian Accounting Standards


    Use of deemed cost for investments in subsidiaries, jointly controlled entities and associates

    31. Similarly, if an entity uses a deemed cost in its opening Ind -AS Balance Sheet for an investment in a subsidiary, jointly controlled entity or associate in its separate financial statements (see paragraph D15), the entity’s first

    Ind-AS separate financial statements shall disclose:

    (a) the aggregate deemed cost of those investments for which deemed cost is their previous GAAP carrying amount;

    (b) the aggregate deemed cost of those investments for which deemed cost is fair value; and

    (c) the aggregate adjustment to the carrying amounts reported under previous GAAP.

    Last edited by IND-AS; 19-02-2011 at 05:56 PM.

  5. #15
    IND-AS
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    Thumbs up Use of deemed cost for oil and gas assets of Indian Accounting Standard (Ind-AS) 101 - First-time Adoption of Indian Accounting Standards

    Use of deemed cost for oil and gas assets of Indian Accounting Standard (Ind-AS) 101

    First-time Adoption of Indian Accounting Standards


    Use of deemed cost for oil and gas assets

    31A. If an entity uses the exemption in paragraph D8A(b) for oil and gas assets, it shall disclose that fact and the basis on which carrying amounts determined under previous GAAP were allocated.


  6. #16
    IND-AS
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    Thumbs up Use of deemed cost for operations subject to rate regulation of Indian Accounting Standard (Ind-AS) 101

    Use of deemed cost for operations subject to rate regulation of Indian Accounting Standard (Ind-AS) 101

    First-time Adoption of Indian Accounting Standards


    Use of deemed cost for operations subject to rate regulation

    31B. If an entity uses the exemption in paragraph D8B for operations subject to rate regulation, it shall disclose that fact and the basis on which carrying amounts were determined under previous GAAP.


  7. #17
    IND-AS
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    Thumbs up Interim financial reports of Indian Accounting Standard (Ind-AS) 101 - First-time Adoption of Indian Accounting Standards

    Interim financial reports of Indian Accounting Standard (Ind-AS) 101

    First-time Adoption of Indian Accounting Standards


    Interim financial reports

    32. To comply with paragraph 23, if an entity presents an interim financial report in accordance with Ind AS 34 for part of the period covered by its first Ind-AS financial statements, the entity shall provide either of the following disclosures in addition to the requirements of Ind AS 34:

    a) where, an entity decides not to provide one year comparative period in accordance with paragraph 21(a) of this Ind-AS: provide the disclosures described in paragraph 24(a) and 24(b) for the part period and year to date covered by its first Ind-AS financial statements (supplemented by the details required by paragraphs 25 and 26) or a cross -reference to another published document that includes these disclosures; or

    b) where, an entity decides to provide one year comparative period in accordance with paragraph 21(b) of this Ind -AS: provide

    i. the reconciliations described in paragraph 24(a) (supplemented by the details required by paragraphs 25 and 26) or a cross - reference to another published document that includes these reconciliations.

    ii. a reconciliation of its equity in accordance with Ind -AS at the end of that comparable interim period to its equity in accordance with previous GAAP at that date; and

    iii. a reconciliation of total comprehensive income in accordance with Ind-AS compiled on a memorandum basis with its total comprehensive income (or if it did not report such a total, profit or
    loss) in accordance with previous GAAP for that comparable interim period (current and year to date).

    (c) Refer to Appendix 1)

    32A. If an entity changes its accounting policies or its use of the exemptions contained in this Ind-AS, it shall explain the changes in each such interim financial report in accordance with paragraph 23 and update the reconciliations required by 32(a) or 32(b).

    32B. If an entity uses IFRS financial statements as its previous GAAP as permitted in paragraph 2A, it shall explain the changes in each such interim financial report in accordance with paragraph 24A.

    33. Ind AS 34 requires minimum disclosures, which are based on the assumption that users of the interim financial report also have access to the most recent annual financial statements. However, Ind AS 34 also requires an entity to disclose ‘any events or transactions that are material to an understanding of the current interim period’. Therefore, if a first -time adopter did not, in its most recent annual financial statements in accordance with previous GAAP, disclose information material to an understanding of the current interim period, its interim financial report shall disclose that information or include a cross-reference to another published document that includes it.


  8. #18
    IND-AS
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    Thumbs up Appendix - A of Indian Accounting Standard (Ind-AS) 101 - First-time Adoption of Indian Accounting Standards

    Appendix - A of Indian Accounting Standard (Ind-AS) 101

    First-time Adoption of Indian Accounting Standards


    Appendix - A

    Defined terms


    This appendix is an integral part of this Ind -AS.

    date of transition
    to Ind-AS
    The beginning date of financial year on or after 1 April 2011 for which an entity presents financial information under Ind -ASs in its first Ind-AS financial statements.
    deemed cost
    An amount used as a surrogate for cost or depreciated cost at a given date. Subsequent depreciation or amortisation assumes that the entity had initially recognised the asset or liability at the given date and that its cost was equal to the
    deemed cost.
    fair value
    The amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.
    first Ind-AS
    financial
    statements
    The first annual financial statements in which an e ntity adopts Indian Accounting Standards (Ind-ASs), by an explicit and unreserved statement of compliance with Ind -ASs.
    first Ind-AS
    reporting period
    The latest reporting period covered by an entity’s first Ind-AS financial statements.
    first-time adopter
    An entity that presents its first Ind-AS financial statements.
    Indian Accounting
    Standards (Ind-
    ASs)
    Indian Accounting Standards are Accounting Standards prescribed under the Companies Act, 1956.
    opening Ind-AS
    Balance Sheet
    An entity’s Balance Sheet at the date of transition to Ind-AS
    previous GAAP
    The basis of accounting that a first-time adopter used immediately before adopting Ind-ASs for its reporting requirements in India. For instance, for companies preparing their financial statements in accordance with the existing Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 shall consider those financial statements as previous GAAP financial statements.



  9. #19
    IND-AS
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    Thumbs up Appendix - B of Indian Accounting Standard (Ind-AS) 101 - First-time Adoption of Indian Accounting Standards

    Appendix - B of Indian Accounting Standard (Ind-AS) 101

    First-time Adoption of Indian Accounting Standards


    Appendix - B

    Exceptions to the retrospective application of other Ind-ASs


    This appendix is an integral part of this Ind-AS.

    B1. An entity shall apply the following exceptions:

    (a) derecognition of financial assets and financial liabilities
    (paragraphs B2 and B3);
    (b) hedge accounting (paragraphs B4–B6); and
    (c) non-controlling interests (paragraph B7)

    Derecognition of financial assets and financial liabilities

    B2. Except as permitted by paragraph B3, a first -time adopter shall apply the derecognition requirements in Ind AS 39 Financial Instruments: Recognition and Measurement prospectively for transactions occurring on or after date of transition to Ind-AS. In other words, if a first -time adopter derecognised non-derivative financial assets or non -derivative financial liabilities in accordance with its previous GAAP as a result of a transaction that occurred before date of transition to Ind-AS, it shall not recognise those assets and liabilities in accordance with Ind-ASs (unless they qualify for recognition as a result of a later transaction or event).

    B3. Notwithstanding paragraph B2, an entity may apply the derecognition requirements in Ind AS 39 retrospectively from a date of the entity’s choosing, provided that the information needed to apply Ind AS 39 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.

    Hedge accounting

    B4. As required by Ind AS 39, at the date of transition to Ind -ASs, an entity shall:

    (a) measure all derivatives at fair value; and
    (b) eliminate all deferred losses and gains arising on derivatives that were reported in accordance with previous GAAP as if they were assets or liabilities.

    B5. An entity shall not reflect in its opening Ind -AS Balance Sheet a hedging relationship of a type that does not qualify for hedge accounting in accordance with Ind AS 39 (for example, many hedging relationships where the hedging instrument is a cash instrument or written option; where the hedged item is a net position; or where the hedge covers interest risk in a held-to-maturity investment). However, if an entity designated a net position as a hedged item in accordance with previous GAAP, it may designate an individual item within that net position as a hedged item in accordance with Ind-ASs, provided that it does so no later than the date of transition to Ind - ASs.

    B6. If, before the date of transition to Ind -ASs, an entity had designated a transaction as a hedge but the hedge does not meet the conditions for hedge accounting in Ind AS 39, the entity shall apply paragraphs 91 and 101 of Ind AS 39 to discontinue hedge accounting. Transactions entered into before the date of transition to Ind -ASs shall not be retrospectively designated as hedges.

    Non-controlling interests

    B7. A first-time adopter shall apply the following requirements of Ind AS 27 prospectively from the date of transition to Ind -ASs:

    (a) the requirement in paragraph 28 that total comprehensive income is attributed to the owners of the parent and to the non -controlling interests even if this results in the non -controlling interests having a deficit balance;

    (b) the requirements in paragraphs 30 and 31 for accounting for changes in the parent’s ownership interest in a subsidiary that do not result in a loss of control; and

    (c) the requirements in paragraphs 34–37 for accounting for a loss of control over a subsidiary, and the related requirements of paragraph 8A of Ind AS 105 Non-current Assets Held for Sale and Discontinued Operations.

    However, if a first-time adopter elects to apply Ind AS 103 Business Combinations retrospectively to past business combinations, it shall also apply Ind AS 27 in accordance with paragraph C1 of this Ind -AS.


  10. #20
    IND-AS
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    Thumbs up Appendix - C of Indian Accounting Standard (Ind-AS) 101 - First-time Adoption of Indian Accounting Standards

    Appendix - C of Indian Accounting Standard (Ind-AS) 101

    First-time Adoption of Indian Accounting Standards


    Appendix - C

    Exemptions for business combinations


    This appendix is an integral part of this Ind-AS. An entity shall apply the following requirements to business combinations that the entity recognised before the date of transition to Ind-ASs

    C1. A first-time adopter may elect not to apply Ind AS 103 Business Combinations retrospectively to past business combinations (business combinations that occurred before the date of transition to Ind -ASs). However, if a first-time adopter restates any business combination to comply with Ind AS 103, it shall restate all later business c ombinations and shall also apply Ind AS 27 from that same date. For example, if a first-time adopter elects to restate a business combination that occurred on 30 June 2006, it shall restate all business combinations that occurred between 30 June 2006 and the date of transition to Ind-ASs, and it shall also apply Ind AS 27 from 30 June 2006.

    C2. An entity need not apply Ind AS 21 The Effects of Changes in Foreign Exchange Rates retrospectively to fair value adjustments and goodwill arising in business combinations that occurred before the date of transition to Ind-ASs. If the entity does not apply Ind AS 21 retrospectively to those fair value adjustments and goodwill, it shall treat them as assets and liabilities of the entity rather than as assets and liabilities of the acquiree. Therefore, those goodwill and fair value adjustments either are already expressed in the entity’s functional currency or are non-monetary foreign currency items, which are reported using the exchange rate applied in accordance with previous GAAP.

    C3. An entity may apply Ind AS 21 retrospectively to fair value adjustments and goodwill arising in either:

    (a) all business combinations that occurred before the date of transition to Ind-ASs; or
    (b) all business combinations that the entity elects to restate to comply with Ind AS 103 , as permitted by paragraph C1 above.

    C4. If a first-time adopter does not apply Ind AS 103 retrospectively to a past business combination, this has the following consequences for that business combination:

    (a) The first-time adopter shall keep the same classification (as an acquisition by the legal acquirer, a reverse acquisition by the legal acquiree, or a uniting of interests) as in its previous GAAP financial\ statements.

    (b) The first-time adopter shall recognise all its assets and liabilities at the date of transition to Ind-ASs that were acquired or assumed in a past business combination, other than:

    (i) some financial assets and financial liabilities derecognised in accordance with previous GAAP (see paragraph B2); and
    (ii) assets, including goodwill, and liabilities that were not recognised in the acquirer’s consolidated Balance Sheet in accordance with previous GAAP and also would not qualify for recognition in accordance with Ind-ASs in the separate Balance Sheet of the acquiree (see (f)–(i) below).

    The first-time adopter shall recognise any resulting change by adjusting retained earnings (or, if appropriate, another category of equity), unless the change results from the recognition of an intangible asset that was previously subsumed within goodwill (see (g)(i) below).

    (c) The first-time adopter shall exclude from its opening Ind -AS Balance Sheet any item recognised in accordance with previous GAAP that does not qualify for recognition as an asset or liability under Ind-ASs. The first-time adopter shall account for the resulting change as follows:

    (i) the first-time adopter may have classified a past business combination as an acquisition and recognised as an intangible asset an item that does not qualify for recognition as an asset in accordance with Ind AS 38 Intangible Assets. It shall reclassify that item (and, if any, the related deferred tax and non - controlling interests) as part of goodwill (unless it deducted goodwill directly from equity in accordance with previous GAAP, see (g)(i) and (i) below) or capital reserve to the extent not exceeding the balance available in that reserve .
    (ii) the first-time adopter shall recognise all other resulting changes in retained earnings1.

    (d) Ind-ASs require subsequent measurement of some assets and liabilities on a basis that is not based on original cost, such as fair value. The first-time adopter shall measure these assets and
    liabilities on that basis in its opening Ind -AS Balance Sheet, even if they were acquired or assumed in a past business combination. It shall recognise any resulting change in the carrying amount by adjusting retained earnings (or, if appropriate, another category of equity), rather than goodwill/capital reserve.

    (e) Immediately after the business combination, the carrying amount in accordance with previous GAAP of assets acquired and liabilities assumed in that business combination shall be their deemed cost in accordance with Ind-ASs at that date. If Ind-ASs require a costbased measurement of those assets and liabilities at a later date, that deemed cost shall be the basis for cost -based depreciation or amortisation from the date of the business combination.

    (f) If an asset acquired, or liability assumed, in a past business combination was not recognised in accordance with previous GAAP, it does not have a deemed cost of zero in the opening Ind -AS
    Balance Sheet. Instead, the acquirer shall recognise and measure it in its consolidated Balance Sheet on the basis that Ind -ASs would require in the Balance Sheet of the acquiree. To illustrate: if the
    acquirer had not, in accordance with its previous GAAP, capitalised finance leases acquired in a past business combination, it shall capitalise those leases in its consolidated financial statements, as
    Ind AS 17 Leases would require the acquiree to do in its Ind -AS Balance Sheet. Similarly, if the acquirer had not, in accordance with its previous GAAP, recognised a contingent liability that still exists at the date of transition to Ind-ASs, the acquirer shall recognise that contingent liability at that date unless Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets would prohibit its
    recognition in the financial statements of the acquiree. Conversely, if an asset or liability was subsumed in goodwill /capital reserve in accordance with previous GAAP but would have been recognised separately under Ind AS 103, that asset or liability remains in goodwill/capital reserve unless Ind-ASs would require its recognition in the financial statements of the acquiree.

    (g) The carrying amount of goodwill or capital reserve in the opening Ind-AS Balance Sheet shall be its carrying amount in accordance with previous GAAP at the date of transition to Ind -ASs, after the following two adjustments:

    (i) If required by (c)(i) above, the first -time adopter shall increase the carrying amount of goodwill or decrease the carrying amount of capital reserve when it reclassifies an item that it recognised
    as an intangible asset in accordance wit h previous GAAP. Similarly, if (f) above requires the first -time adopter to recognise an intangible asset that was subsumed in recognised goodwill in accordance with previous GAAP, the first -time adopter shall decrease the carrying amount of goodwill or increase the carrying amount of capital reserve accordingly (and, if applicable, adjust deferred tax and non-controlling interests).

    (ii) Regardless of whether there is any indication that the goodwill may be impaired, the first-time adopter shall apply Ind AS 36 in testing the goodwill for impairment at the date of transition to
    Ind-ASs and in recognising any resulting impairment loss in retained earnings (or, if so required by Ind AS 36, in revaluation surplus). The impairment test shall be based on conditions at the date of transition to Ind-ASs.

    (h) No other adjustments shall be made to the carrying amount of goodwill/capital reserve at the date of transition to Ind-ASs. For example, the first-time adopter shall not restate the carrying amount of goodwill:

    (i) to exclude in-process research and development acquired in that business combination (unless the related intangible asset would qualify for recognition in accordance with Ind AS 38 in the Balance Sheet of the acquiree);
    (ii) to adjust previous amortisation of goodwill;
    (iii) to reverse adjustments to goodwill that Ind AS 36 would not permit, but were made in accordance with previous GAAP because of adjustments to assets and liabilities between the date of the business combination and the date of t ransition to Ind-ASs.

    (i) If the first-time adopter recognised goodwill in accordance with previous GAAP as a deduction from equity:

    (i) it shall not recognise that goodwill in its opening Ind -AS Balance Sheet. Furthermore, it shall not reclassify that goodwill to profit or loss if it disposes of the subsidiary or if the investment in the subsidiary becomes impaired.
    (ii) adjustments resulting from the subsequent resolution of a contingency affecting the purchase consideration shall be recognised in retained earnings.

    (j) In accordance with its previous GAAP, the first -time adopter may not have consolidated a subsidiary acquired in a past business combination (for example, because the parent did not regard it as a subsidiary in accordance with previous GAAP or did not prepare consolidated financial statements). The first -time adopter shall adjust the carrying amounts of the subsidiary’s assets and liabilities to the amounts that Ind-ASs would require in the subsidiary’s Balance
    Sheet. The deemed cost of goodwill equals the difference at the date of transition to Ind-ASs between:

    (i) the parent’s interest in those adjusted carrying amounts; and
    (ii) the cost in the parent’s separate financial statements of its investment in the subsidiary.

    (k) The measurement of non-controlling interests and deferred tax follows from the measurement of other assets and liabilities. Therefore, the above adjustments to recognised assets and liabilities affect non-controlling interests and deferred tax.

    C5. The exemption for past business combinations also applies to past acquisitions of investments in associates and of interests in joint ventures. Furthermore, the date selected for paragraph C1 applies equally for all such acquisitions.


    Last edited by IND-AS; 21-02-2011 at 10:25 AM.

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