Decoding Indian Accounting Standard (Ind AS) - 1 Part II

In part 1 of Ind AS 1 we covered the objectives, Relevance, Role and basic points to be remebered while implementing. In this section we will cover the Key paragraphs, Disclosures oriented paragraphs and Carve Outs between Ind AS 1 and IAS 1.

Key Paragraphs of Ind AS 1

List of minimum line items that has to be presented under each component of financial statements:

• Balance sheet [Para 54]

(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 within the scope of Ind AS 41 Agriculture;

(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.

• Statement of Profit & Loss and Other Comprehensive Income [Para 82]

(a) Revenue, Interest revenue calculated using effective interest income separately;

(b) Gains or losses arising from derecognition of financial assets valued at amortised cost;

(c) Finance costs;

(d) Impairment losses (including any reversals);

(e) Share of profit or loss of associate/ joint ventures accounted for using the equity method;

(f) Any gain or loss arising due to reclassification of financial asset from amortised cost method to fair value through Profit and Loss (FVTPL);

(g) Any cumulative gain being previously recognised in other comprehensive income now to be reclassified in profit and loss due to reclassification of financial asset from Fair value through other comprehensive Income (FVTOCI) to FVTPL;

(h) Tax Expense;

(i) Single amount for the total discontinued operations;

(j) Allocation of Profit & loss and other comprehensive income to non-controlling interest and owners.

Classification of Current & Non-current Assets & liabilities

Assets to be classified as current when: [Para 66]

• Expected to be realised or Intended to be sold during the normal operating cycle, or
• Asset is cash or cash equivalent.
• Asset is expected to be realised within 12 months after the reporting period, or
• Asset is being hold primarily for trading purpose, or

All other assets shall be classified as Non-current.

Liabilities to be classified as current when: [Para 69]

• Expected to be settled within normal operating cycle, or
• Liability having no right to defer settlement for at least 12 months after the reporting period.
• Liability is expected to be realised within 12 months after the reporting period, or
• Liability is being hold primarily for trading purpose, or

All other liabilities shall be classified as Non-current.

Disclosure Oriented Paragraphs

• Disclosure when entity departs from requirements of an Ind AS [Para 20]

(a) Financial statements present a true and fair view of entity’s financial position, financial performance and cash flows

(b) Compliance with regards to all other Ind AS except the one it has departed is assured.

(c) Title of the Ind AS, Nature of Departure, Reason for such departure and the treatment adopted.

(d) Financial impact of such departure on each item in the financial statements.

• Disclosure when entity Changes classification and presentation of items in its financial statements [Para 41]

(a) The nature of reclassification

(b) The amount of item reclassified

(c) The reason for reclassification.

• Further subclassification of the items of financial statements, where deemed material shall be disclosed either in the balance sheet or in the notes. [Para 77]

• Disclosure of significant accounting policies comprising the measurement basis and other accounting policies relevant to understand the financial statements [Para 117], judgements made in applying accounting policies [Para 122] and estimates having significant risk that can affect the carrying amount of assets & liabilities in financial statements [Para 125]

What are the Carve Outs between Ind AS 1 & IAS 1?

• IFRS provides an option either to follow the single-statement approach or to follow the two-statement approach. In the single-statement approach, all items of income and expense are recognized in the statement of profit and loss; whereas in two statement approach, two statements are prepared, one displaying components of profit or loss (separate income statement) and the other beginning with profit or loss and displaying components of other comprehensive income. On the other hand, Ind AS only allows one statement approach.

• There is another option in IFRS that permits the classification of expenses on the basis of their nature or on the basis of their function within the entity whereas IND AS permits only classification on the basis of nature.

This is where our Ind AS 1 come to end, hope you like the blog, any sugestions or improvements are accepted with great love, eager to hear from you in the comment section below

A quick Disclaimer, any information containing in this blog is not, in any aspect, to be considered as exhaustive explanation of the accounting standard; the key paragraphs, disclosure or carve outs are distributed and presented according to my personal judgement, ergo, optimum prudence should be maintained while complying with this Ind AS

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