Brief on Indian Accounting Standard (Ind AS) 101
First-Time Adoption of Indian Accounting Standards
Note : This article covers a few important points related to Ind AS 101. Refer to this PDF to read the full details of this accounting standard : http://mca.gov. in/Ministry/pdf/IndAS101_2019.pdf
The objective of Ind AS 101 is to ensure that an entity?s first Ind AS financial statements contain information that :
- Is transparent for users
- Provides suitable starting point for accounting
- Can be generated at a reasonable cost
Recognition and measurement
An entity shall, in its opening Ind AS Balance Sheet :
- Recognize all assets and liabilities whose recognition is required by Ind ASs
- Reclassify items in accordance with Ind ASs
- Apply Ind AS in measuring all recognized assets and liabilities
Para 12 of Ind AS 101 establishes two categories of exceptions to the principle that an entity opening Ind AS Balance Sheet shall comply with each Ind AS :
- Paragraph 14?17 and Appendix B prohibit retrospective application of some aspects
- Paragraph C?D grant exemptions from some requirements of other Ind ASs
As per Para 21 of Ind AS 101, an entity?s first Ind AS financial statements shall include at least three Balance Sheet, two Statements of profit and loss, two statements of cash flows and two Statements of changes in equity and related notes, including comparative information for all statements presented.
Paragraph 14?17 are summarized below :
Estimates : An entity?s estimate in accordance with Ind AS should be consistent with estimate made as per previous standard.Para 15 describes that in accordance with paragraph 14, an entity shall treat the receipt of that information in the same way as non-adjusting events after the reporting period in accordance with Ind AS 10, Events after the Reporting Period. An entity may need to make estimates in accordance with Ind ASs at the date of transition that were not required at that date under previous GAAP. Para 14?16 apply to opening Ind AS Balance Sheet and to a comparative period presented in an entity?s first Ind AS financial statements.
This appendix is an integral part of this Ind AS.
An entity shall apply the following exceptions :
- Derecognition of financial assets and liabilities : Derecognition requirement in Ind AS-109 shall apply prospectively for transactions occurring on or after the date of transition to Ind ASs.
- Hedge Accounting : As per Ind AS 109, measure all derivatives at fair value and eliminate all deferred losses and gains in accordance with previous GAAP.
- Non-controlling interest : Requirement of Ind AS-110 shall apply prospectively from the date of transition to Ind ASs.
- Classification and measurement of financial assets : An entity shall assess whether a financial asset meets the conditions in paragraph 4.1.2 or the conditions in paragraph 4.1.2A of Ind AS 109 on the basis of the facts and circumstances that exist at the date of transition to Ind ASs.
- Impairment of financial assets : At the date of transition to Ind ASs, an entity shall use reasonable and supportable information that is available without undue cost or effort to determine the credit risk.
- Embedded derivatives : A first-time adopter shall assess whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative on the basis of conditions that existed at the later of the date it first become a party to the contract.
- Government Loans : A first-time adopter shall classify all government loans received as a financial liability or an equity instrument in accordance with Ind AS 32.
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