There are many situations in businesses where a Parent Company issues some kind of written piece of paper (we usually call it guarantee) to a lender on behalf of its Group Companies to provide assurance for repayment of loan in case of default.
As we all know and perhaps keep a track about all latest developments related to proposed merger of Idea and Vodafone, it would be interesting to co-relate this with an interesting topic called Reverse Acquisition from the perspective of latest accounting standards i.e Ind-As/ IFRS
After the introduction of IFRS (called IND-AS in Indian perspective) in India, now all instruments that are issued by an entity will not accounted just based on their legal form. E.g. Preference shares are being accounted as Equity
As India moves towards International Financial Reporting Standards (Ind-AS/ IFRS) requirements gradually, there are some fundamental changes which are imperative in nature while defining group structure of any entity and/ or requirement to present it on the face of financial statements differently comparing to the present practices in India.
Unlike in current accounting practices in India, there is a need to identify Functional Currency for every entity whose financial statements are being prepared under IND-AS/ IFRS whenever it is applicable to them (based on the roadmap suggested by MCA for convergence of IND-AS in India).
Entities usually invest strategically into various properties to earn some kind of rentals or value appreciations in future (in substance) and made them available for sale as per the requirements or plans made by the Management.
An Investment is being recognized as an Associate if the investor has significant influence over such entity. Under the current practice an entity shows this type of investment at cost in its separate financial statements and it is being accounted based on Equity Method in Consolidated Financial Statements.
We have a situation where standard says that an entity will have power over other entity when it has current ability(refer Para 10 above) to direct the “relevant activities” (as defined in Ind-As 103- “Business Combinations”) of an investee which essentially means that existing rights which can in substance direct these relevant activities to conclude as power
India being an agriculture based economy, many activities are being carried out in way to raise live animals, crop harvesting & selling etc and apart from its dealing within an unorganized sector, there are many corporate sector (either listed or not) which directly or indirectly operate into such agricultural activities in India.
CA Anuj Agrawal There are many situations where an entity needs to incur substantial amount of money to ensure proper use/ access to its existing Assets by way of constructing roads, electricity transmission lines, water well etc. which is generally being called as Enabling Assets. These are eventually not in the name of the entity […]
