CA Vivekanand Pote
Indian Accounting Standards, (abbreviated as Ind AS) are a set of accounting standards notified by the Ministry of Corporate Affairs which are converged with International Financial Reporting Standards (IFRS). These accounting standards are formulated by Accounting Standards Board of Institute of Chartered Accountants of India. Now India will have two sets of accounting standards viz. existing accounting standards under Companies (Accounting Standard) Rules, 2006 and IFRS converged Indian Accounting Standards(Ind AS). The Ind AS are named and numbered in the same way as the corresponding IFRS. NACAS recommend these standards to the Ministry of Corporate Affairs. The Ministry of Corporate Affairs has to spell out the accounting standards applicable for companies in India. As on date the Ministry of Corporate Affairs notified 35 Indian Accounting Standards(Ind AS). But it has not notified the date of implementation of the same.
OBJECTIVE The basic objective of Accounting Standards is to remove variations in the treatment of several accounting aspects and to bring about standardization in presentation. They intent to harmonize the diverse accounting policies followed in the preparation and presentation of financial statements by different reporting enterprises so as to facilitate intra-firm and inter-firm comparison.
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Differences between IFRS AND Ind AS
Govt notifies 35 accounting standards in line with IFRS
DIFFERENCES IN IND AS AND EXISTING AS
| Sr | IND AS | Existing AS |
| IND AS 1 | AS 1 | |
| Presentation of Financial Statements | Disclosure of Accounting Policies | |
| 1 | IND AS 1 deals with presentation of financial statements. | AS 1 deals with disclosure of accounting policies. |
| 2 | Scope is wider. | Scope is comparatively narrow. |
| 3 | Explicit statement in the financial statements of compliance with all the Indian Accounting Standards. Further, Ind AS 1 allows deviation from a requirement of an accounting standard. | |
| 4 | Requires presentation and provides criteria for classification of Current / Non- Current assets / liabilities. | Such bifurcation is not required. |
| 5 | Prohibits presentation of any item as extraordinary Item in the statement of profit and loss or in the notes. | No such prohibition. |
| 6 | Requires disclosure of judgments made by management while framing of accounting polices. Also, it requires disclosure of key assumptions about the future and other sources of measurement uncertainty. | |
| 7 | Requires classification of expenses to be presented based on nature of expenses. | No specific restriction. |
| 8 | Requires presentation of balance sheet as at the beginning of the earliest period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in the financial statements, or when it reclassifies items in its financial statements. | |
| 9 | Requires the financial statements to include a Statement of Changes in Equity to be shown as a part of the balance sheet. | |
| IND AS 2 | AS 2 | |
| Inventories | Valuation of Inventories | |
| 1 | Deals with the subsequent recognition of cost/carrying amount of inventories as an expense, | No such provision. |
| 2 | Provides explanation with regard to inventories of service providers. | AS 2 does not contain such anExplanation. |
| 3 | Explains that inventories do not include machinery spares which can be used only in connection with anitem of fixed asset and whose use is expected to be irregular. | Does not contain specific explanation in respect of such Spares. |
| 4 | Ind AS 2 defines fair value and provides an explanation in respect of distinction between ‘net realisablevalue’ and ‘fair value’. | Does not contain the definition of fair value. |
| 5 | Provides detailed guidance in case of subsequent assessment of net realisable value. Also deals with the reversal of the write-down of inventories to net realisable value to the extent of the amount of original write-down, and the recognition and disclosure thereof in the financial statements | Does not deal with such reversal. |
| 6 | Excludes from its scope only the measurement of inventories held by producers of agricultural and forest products, agricultural produce after harvest, and minerals and mineral products though it provides guidance on measurement of such inventories. | Excludes from its scope such types of inventories. |
| 7 | Does not specifically state so and requires the use of consistent cost formulas for all inventories having a similar nature and use to the entity. | Specifically provides that the formula used in determining the cost of an item of inventory should reflect the fairest possible approximation to the cost incurred in bringing the items of inventory to their present location and condition. |
| 8 | Requires more disclosures | Comparatively requires less disclosure. |
| IND AS 7 | AS 3 | |
| Statement of Cash Flows | Cash Flow Statements | |
| 1 | Specifically includes bank overdrafts which are repayable on demand as a part of cash and cash equivalents. | Existing AS 3 is silent on this aspect |
| 2 | Treatment of cash payments to manufacture or acquire assets held for rental to others and subsequently held for sale in the ordinary course of business as cash flows from operating activities | Does not contain such requirements. |
| 3 | Treatment of cash receipts from rent and subsequent sale of such assets as cash flow from operating activity | Does not contain such requirements |
| 4 | Specifically requires adjustment of the profit or loss for the effects of ‘undistributed profits of associates and non-controlling interests’ while determining the net cash flow from operating activities | Does not contain such requirements |
| 5 | Does not contain such requirements | Cash flows associated with extraordinary activities to be separately classified as arising from operating, investing and financing activities |
| 6 | Requires to disclose the amount of cash and cash equivalents and other assets and liabilities in the subsidiaries or other businesses over which control is obtained or lost | Does not contain such requirements |
| 7 | Requires to classify cash flows arising from changes in ownership interests in a subsidiary that do not result in a loss of control as cash flows from financing activities | Does not contain such requirements |
| 8 | Uses the term ‘functional currency’ instead of ‘reporting currency’ | Uses the term instead of ‘reporting currency’ |
| 9 | Requires more disclosures | Comparatively requires less disclosure. |
| IND AS 8 | AS 5 | |
| Accounting Policies,Changes in Accounting Estimates & Errors | Net Profit or Loss for the Period, Prior Period Items, and Changes in Accounting Policies | |
| 1 | Objective of Ind AS 8 is to prescribe the criteria for selecting and changing accounting policies, together with the accounting treatment and disclosure of changes in accounting policies, changes in accounting estimates and corrections of errors. | Objective is to prescribe the classification and disclosure of certain items in the statement of profit and loss for uniform preparation and presentation of financial statements. |
| 2 | Intends to enhance the relevance and reliability of an entity’s financial statements and the comparability of those financial statements over time and with the financial statements of other entities. | |
| 3 | Restricts the definition of accounting policies to specific accounting principles and the methods of applying those principles | Broadens the definition to include bases, conventions, rules and practices (in addition to principles) applied by an entity in the preparation and presentation of financial statements. |
| 4 | Such situation is not mentioned. | Allows the situation where change in accounting policy is required by statute. |
| 5 | Specifically states that an entity shall select and apply its accounting policies consistently for similar transactions, other events and conditions, unless an Ind AS specifically requires or permits categorisation of items for which different policies may be appropriate. | Does not contain such requirements |
| 6 | Requires that changes in accounting policies should be accounted for with retrospective effect subject to limited exceptions | Does not specify how change in accounting policy should be accounted for. |
| 7 | Uses the term errors and relates it to errors or omissions arising from a failure to use or misuse of reliable information (in addition to mathematical mistakes, mistakes in application of accounting policies etc.) that was available when the financial statements of the prior periods were approved for issuance and could reasonably be expected to have been obtained and taken into account in the preparation and presentation of those financial statements. | Defines prior period items as incomes or expenses which arise in the current period as a result of errors or omissions in the preparation of financial statements of one or more prior periods. |
| 8 | Specifically states that errors include frauds. | Does not contain such requirements |
| 9 | Requires rectification of material prior period errors with retrospective effect subject to limited exceptions. | Requires the rectification of prior period items with prospective effect. |
| 10 | Requires more disclosures | Comparatively requires less disclosure. |
| IND AS 10 | AS 4 | |
| Events occurring after the reporting period | Contingencies and Events occurring after the balance sheet date | |
| 1 | Material non-adjusting events are required to be disclosed in the financial statements. | Requires the same to be disclosed in the report of approving authority |
| 2 | Dividend proposed or declared after the reporting period, can not be recognised as a liability in the financial statements because it dose not meet the criteria of a present obligation as per Ind AS 37. Such dividend is required to be disclosed in the notes in the financial statements as per Ind AS 1 | The same is required to be adjusted in financial statements |
| 3 | If after the reporting date, it is determined that the fundamental accounting assumption of going concern is no longer appropriate, Ind AS 10 requires a fundamental change in the basis of accounting. | Requires assets and liabilities to be adjusted for events occurring after the balance sheet date that indicate that the fundamental accounting assumption of going concern is not appropriate. |
| IND AS 11 | AS 7 | |
| Construction Contracts | Construction Contracts | |
| 1 | No such specific reference to Borrowing Cost. | Includes borrowing costs as per AS 16, Borrowing Costs, in the costs that may be attributable to contract activity in general and can be allocated to specific contracts |
| 2 | Requires that contract revenue shall be measured at fair value of consideration received/receivable. | Does not recognise fair value concept as contract revenue is measured at consideration received/receivable |
| 3 | Appendix A of Ind AS 11 deals with accounting aspects involved in Service Concession Arrangements and Appendix B of Ind AS 11 deals with disclosures of such arrangements. | Does not deal with accounting for Service Concession Arrangements |
| IND AS 12 | AS 22 | |
| Income Taxes | Taxes on Income | |
| 1 | Based on balance sheet approach. It requires recognition of tax consequences of differences between the carrying amounts of assets and liabilities and their tax base. | Based on income statement approach. It requires recognition of tax consequences of differences between taxable income and accounting income. |
| 2 | Deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised, The criteria for recognising deferred tax assets arising from the carry forward of unused tax losses and tax credits are the same that for recognising deferred tax assets arising from deductible temporary differences. However, the existence of unused tax losses is strong evidence that future taxable profit may not be available. Therefore, when an entity has a history of recent losses, the entity recognises a deferred tax asset arising from unused tax losses or tax credits only to the extent that the entity has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which the unused tax losses or unused tax credits can be utilised by the entity | Deferred tax assets are recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Where deferred tax asset is recoganised against unabsorbed depreciation or carry forward of losses under tax laws, it is recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised. |
| 3 | Current and deferred tax are recognised as income or an expense and included in profit or loss for the period, except to the extent that the tax arises from a transaction or event which is recognised outside profit or loss, either in other comprehensive income or directly in equity, in those cases tax is also recognised in other comprehensive income or in equity, as appropriate. | Does not specifically deal with this aspect. |
| 4 | Disclosure requirements are more detailed. | Comparatively less detailed. |
| 5 | Provides guidance that deferred tax asset/liability arising from revaluation of assets shall be measured on the basis of tax consequences from the sale of asset rather than through use. | Does not deal with this aspect. |
| 6 | Provides guidance as to how an entity should account for the tax consequences of a change in its tax status or that of its shareholders. | Does not deal with this aspect. |
| 7 | The concept of virtual certainty does not exist in Ind AS 12, this explanation is not included. | Explains virtual certainty supported by convincing evidence. |
| 8 | Does not specifically deal with these situations. | Specifically provides guidance regarding recognition of deferred tax in the situations of Tax Holiday under Sections 80-IA and 80-IB and Tax Holiday under Sections 10A and 10B of the Income Tax Act, 1961.Provides guidance regarding recognition of deferred tax asset in case of loss under the head ‘capital gains’. |
| 9 | Does not specifically deal with this aspect. | Specifically provides guidance regarding tax rates to be applied in measuring deferred tax assets/liability in a situation where a company pays tax under section 115JB. |
| IND AS 16 | IND AS 10 & 6 | |
| Property, Plant & Equipment | Accounting for Fixed Assets and Depreciation Accounting | |
| 1 | Ind AS 16 also deals with depreciation of property, plant and equipment | Presently covered by AS 6. |
| 2 | Ind AS 16 does not exclude such developers from its scope | Specifically excludes accounting for real estate developers from its scope |
| 3 | Lays down the following criteria which should be satisfied for recognition of items of property, plant and equipment:(a) it is probable that future economic benefits associated with the item will flow to the entity, and
(b) the cost of the item can be measured reliably. |
Does not lay down any specific recognition criteria for recognition of a fixed asset. |
| 4 | Initial costs as well as the subsequent costs are evaluated on the same recognition principles to determine whether the same should be recognised as an item of property, plant and equipment. | Subsequent expenditures related to an item of fixed asset are capitalised only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance. |
| 5 | Requires that major spare parts qualify as property, plant and equipment when an entity expects to use them during more than one period and when they can be used only in connection with an item of property, plant and equipment. | Only those spares are required to be capitalised which can be used only in connection with a fixed asset and whose use is expected to be irregular. |
| 6 | Based on the component approach. Under this approach, each major part of an item of property plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. | It recognises the said approach in only one paragraph by stating that accounting for a tangible fixed asset may be improved if total cost thereof is allocated to its various parts. Apart from this, neither existing AS 10 nor existing AS 6 deals with the aspects such as separate depreciation of components, capitalising the cost of replacement, etc. |
| 7 | The cost of major inspections should be capitalised with consequent derecognition of any remaining carrying amount of the cost of the previous inspection. | Does not deal with this aspect. |
| 8 | Ind AS 16 requires that the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located should be included in the cost of the respective item of property plant and equipment. | Does not contain any such requirement. |
| 9 | Requires an entity to choose either the cost model or the revaluation model as its accounting policy and to apply that policy to an entire class of property plant and equipment. It requires that under revaluation model, revaluation be made with reference to the fair value of items of property plant and equipment. It also requires that revaluations should be made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the balance sheet date. | Recognises revaluation of fixed assets. However, the revaluation approach adopted therein is ad hoc in nature, as it does not require the adoption of fair value basis as its accounting policy or revaluation of assets with regularity. It also provides an option for selection of assets within a class for revaluation on systematic basis. |
| 10 | Provides that the revaluation surplus included in equity in respect of an item of property plant and equipment may be transferred to the retained earnings when the asset is derecognised. This may involve transferring the whole of the surplus when the asset is retired or disposed of. However, some of the surplus may be transferred as the asset is used by an entity. In such a case, the amount of the surplus transferred would be the difference between the depreciation based on the revalued carrying amount of the asset and depreciation based on its original cost. Transfers from revaluation surplus to the retained earnings are not made through profit or loss. | As compared to the above, neither existing AS 10 nor existing AS 6 deals with the transfers from revaluation surplus. To deal with this aspect, the Institute issued a Guidance Note on Treatment of Reserve Created on Revaluation of Fixed Assets. The Guidance Note provides that if a company has transferred the difference between the revalued figure and the book value of fixed assets to the ‘Revaluation Reserve’ and has charged the additional depreciation related thereto to its profit and loss account, it is possible to transfer an amount equivalent to accumulated additional depreciation from the revaluation reserve to the profit and loss account or to the general reserve as the circumstances may permit, provided suitable disclosure is made in the accounts. However, the said Guidance Note also recognises that it would be prudent not to charge the additional depreciation arising due to revaluation against the revaluation reserve. |
| 11 | With regard to self-constructed assets, Ind AS 16, specifically states that the cost of abnormal amounts of wasted material, labour, or other resources incurred in the construction of an asset is not included in the cost of the assets. | Existing AS 10 while dealing with self-constructed fixed assets does not mention the same. |
| 12 | Provides that the cost of an item of property, plant and equipment is the cash price equivalent at the recognition date. If payment is deferred beyond normal credit terms, the difference between the cash price equivalent and the total payment is recognised as interest over the period of credit unless such interest is capitalised in accordance with Ind AS 16. Similarly, the concept of cash price equivalent has been followed in case of disposal of fixed assets also. | Existing AS 10 does not contain this requirement. |
| 13 | Does not specifically deal with this aspect as these would basically be covered by Ind AS 31 as jointly controlled assets. | Existing AS 10 specifically deals with the fixed assets owned by the entity jointly with others. |
| 14 | Does not specifically deal with this situation. | Specifically deals with the situation where several assets are purchased for a consolidated price. It provides that the consideration should be apportioned to the various assets on the basis of their respective fair values. |
| 15 | Requires that change in depreciation method should be considered as a change in accounting estimate and treated accordingly. | It is considered as a change in accounting policy and treated accordingly. |
| 17 | Requires that compensation from third parties for items of property, plant and equipment that were impaired, lost or given up should be included in the statement of profit and loss when the compensation becomes receivable. | Does not specifically deal with this aspect. |
| 18 | Specifically provides that gains arising on derecognition of an item of property, plant and equipment should not be treated as revenue as defined in AS 9. | Existing AS 10 is silent on this aspect. |
| 19 | Deals with the situation where entities hold the items of property, plant and equipment for rental to others and subsequently sell the same. | No such provision is there in existing AS 10. |
| 20 | Does not deal with the assets ‘held for sale’ because the treatment of such assets is covered in Ind AS 105 Non-current Assets Held for Sale and Discontinued Operations. | Deals with accounting for items of fixed assets retired from active use and held for sale. |
| 21 | requires that if property, plant and equipment is acquired in exchange for a non-monetary asset, it should be recognised at its fair value unless (a) the exchange transaction lacks commercial substance or (b) the fair value of neither the asset received nor the asset given up is reliably measurable. | The existing standard requires that when a fixed asset is acquired in exchange for another asset, its cost is usually determined by reference to the fair market value of the consideration given. It may be appropriate to consider also the fair market value of the asset acquired if this is more clearly evident. |
| 22 | Ind AS 16 includes Appendix A which addresses how the changes in the measurement of an existing decommissioning, restoration and similar liability that result from changes in the estimated timing or amount of the outflow of resources embodying economic benefits required to settle the obligation, or a change in the discount rate, shall be accounted for | NA |
| 23 | Disclosure requirements of Ind AS 16 are significantly elaborate as compared to AS 10/AS 6. | |
| IND AS 17 | AS 19 | |
| Leases | Leases | |
| 1 | Ind AS 17 does not have such scope exclusion. It has specific provisions dealing with leases of land and building applicable. | The existing standard excludes leases of land from its scope. |
| 2 | Further, Ind AS 17 is not applicable as the basis of measurement for property held by lessees/provided by lessors under operating leases but treated as investment property and biological assets held by lessees/provided by lessors under operating dealt with in the Standard on Agriculture. | The existing standard does not contain such provisions. |
| 3 | The definition of residual value appearing in the existing standard has been deleted in Ind AS 17. | |
| 4 | in respect of treatment of initial direct costs incurred by a non-manufacturer/non-dealer-lessor in respect of a finance lease (see point 5 below), the term ‘initial direct costs’ has been specifically defined in Ind AS 17 and definition of the term ‘interest rate implicit in the lease’ as per the existing standard has been modified in Ind AS 17. | |
| 5 | Makes a distinction between inception of lease and commencement of lease. | No such distinction. |
| 6 | The lessee shall recognise finance leases as assets and liabilities in balance sheet at the commencement of the lease term | As per the existing standard such recognition is at the inception of the lease. |
| 7 | Requires current/non-current classification of lease liabilities if such classification is made for other liabilities. Also, it makes reference to Ind AS 105, Non-current Assets Held for Sale and Discontinued Operations . | These matters are not addressed in the existing standard. |
| 8 | Ind AS 17 retains the deferral and amortisation principle, it does not specify any method of amortisation. | As per the existing standard, if a sale and leaseback transaction results in a finance lease, excess, if any, of the sale proceeds over the carrying amount shall be deferred and amortised by the seller-lessee over the lease term in proportion to depreciation of the leased asset. |
| 9 | Provides guidance on accounting for incentives in the case of operating leases, evaluating the substance of transactions involving the legal form of a lease and determining whether an arrangement contains a lease. | The existing standard does not contain such guidance. |
| IND AS 18 | AS 9 | |
| Revenue | Revenue | |
| 1 | Definition of ‘revenue’ is broad compared to the definition of ‘revenue’ given in existing AS 9 because it covers all economic benefits that arise in the ordinary course of activities of an entity which result in increases in equity, other than increases relating to contributions from equity participants. | Revenue is gross inflow of cash, receivables or other consideration arising in the course of the ordinary activities of an enterprise from the sale of goods, from the rendering of services, and from the use by othersof enterprise resources yielding interest, royalties and dividends. |
| 2 | Revenue arising from agreements of real estate development are specifically scoped out | Existing AS 9 does not exclude the same |
| 3 | Requires the revenue to be measured at fair value of the consideration received or receivable | Revenue is recognised at the nominal amount of consideration receivable |
| 4 | Specifically deals with the exchange of goods and services with goods and services of similar and dissimilar nature | This aspect is not dealt with in the existing AS 9. |
| 5 | Requires recognition of revenue using percentage of completion method only | Completed Service Contract method is permitted. |
| 6 | Requires interest to be recognised using effective interest rate method. | Requires the recognition of revenue from interest on time proportion basis. |
| 7 | Specifically provides guidance regarding revenue recognition in case the entity is under any obligation to provide free or discounted goods or services or award credits to its customers due to any customer loyalty programme. | Does not deal with this aspect. |
| 8 | Does not specifically deal with the same. | Specifically deals with disclosure of excise duty as a deduction from revenue from sales transactions. |
| Ind AS 19 | AS 15 | |
| Employees Benefits | Employees Benefits | |
| 1 | Employee benefits arising from constructive obligations are also covered | Does not deal with the same. |
| 2 | The term employee includes wholetime directors | The term includes directors. |
| 3 | Deals with situations where there is a contractual agreement between a multi-employer plan and its participants that determines how the surplus in the plan will be distributed to the participants | Does not deal with it. |
| 4 | Participation in a defined benefit plan sharing risks between various entities under common control is a related party transaction for each group entity and some disclosures are required in the separate or individual financial statements of an entity | Does not contain similar provisions. |
| 5 | Encourages, but does not require, an entity to involve a qualified actuary in the measurement of all material postemployment benefit obligations | Does not require involvement of a qualified actuary, does not specifically encourage the same. |
| 6 | Financial assumptions shall be based on market expectations, at the end of the reporting period, for the period over which the obligations are to be settled . | Does not clarify the same |
| 7 | Requires recognition of the actuarial gains and losses in other comprehensive income, both for post-employment defined benefit plans and other long-term employment benefit plans. The actuarial gains and losses recognised in other comprehensive income should be recognised immediately in retained earnings and should not be reclassified to profit or loss in a subsequent period. | Requires recognition of the actuarial gains and losses immediately in the statement of profit and loss as income or expense. |
| Ind AS 20 | AS 12 | |
| Accounting for Government Grants and Disclosure of Government Assistance | Accounting for Government Grants | |
| 1 | Deals with the other forms of government assistance which do not fall within the definition of government grants. It requires that an indication of other forms of government assistance from which the entity has directly benefited should be disclosed in the financial statements. | Does not deal with such government assistance. |
| 2 |
Based on the principle that all government grants would normally have certain obligations attached to them and these grants should be recognised as income over the periods which bear the cost of meeting the obligation. It, therefore, specifically prohibits recognition of grants directly in the shareholders’ funds. |
Requires that in case the grant is in respect of nondepreciable assets, the amount of the grant should be shown as capital reserve which is a part of shareholders’ funds. It further requires that if a grant related to a non-depreciable asset requires the fulfilment of certain obligations, the grant should be credited to income over the same period over which the cost of meeting such obligations is charged to income. Also gives an alternative to treat such grants as a deduction from the cost of such asset. |
| 3 | Does not recognise government grants of the nature of promoters’ contribution. | Recognises that some government grants have the characteristics similar to those of promoters’ contribution. It requires that such grants should be credited directly to capital reserve and treated as a part of shareholders’ funds. |
| 4 |
Requires to to value non-monetary grants at their fair value, since it results into presentation of more relevant information and is conceptually superior as compared to valuation at a nominal amount. |
Requires that government grants in the form of nonmonetary assets, given at a concessional rate, should be accounted for on the basis of their acquisition cost. In case a non-monetary asset is given free of cost, it should be recorded at a nominal value. |
| 5 | Requires presentation of such grants in balance sheet only by setting up the grant as deferred income. Thus, the option to present such grants by deduction of the grant in arriving at at at its book value is not available under Ind AS 20 | Gives an option to present the grants related to assets, including non-monetary grants at fair value in the balance sheet either by setting up the grant as deferred income or by deducting the grant from the gross value of asset concerned in arriving at at its book value. |
| 6 | Requires that loans received from a government that have a below-market rate of interest should be recognised andmeasured in accordance with Ind AS 39 (which requires all loans to be recognised at fair value, thus requiring interest to be imputed to loans with a below-market rate of interest) | does not require such treatment. |
| Ind AS 21 | AS 11 | |
| The Effects of Changes in Foreign Exchange Rates | The Effects of Changes in Foreign Exchange Rates | |
| 1 | Excludes from its scope forward exchange contracts and other similar financial instruments, which are treated in accordance with Ind AS 39 | Does not such exclude accounting for such contracts. |
| 2 | Based on functional currency | Not based on functional currency |
| 3 | The factors to be considered in determining an entity’s functional currency are similar to the indicators in existing AS 11 to determine the foreign operations as non-integral foreign operations. As a result, despite the difference in the term, there are no substantive differences in respect of accounting of a foreign operation. | Based on integral foreign operations and non-integral foreign operations approach for accounting for a foreign operation |
| 4 | Presentation currency can be different from local currency | Does not explicitly state so |
| 5 | Permits an option to recognise exchange differences arising on translation of certain long-term monetary items from foreign currency to functional currency directly in equity. In this situation, Ind AS 21 requires the accumulated exchange differences to be transferred to profit or loss in an appropriate manner. | Does not permit such a treatment. |
| 6 | Permits an option to recognise exchange differences arising on translation of certain long-term monetary items from foreign currency to functional currency directly in equity and to transfer the same to profit or loss over the term of such items. | Gives an option to the foreign currency gains and losses to recognise exchange differences arising on translation of certain long-term monetary items from foreign currency to functional currency directly in equity to be transferred to profit or loss over the life of the relevant liability/asset if such items are not related to acquisition of fixed assets upto 31st March 2011; where such items are related to acquisition of fixed assets,the foreign exchange differences can be recognised as part of the cost of the asset. |
| Ind AS 23 | AS 16 | |
| Borrowing Costs | Borrowing Costs | |
| 1 | Does not require an entity to apply this standard to borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset measured at fair value. | Does not provide for such scope relaxation. |
| 2 | Excludes the application of this Standard to borrowing costs directly attributable to the acquisition, construction or production of inventories that are manufactured, or otherwise produced, in large quantities on a repetitive basis | Does not provide for such scope relaxation and is applicable to borrowing costs related to all inventories that require substantial period of time to bring them in saleable condition. |
| 3 | Requires to calculate the interest expense using the effective interest rate method as described in Ind AS 39 Financial Instruments: Recognition and Measurement. | Borrowing Costs, inter alia, include the following:(a) interest and commitment charges on bank borrowings and other short-term and long-term borrowings;
(b) amortisation of discounts or premiums relating to borrowings; (c) amortisation of ancillary costs incurred in connection with the arrangement of borrowings; |
| 4 | Explanation is not included in the Ind AS 23. | Gives explanation for meaning of ‘substantial period of time’ appearing in the definition of the term ‘qualifying asset’. |
| 5 | Provides that when the Standard on Financial Reporting in Hyperinflationary Economies is applied, part of the borrowing costs that compensates for inflation should be expensed as required by that Standard (and not capitalised in respect of qualifying assets). | Does not contain a similar clarification because at present, in India, there is no Standard on Financial Reporting in Hyperinflationary Economies. |
| 6 | Specifically provides that in some circumstances, it is appropriate to include all borrowings of the parent and its subsidiaries when computing a weighted average of the borrowing costs while in other circumstances, it is appropriate for each subsidiary to use a weighted average of the borrowing costs applicable to its own borrowings. | This specific provision is not there in the existing AS. |
| 7 | Requires disclosure of capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation. | Does not have this disclosure requirement |
| Ind AS 24 | AS 18 | |
| Related Party Disclosures | Related Party Disclosures | |
| 1 | Uses the term “a close member of that person’s family” | Uses the term “relatives of an individual” |
| 2 | Includes the persons specified within the meaning of ‘relative’ under the Companies Act 1956 and that person’s domestic partner, children of that person’s domestic partner and dependants of that person’s domestic partner. | Covers the spouse, son, daughter, brother, sister, father and mother who may be expected to influence, or be influenced by, that individual in his/her dealings with the reporting enterprise. Hence, the definition as per Ind AS 24 is much wider. |
| 3 | There is extended coverage of Government Enterprises, as it defines a government-related entity as “an entity that is controlled, jointly controlled or significantly influenced by a government.” Further, “Government refers to government, government agencies and similar bodies whether local, national or international.” | Defines state-controlled enterprise as “an enterprise which is under the control of the Central Government and/or any State Government(s)”. |
| 4 | Covers KMP of the parent as well. | Covers key management personnel (KMP) of the entity only |
| 5 | There is extended coverage in case of joint ventures. Two entities are related to each other in both their financial statements, if they are either co-venturers or one is a venturer and the other is an associate. | Co-venturers or co-associates are not related to each others. |
| 6 | Does not specifically mention this. | Mentions that where there is an inherent difficulty for management to determine the effect of influences which do not lead to transactions, disclosure of such effects is not required. |
| 7 | Specifically includes post employment benefit plans for the benefit of employees of an entity or its related entity as related parties. | Does not specifically cover entities that are post employment benefit plans, as related parties. |
| 8 | Requires an additional disclosure as to the name of the next most senior parent which produces consolidated financial statements for public use | No such requirement. |
| 9 | Requires extended disclosures for compensation of KMP under different categories. | Does not specifically require. |
| 10 | Requires “the amount of the transactions” need to be disclosed, | Gives an option to disclose the “Volume of the transactions either as an amount or as an appropriate proportion”. |
| 11 | Requires disclosures of certain information by the government related entities | Presently exempts the disclosure of such information. |
| 12 | Does not include such clarificatory text and allows respective standards to deal with the same. | Includes clarificatory text, primarily with regard to control, substantial interest (including 20% threshold), significant influence (including 20% threshold). |
| Ind AS 27 | AS 21 | |
| Consolidated and Separate Financial Statements | Consolidated Financial Statements | |
| 1 | Makes the preparation of Consolidated Financial Statements mandatory for a parent. | Does not mandate the preparation of Consolidated Financial Statements by a parent. |
| 2 | Does not mandate preparation of separate financial statements. | Consolidated Financial Statements are prepared in addition to separate financial statements |
| 3 | Provides guidance for accounting for investments in subsidiaries, jointly controlled entities and associates in preparing the separate financial statements. | Does not deal with the same. |
| 4 | Does not give any such exemption from consolidation except that if a subsidiary meets the criteria to be classified as held for sale, in that case it shall be accounted for as per Ind AS 105, Noncurrent Assets held for Sale and Discontinued Operations. | Subsidiary is excluded from consolidation when control is intended to be temporary or when subsidiary operates under severe long term restrictions. |
| 5 | Does not explain the same. | Explains where an entity owns majority of voting power because of ownership and all the shares are held as stockin-trade, whether this amounts to temporary control. Also explains the term ‘near future’. |
| 6 | Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. | the definition of control given in the existing AS 21 is rule-based, which requires the ownership, directly or indirectly through subsidiary(ies), of more than half of the voting power of an enterprise; or control of the composition of the board of directors in the case of a company or of the composition of the corresponding governing body in case of any other enterprise so as to obtain economic benefits from its activities. |
| 7 | Existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether an entity has control over the subsidiary. | For considering share ownership, potential equity shares of the investee held by investor are not taken into account. |
| 8 | Non-controlling interests shall be presented in the consolidated balance sheet within equity separately from the parent shareholders’ equity. | Minority interest should be presented in the consolidated balance sheet separately from liabilities and equity of the parent’s shareholders. |
| 9 | The length of difference in the reporting dates of the parent and the subsidiary should not be more than three months. | Permits the use of financial statements of the subsidiaries drawn upto a date different from the date of financial statements of the parent after making adjustments regarding effects of significant transactions. The difference between the reporting dates should not be more than six months. |
| 10 | Require the use of uniform accounting policies. | Require the use of uniform accounting policies. However, existing AS 21 specifically states that if it is not practicable to use uniform accounting policies in preparing the consolidated financial statements, that fact should be disclosed together with the proportions of the items in the consolidated financial statements to which the different accounting policies have been applied. |
| Ind AS 28 | AS 23 | |
| Investments in Associates | Accounting for Investments in Associates in Consolidated Financial Statements | |
| 1 | Excludes from its scope, investments in associates held by venture capital organisations, mutual funds, unit trusts and similar entities including investment-linked insurance funds, which are treated in accordance with Ind AS 39 | Does not make such exclusion. |
| 2 | Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. | Definition of control given in the existing AS 23 is rule-based, which requires the ownership, directly or indirectly through subsidiary(ies), of more than half of the voting power of an enterprise; or control of the composition of the board of directors in the case of a company or of the composition of the corresponding governing body in case of any other entity so as to obtain economic benefits from its activities. |
| 3 | The same has been defined as ‘power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies’. | ‘Significant Influence’ has been defined as ‘power to participate in the financial and/or operating policy decisions of the investee but is not control over those policies’. |
| 4 | Existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether an entity has significant influence or not. | For considering share ownership for the purpose of significant influence, potential equity shares of the investee held by investor are not taken into account. |
| 5 | Requires application of equity method in financial statements other than separate financial statements even if the investor does not have any subsidiary. | Requires application of the equity method only when the entity has subsidiaries and prepares Consolidated Financial Statements. |
| 6 | No such exemption is provided in Ind AS 28. | One of the exemptions from applying equity method in the existing AS 23 is where the associate operates under severe long-term restrictions that significantly impair its ability to transfer funds to the investee. |
| 7 | The same is to be accounted for at cost or in accordance with Ind AS 39 Financial Instruments: Recognition and Measurement. | In separate financial statements, investment in an associate is not accounted for as per the equity method, the same is accounted for in accordance with existing AS 13, Accounting for investments. |
| 8 | Length of difference in the reporting dates of the investor and the associate should not be more than three months unless it is impracticable. | Permits the use of financial statements of the associate drawn upto a date different from the date of financial statements of the investor when it is impracticable to draw the financial statements of the associate upto the date of the financial statements of the investor. There is no limit on the length of difference in the reporting dates of the investor and the associate. |
| 9 | Require that similar accounting policies should be used. in case an associate uses different accounting policies for like transactions, appropriate adjustments shall be made to the accounting policies of the associate. | Require that similar accounting policies should be used. in case an associate uses different accounting policies for like transactions, appropriate adjustments shall be made to the accounting policies of the associate. |
| 10 | Provides that the investor’s financial statements shall be prepared using uniform accounting policies for like transactions and events in similar circumstances unless it is impracticable to do so. | Provides exemption to this that if it is not possible to make adjustments to the accounting policies of the associate, the fact shall be disclosed along with a brief description of the differences between the accounting policies. |
| 11 | Carrying amount of investment in the associate as well as its other long term interests in the associate that, in substance form part of the investor’s net investment in the associate shall be considered for recognising investor’s share of losses in the associate | Investor’s share of losses in the associate is recognised to the extent of carrying amount of investment in the associate. |
| 12 | Requires that after application of equity method, including recognising the associate’s losses, the requirements of Ind AS 39 shall be applied to determine whether it is necessary to recognise any additional impairment loss. | Requires that the carrying amount of investment in an associate should be reduced to recognise a decline, other than temporary, in the value of the investment. |
| Ind AS 31 | AS 27 | |
| Interests in Joint Ventures | Financial Reporting of Interests in Joint Ventures | |
| 1 | Specifically excludes joint venture investments made by venture capital organizations, mutual funds, unit trusts and similar entities including investment- linked insurance funds which are treated in accordance with Ind AS 39 Financial Instruments: Recognition and Measurement. | Does not make such exclusion. |
| 2 | Does not recognise such cases keeping in view the definition of control | Provides that in some exceptional cases, an enterprise by a contractual arrangement establishes joint control over an entity which is a subsidiary of that enterprise within the meaning of AS 21. In those cases, the entity is consolidated under AS 21 by the said enterprise, and is not treated as a joint venture. |
| 3 | Prescribes the use of proportionate consolidation method only. | Provides that a venturer can recognise its interest in jointly controlled entity using either proportionate consolidation method or equity method. |
| 4 | Requires proportionate consolidation of jointly controlled entities, even if the venturer does not have any subsidiary in financial statements other than separate financial statements. | Requires application of the proportionate consolidation method only when the entity has subsidiaries and prepares Consolidated Financial Statements. |
| 5 | Recognised at cost or in accordance with Ind AS 39. | In case of separate financial statements interest in jointly controlled entity is accounted for as per AS 13, Accounting for Investments, i.e., at cost less provision for other than temporary decline in the value of investment. |
| 6 | This explanation has not been given in Ind AS 31 , as such situations are now covered by Ind AS 105, Non-current Assets Held for Sale and Discontinued Operations. | Regarding the term ‘near future’ used in an exemption given from applying proportionate consolidation method, ie, where the investment is acquired and held exclusively with a view to its subsequent disposal in the near future. |
| 7 | The same has not been dealt with in Ind AS 31. | Provides clarification regarding disclosure of venturer’s share in post-acquisition reserves of a jointly controlled entity. |
| 8 | Specifically deals with the venturer’s accounting for non-monetary contributions to a jointly controlled entity. | Does not deal with this aspect. |
| Ind AS 32 | AS 31 | |
| Financial Instruments: Presentation | Financial Instruments: Presentation | |
| 1 | Does not exempt such contracts. | Does not apply to contracts for contingent consideration in a business combination in case of acquirers. |
| 2 | Includes the definition of puttable instruments and deals with the same. | Does not deal with the same. |
| 3 | Does not include deposits and advances in common examples of financial assets and financial liabilities. | AS 31 includes the same. |
| 4 | Specifies conditions for offsetting a financial liability or financial asset. | Does not specify the same. |
| 5 | Requires that in some circumstances, because of the differences between interest and dividends with respect to matters such as tax deductibility, it is desirable to disclose them separately in the statement of profit and loss. Disclosures of the tax effects are made in accordance with Ind AS 12. | Does not mention this aspect. |
| 6 | Specifically mentions that the related amount of income taxes recognised directly in equity is included in the aggregate amount of current and deferred income tax credited or charged to equity that is disclosed under Ind AS 12, Income Taxes. | Does not mention so. |
| 7 | 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 as an equity instrument if the exercise price is fixed in any currency. | This exception is not provided in AS 31. |
| Ind AS 33 | AS 20 | |
| Earnings per Share | Earnings per Share | |
| 1 | Deals with the same. | does not specifically deal with options held by the entity on its shares, e.g., purchased options, written put option etc. |
| 2 | Requires presentation of basic and diluted EPS from continuing and discontinued operations separately. | Does not require any such disclosure. |
| 3 | As per Ind AS 1, Presentation of Financial Statements, no item can be presented as extraordinary item, Ind AS 33 does not require the aforesaid disclosure. | Requires the disclosure of EPS with and without extraordinary items. |
| Ind AS 34 | AS 25 | |
| Interim Financial Reporting | Interim Financial Reporting | |
| 1 | Applies only if an entity is required or elects to prepare and present an interim financial report in accordance with Accounting Standards. Consequently, it is specifically stated in Ind AS 34 that the fact that an entity may not have provided interim financial reports during a particular financial year or may have provided interim financial reports that do not comply with the revised standard does not prevent the entity’s annual financial statements from conforming to Accounting Standards if they otherwise do so. | If an entity is required or elects to prepare and present an interim financial report, it should comply with that standard. |
| 2 |
The term ‘complete set of financial statements’ appearing in the definition of interim financial report has been expanded. The said term includes balance sheet as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements. |
The contents of an interim financial report include, at a minimum, a condensed balance sheet, a condensed statement of profit and loss, a condensed cash flow statement and selected explanatory notes. Ind AS 34 requires, in addition to the above, a condensed statement of changes in equity for the period which is presented as a part of the balance sheet. |
| 3 | Prohibits reversal of impairment loss recognised in a previous interim period in respect of goodwill or an investment in either an equity instrument or a financial asset carried at cost. | There is no such specific prohibition. |
| 4 |
States that it neither requires nor prohibits the inclusion of the parent’s separate statements in the entity’s interim report prepared on a consolidated basis. |
If an entity’s annual financial report included the consolidated financial statements in addition to the separate financial statements, the interim financial report should include both the consolidated financial statements and separate financial statements, complete or condensed. |
| 5 | Additionally requires the above information in respect of methods of computation followed. |
Requires the Notes to interim financial statements, (if material and not disclosed elsewhere in the interim financial report), to contain a statement that the same accounting policies are followed in the interim financial statements as those followed in the most recent annual financial statements or, in case of change in those policies, a description of the nature and effect of the change. |
| 6 | Requires furnishing of information, in interim financial report, on dividends paid, aggregate or per share separately for equity and other shares. | Requires furnishing information, in interim financial report, of dividends, aggregate or per share (in absolute or percentage terms), for equity and other shares. |
| 7 | Requires furnishing of information on both contingent liabilities and contingent assets, if they are significant. | Requires furnishing of information on contingent liabilities only, |
| 8 | No reference to extraordinary items. | Reference to extraordinary items (in the context of materiality) in the existing standard is deleted |
| 9 | Requires that, where an interim financial report has been prepared in accordance with the requirements of the revised standard, that fact should be disclosed. Further, an interim financial report should not be described as complying with Accounting Standards unless it complies with all of the requirements of Accounting Standards. (The latter statement is applicable when interim financial statements are prepared on complete basis instead of ‘condensed basis’). | Does not contain these requirements. |
| 10 | Additionally requires restatement of the comparable interim periods of prior financial years that will be restated in annual financial statements in accordance with Ind AS 8, subject to special provisions when such restatement is impracticable. | A change in accounting policy, other than one for which the transitional provisions are specified by a new Standard, should be reflected by restating the financial statements of prior interim periods of the current financial year. |
| Ind AS 36 | AS 28 | |
| Impairment of Assets | Impairment of Assets | |
| 1 | Ind AS 36 applies to financial assets classified as:(a) subsidiaries, as defined in Ind AS 27,(b) associates as defined in Ind AS 28)(c) joint ventures as defined in Ind AS 31 | Does not apply to these assets |
| 2 | Specifically excludes biological assets related to Agricultural activity | Does not specifically exclude biological assets. |
| 3 | Requires annual impairment testing for an intangible asset with an indefinite useful life or not yet available for use and goodwill acquired in a business combination. | Does not require the annual impairment testing for the goodwill unless there is an indication of impairment. |
| 4 | Gives additional guidance on the following aspects (a) estimating the value in use of an asset; (b) for managements to assess the reasonableness of the assumptions on which cash flows are based; and (c) using present value techniques in measuring an asset’s value in use. | No such guidance available. |
| 5 | Prohibits the recognition of reversals of impairment loss for goodwill. | Requires that the impairment loss recognised for goodwill should be reversed in a subsequent period when it was caused by a specific external event of an exceptional nature that is not expected to recur and subsequent external events that have occurred that reverse the effect of that event |
| 6 | Goodwill is allocated to cash-generating units (CGUs) or groups of CGUs that are expected to benefit from the synergies of the business combination from which it arose. There is no bottom-up or top-down approach for allocation of goodwill. | Goodwill is allocated to CGUs only when the allocation can be done on a reasonable and consistent basis. If that requirement is not met for a specific CGU under review, the smallest CGU to which the carrying amount of goodwill can be allocated on a reasonable and consistent basis must be identified and the impairment test carried out at this level. Thus, when all or a portion of goodwill cannot be allocated reasonably and consistently to the CGU being tested for impairment, two levels lof impairment tests are carried out, viz., bottom-up test and top-down test. |
| Ind AS 37 | AS 29 | |
| Provisions, Contingent Liabilities and Contingent Assets, | Provisions, Contingent Liabilities and Contingent Assets | |
| 1 | Requires creation of provisions in respect of constructive obligations also. The terms ‘legal obligation’ and ‘constructive obligation’ have been inserted and defined | NA |
| 2 | Requires discounting the amounts of provisions, if effect of the time value of money is material. | Prohibits discounting the amounts of provisions. |
| 3 | Requires disclosure of contingent assets in the financial statements when the inflow of economic benefits is probable. The disclosure, however, should avoid misleading indications of the likelihood of income arising. | Notes the practice of disclosure of contingent assets in the report of the approving authority but prohibits disclosure of the same in the financial statements. |
| 4 | Makes it clear that before a separate provision for an onerous contract is established, an entity should recognise any impairment loss that has occurred on assets dedicated to that contract in accordance with Ind AS 36 | No such specific provision |
| 5 | Gives an exception to this principle viz. such losses related to an onerous contract. | States that identifiable future operating losses up to the date of restructuring are not included in a provision. |
| 6 | Gives guidance on (i) Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds and (ii) Liabilities arising from Participating in a Specific Market— Waste Electrical and Electronic Equipment. | NA |
| Ind AS 38 | AS 26 | |
| Intangible Assets | Intangible Assets | |
| 1 | Does not include any such exclusion specifically as these are covered by other accounting standards. | Does not apply to accounting issues of specialised nature also arise in respect of accounting for discount or premium relating to borrowings and ancillary costs incurred in connection with the arrangement of borrowings, share issue expenses and discount allowed on the issue of shares. |
| 2 | The requirement for the asset to be held for use in the production or supply of goods or services, for rental to others, or for administrative purposes has been removed from the definition of an intangible asset. | Defines an intangible asset as an identifiable non-monetary asset without physical substance held for use in the production or supply of goods or services, for rental to others, or for administrative purposes. |
| 3 | Provides detailed guidance in respect of identifiability. | Does not define ‘identifiability’, but states that an intangible asset could be distinguished clearly from goodwill if the asset was separable, but that separability was not a necessary condition for identifiability. |
| 4 | In the case of separately acquired intangibles, the criterion of probable inflow of expected future economic benefits is always considered satisfied, even if there is uncertainty about the timing or the amount of the inflow. | There is no such provision. |
| 5 | If payment for an intangible asset is deferred beyond normal credit terms, the difference between this amount and the total payments is recognised as interest expense over the period of credit unless it is capitalised as per Ind AS 23. | There is no such provision. |
| 6 | Deals in detail in respect of intangible assets acquired in a business combination. | Refers only to intangible assets acquired in an amalgamation in the nature of purchase and does not refer to business combinations as a whole. |
| 7 | Gives guidance for the treatment of such expenditure. | Silent regarding the treatment of subsequent expenditure on an in-process research and development project acquired in a business combination. |
| 8 | Requires that if an intangible asset is acquired in exchange of a non-monetary asset, it should be recognised at the fair value of the asset given up unless (a) the exchange transaction lacks commercial substance or (b) the fair value of neither the asset received nor the asset given up is reliably measurable. | Requires the principles of existing AS 10 to be followed which requires that when an asset is acquired in exchange for another asset, its cost is usually determined by reference to the fair market value of the consideration given. It may be appropriate to consider also the fair market value of the asset acquired if this is more clearly evident. An alternative accounting treatment to record the asset acquired at the net book value of the asset given up; in each case an adjustment is made for any balancing receipt or payment of cash or other consideration also. |
| 9 | When intangible assets are acquired free of charge or for nominal consideration by way of government grant, an entity should, in accordance with Ind AS 20, record both the grant and the intangible asset at fair value. | Intangible assets acquired free of charge or for nominal consideration by way of government grant is recognised at nominal value or at acquisition cost, as appropriate plus any expenditure that is attributable to making the asset ready for intended use. |
| 10 | The rebuttable presumption is not there in Ind AS 38. Ind AS 38 recognizes that the useful life of an intangible asset can even be indefinite subject to fulfillment of certain conditions, in which case it should not be amortised but should be tested for impairment. | Is based on the assumption that the useful life of an intangible asset is always finite, and includes a rebuttable presumption that the useful life cannot exceed ten years from the date the asset is available for use. |
| 11 | Guidance is available on cessation of capitalisation of expenditure, de-recognition of a part of an intangible asset and useful life of a reacquired right in a business combination. | There is no such guidance. |
| 12 | Permits an entity to choose either the cost model or the revaluation model as its accounting policy | Revaluation model is not permitted. |
| 13 | Acknowledges that the useful life of an intangible asset arising from contractual or legal rights may be shorter than the legal life. | Does not include such a provision. |
| 14 | The residual value is reviewed at least at each financial year-end. If it increases to an amount equal to or greater than the asset’s carrying amount, amortisation charge is zero unless the residual value subsequently decreases to an amount below the asset’s carrying amount. | Specifically requires that the residual value is not subsequently increased for changes in prices or value. |
| 15 | Change in the method of amortisation is a change in accounting estimate.. | Change in the method of amortisation is a change in accounting policy. |
| 16 | No such requirement. | Also requires annual impairment testing of asset not yet available for use. |
| 17 | Does not include such intangible assets since they would be covered by Ind AS 105. | Intangible assets retired from use and held for sale are covered. |
| Ind AS 39 | AS 30 | |
| Financial Instruments: Recognitionand Measurement | Financial Instruments: Recognition and Measurement | |
| 1 | States that a financial asset or financial liability at fair value through profit or loss is classified as held for trading if ‘on initial recognition it is part of a portfolio of identified financial instruments………’. | States that a financial asset or financial liability at fair value through profit or loss is classified as held for trading if ‘it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking’. |
| 2 | Ind AS 39 states that ‘an entity shall not reclassify a derivative out of the fair value through profit or loss category while it is held or Issued. | AS 30 states that ‘an entity should not reclassify a financial instruments into or out of the fair value through profit or loss category while it is held or issued’ |
| 3 | Specifically states that ‘if a financial asset is reclassified in accordance with paragraphs 50B, 50D or 50E, and the entity subsequently increases its estimates of future cash receipts as a result of increased recoverability of those cash receipts, the effect of that increase shall be recognised as an adjustment to the effective interest rate from the date of the change in estimate rather than as an adjustment to the carrying amount of the asset at the date of the change in estimate.’ | Does not specify so. |
| 4 | If an entity is unable to measure separately the embedded derivative that would have to be separated on reclassification of a hybrid (combined) contract out of the fair value through profit or loss category, that reclassification is prohibited. In such circumstances the hybrid (combined) contract remains classified as at fair value through profit or loss in its entirety.’ | |
| 5 | Any forward contracts between an acquirer and a selling shareholder to buy or sell an acquiree that will result in a business combination at a future acquisition date. The term of the forward contract should not exceed a reasonable period normally necessary to obtain any required approvals and to complete the transaction.’ | |
| 6 | ‘for hedge accounting purposes, only assets, liabilities, firm commitments or highly probable forecast transactions that involve a party external to the entity can be designated as hedged items. It follows that hedge accounting can be applied to transactions between entities or segments in the same group only in the individual or separate financial statements of those entities or segments and not in the consolidated financial statements of the group.’ | |
| 7 | If a hedge of a forecast transaction subsequently results in the recognition of a financial asset or a financial liability, the associated gains or losses that were recognised in other comprehensive income in accordance with paragraph 95 shall be reclassified from equity to profit or loss as a reclassification adjustment (see Ind AS 1) in the same period or periods during which the hedged forecast cash flows affects profit or loss (suchas in the periods that interest income or interest expense is recognised). However, if an entity expects that all or a portion of a loss recognised in other comprehensive income will not be recovered in one or more future periods, it shall reclassify into profit or loss as a reclassification adjustment the amount that is not expected to be recovered.’ | |
| 8 | Does not exempt contracts for contingent consideration in a business combination from its scope | Provides an exemption. |
| Ind AS 103 | AS 14 | |
| Business Combinations | Accounting for Amalgamations | |
| 1 | Wider scope | Narrow scope |
| 2 | Prescribes only the acquisition method for each business combination. | There are two methods of accounting for amalgamation. The pooling of interest method and the purchase method. |
| 3 | Requires the acquired identifiable assets liabilities and non-controlling interest to be recognised at fair value under acquisition method. | The acquired assets and liabilities are recognised at their existing book values or at fair values underthe purchase method. |
| 4 | Requires that for each business combination, the acquirer shall measure any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. | States that the minority interest is the amount of equity attributable to minorities at the date on which investment in a subsidiary is made and it is shown outside shareholders’ equity. |
| 5 | The goodwill is not amortised but tested for impairment on annual basis in accordance with Ind AS 36 | Requires that the goodwill arising on amalgamation in the nature of purchase is amortised over a period not exceeding five years. |
| 6 | Deals with reverse acquisitions | Does not deal with the same |
| 7 | The consideration the acquirer transfers in exchange for the acquiree includes any asset or liability resulting from a contingent consideration arrangement. | Does not provide specific guidance on this aspect. |
| Ind AS 105 | AS 24 | |
| Non-current Assets Held for Sale and Discontinued Operations | Discontinuing Operations | |
| 1 | Specifies the accounting for non- current assets held for sale, and the presentation and disclosure of discontinued operations. | Establishes principles for reporting information about discontinuing operations. It does not deal with the non-current assets held for sale; fixed assets retired from active used and held for sale, |
| 2 | Discontinued operation is a component of an entity that either has been disposed of or is classified as held for sale. | There is no concept of discontinued operations but it deals with discontinuing operations. |
| 3 | The sale should be expected to qualify for recognition as a completed sale within one year from the date of classification with certain exceptions | Does not specify any time period in this regard as it relates to discontinuing operations |
| Ind AS 107 | AS 32 | |
| Financial Instruments: Disclosures | Financial Instruments: Disclosures | |
| 1 | Does not apply to contracts for contingent consideration in a business combination in case of acquirers. | Does not exempt such contracts. |
| 2 | Excludes from its scope puttable instruments dealt with by Ind AS 32 | Does not exclude the same from its scope. |
| Ind AS 108 | AS 17 | |
| Operating Segments | Segment Reporting | |
| 1 | Identification of segments under Ind AS 108 is based on ‘management approach’ i.e. operating segments are identified based on the internal reports regularly reviewed by the entity’s chief operating decision maker. | Requires identification of two sets of segments—one based on related products and services, and the other on geographical areas based on the risks and returns approach. One set is regarded as primary segments and the other as secondary segments. |
| 2 | Requires disclosures of revenues from external customers for each product and service. With regard to geographical information, it requires the disclosure of revenues from customers in the country of domicile and in all foreign countries, non-current assets in the country of domicile and all foreign countries. It also requires disclosure of information about major customers | Disclosures in existing AS 17 are based on the classification of the segments as primary or secondary segments. Disclosure requirements for primary segments are more detailed as compared to secondary segments. |
(Author is Working as Finance Professional in Automobile Industry and can be contacted at vcpote@rediffmail.com)
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Good job. It helps the students.
Great help. Good job.
Difference between Ind AS & AS is explained in an easiest way. Good efforts by CA Vivekanand. Thank you
The difference between INS AS and AS has been explained meticously, appreaciate the efforts of Vivekanand.
Very useful notes on differences between Indas and AS. Thanks for the best efforts put by the author.
Its very comprehensive and excellent!
Comprehensive and clear
grest work done
Superb!! Thanks a lot..
EXCELLENT PROACTIVE SELFLESS WORK.
It a very good effort made. Thanks to you for that. But there are some careless mistakes where by the statements of IND AS and AS have been interchanged. This error has occurred a lot of times. One such example is the 1st point in AS 15 Employee Benefit.
For this thanks will be a small word
for thanks will be a small word
Dear sir, you have done an awesome work by providing difference between AS and Ind AS. I want to say thanks for this. This difference will help student more.