IND AS SUMMARY – Generally applicable standards for SFS

Vivekanand 01 Oct 2015 12,577 Views 0 comment Print CA, CS, CMA | Articles

The article is prepared by Mr. DVSS Mallikarjun, Mr. Sunil Khandelwal and Mr. Vivekanand Pote. All the writers are working as a Finance Professionals in Automobile Industry at Pune. The writers may be reached at DVSS..mallikarjun@rediffmail.com ; khandelwal.sa27@gmail.com & vcpote@rediffmail.com.

IND AS No	Description	Applicability	Brief	Exis- ting GAAP	Description	Impact
1	Presentation of Financial Statements	Applicable	The standard prescribes the basis for preparation and presentation of FS to ensure comparability. A complete set of FS include Balance Sheet, Income Statement, SOCE, CFS & Notes to accounts. Assets and Liabilities are classified as current and non-current. As per the standard, some items are routed through OCI e.g. changes in revaluation surplus. Going concern, accrual basis of accounting and consistency are the fundamental accounting assumptions. Unless permitted by Ind AS an entity shall not offset assets and liabilities or income and expenses. Minimum requirements for structure and content of FS are stated in the standard. Requires explicit statement in FS of compliance with all Ind ASs.Inappropriate accounting policies are not rectified by disclosure in notes.	AS 1	Disclosures of Accounting Principles and Policies	Revised Draft Schedule III format is available which shall be followed for preparation of Ind AS financials. The transition date is 01.04.2016. FS for FY 15-16 will be prepared as per existing AS. For quarter ended June 16 the FS shall be prepared as per Ind AS and reconciliation from IND AS to IGAAP required. For comparative period of quarter ended for June 15 the FS shall be prepared as per Ind AS and reconciliation from IGAAP to IND AS required. Opening Balance Sheet as on 01.04.2015 as per Ind AS.
2	Inventories	Applicable	Inventories are assets (a) held for sale (b) in the process of production & (c ) materials and supplies. The cost of inventories comprises all costs of production, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Inventories are measured at cost or NRV whichever is less.FIFO and weighted average cost formulae are used for inventory valuation.	AS 2	Inventories	No impact
7	Statement of Cash Flows	Applicable	Bank overdrafts are included in cash & cash equivalents under IND AS 7. Hitherto it was part of financing activities. As extraordinary items are not permitted under IND AS, there is no classification of extraordinary items under operating, investing or financing activities. However, interest and dividends received are required to be classified as investing activities and payment of the same under financing activities. IND AS and IGAAP follow the same principle in this aspect.	AS 3	Cash Flow Statements	1) To include bank overdrafts which are repayable on demand as a part of cash equivalents. 2) interest received to be classified as from investing activity 3) interest paid to be classified as financing activity 4) indirect method of cash flow statement can be used as the standard states that entity can present cash flow statement in a manner most suitable to its business.
8	Accounting Policies, Changes in Accounting Estimates and Errors	Applicable	The objective of this standard is to prescribe the criteria for selecting and changing accounting policies and disclosing the effects of estimates and errors. The entity shall apply the relevant accounting standard when determining the accounting policy. Policies should be consistent from period to period to allow comparison. AP may be changed only when it is required by standard or when the change would result better information. The effect of change must be clearly disclosed. Application of retrospective AP requires adjustment of the prior period opening balance of each component of equity. Adjustment of carrying amount of asset, liability or the consumption of an asset is change in accounting estimate. The distinction is required for change in accounting estimate and change in accounting policy.Rectification of errors in the immediate comparative period, restate the comparative period. If the errors are corrected for the period before the immediate comparative period, correct the opening balances. The distinction is required for change in accounting estimate and change in accounting policy.	AS 5	Net Profit or Loss for the period, prior period items and changes in accounting policies	Estimates used in IGAAP can be carried in Ind AS, unless there are errors, is a carve out available for smooth transition.
10	Events after the Reporting Period	Applicable	The objective of the standard is to prescribe the adjustments and disclosures for events after the balance sheet date till the approval of financial statement. Events occurring after the balance sheet date may be Adjusting events ( when the condition existed at the balance sheet date ) or Non-adjusting events ( when the event arose after balance sheet date ). The former needs to be adjusted in FS but the latter need not be.The date of approval is the end of post balance sheet period. The date of approval by board is considered as approval date regardless of subsequent approvals under law.	AS 4	Contingencies and Events occurring after the Balance Sheet Date	1) Material Non-adjusting events are required to be disclosed in the financial statements 2) The date of approval by board is considered as approval date regardless of subsequent approvals under law
12	Income Taxes	Applicable	Difference in accounting profit and taxable income may arise because of temporary difference in asset or liability. The deferred tax liability should be recognised for all taxable temporary differences.Deferred tax asset should be recognised for all deductible temporary differences. DTA / DTL should be measured using tax rates that are expected to be applied when the liability is settled or asset realised.An entity may record DTA when it is probable that future taxable profit will be available. In our case, the huge unused tax losses are available. So there is no possibility that the temporary timing differences will be reversed in the foreseeable future. Hence, DTL / DTA need not be recorded in the books however, the same should be disclosed in notes to accounts.	AS 22	Taxes on Income	The assessment of DTL / DTA shall be made for every reporting period using the balance sheet approach. The probability of reversal of deductible temporary differences and availability of taxable profit shall be ascertained.
16	Property, Plant and Equipment	Applicable	The standard prescribes componentization in case of different useful lives of PPE.Major repairs and overhauling expenditure shall be capitalised .If the credit period for purchase of PPE is deferred beyond normal credit terms , difference between the cash price equivalent and total payment is charged as interest expenses to Income Statement unless such payment of interest is capitalised under Ind AS 23 Borrowing Costs. AS 11 The effects of changes in foreign Exchange Rates allows companies to adjust currency exchange differences arising on long term foreign currency monetory items to the carrying value of PPE. Schedule II to the Act, prescribes useful lives for various items of PPE. It also fixes the residual value for items of PPE maximum at 5% of the original cost. If a company adopts a useful life/ residual value different from that specified in schedule II , the financial statements should disclose such differences and provide justification in this behalf duly supported by technical advice.Ind AS 16 requires that the initial estimates of the costs of dismantling and removing the items and restoring the site on which it is located should be included in the cost of the respective items of property plant and equipment.	AS 10 and AS 6	Accounting for Fixed Assets and Depreciation Accounting	1) To identify the assets in FAR where component accounting would be applied. e.g. paint shop plant & machinery. 2) To study the useful life of component of which useful life is different from main asset then , it is to be derecognised from already capitalised machinery and then to show capitalisation separately. 3) To use the carrying values of all assets as on the date of transisition to Ind ASs,in accordance with previous GAAP as an acceptable starting point under Ins AS. 4) The fact and policy regarding this option to disclose 5)Aadopting a useful life/ residual value different from that specified in Schedule II , the financial statement will have to disclose such difference and justfication for the same will have to provide with support of technical advice. 6) To check whether major repairs and overhaul expenses to be capitalised as replacement costs 7) To decide about inclusion of dismantling and removal cost of PPE in its initial costs.8) to decide about estimates of useful lives, depreciation method and residual values to be reviewed at least at the end of each financial year. 9) Any change in depreciation method is treated as change in estimate and will have to applied prospectively.
17	Leases	Applicable	A lease is an agreement whereby the lessor provides to the lessee the right to use an asset for an agreed period of time in return for payment or for series of payments. In case of finance lease substantially all the risks and rewards of ownership are transferred. The other lease is operating lease. When the land has indefinite economic life, the land element is normally classified as an operating lease unless the title is expected to pass to leassee.Building element is classified as finance or operating lease depending on the agreement.	AS 19	Leases	As per IGAAP the leasehold land is capitalised in the books. As per Ind AS 17, the land lease is classified as operating lease. Hence the leasehold land shall be derecognised at carrying amount. The disclosure of advance lease payments shall be made in the notes. The other leases shall be identified in cancellable and non-cancellable and the lease payments to be made in next 1 year, 1 to 5 years and later than 5 years shall be disclosed in the notes.
19	Employee Benefits	Applicable	Ind AS 19 Employee Benefit requires the impact of remeasurement in net defined benefit liability ( asset) to be recognised in other comprehensive income( OCI ).Remeasurement of net defined benefit liability(asset) comprises actuarial gains or losses , return on plan assets( excluding interest on net/ asset liability) and any change in the asset ceiling. Under Ind AS 19 , unvested service costs are recognized immediately as they occur , rather than being spread over the vesting period. Employee benefits arising from constructive obligations are also covered.The term employee includes wholetime directors.	AS 15 ( R 2005)	Employee Benefits	1) Employee benefits arising from constructive obligations are to be covered. 2) Employee includes directors also 3) Actuarial gains & losses due to changes in actuarial assumptions shall be recognised in other comprehensive income and should not be recognised in profit & loss.
20	Accounting for Government Grants and Disclosure of Government Assistance	Applicable	Government assistance is direct action to provide economic benefits to qualifying entity.It does not include indirect help.Government grants are the transfer of resources to qualifying entity.The entity qualify for past or future compliance with grant conditions	AS 12	Government Grants	Government grants are the transfer of resources to qualifying entity. An entity shall apply the definition of government grant to conclude whether the grant is government grant and then the prescribed AP shall be followed.
21	The Effects of Changes in Foreign Exchange Rates	Applicable	The objective of this standard is to prescribe the accounting for transactions in foreign currencies and foreign operations. The initial transaction shall be recorded at the at the exchange rate on the day of the transaction. The rate shall be used is the spot rate on the day of the transaction. However an average rate may be used for a week or a month. Monetary items ( money held, receivables and payables ) shall be reported at the closing rate on the reporting period. On monetary items ( PPE ) shall be reported at the exchange rate of the transaction.The exchange differences shall be recognised in period’s income statement except for integral operations. The disclosure shall be made for total net exchange differences included in profit for the period and net exchange differences classified as equity.	AS 11	The Effects of Changes in Foreign Exchange Rates	No change. The existing procedure of recognising foreign exchange differences through profit or loss shall continue.
23	Borrowing Costs	Applicable	Items included in borrowing costs are interest on bank overdraft & borrowings (short term or long term ), amortization of fund raising costs, finance charges as a part of finance lease & exchange differences form FC relating to interest costs ( no guidance has yet provided ).A qualifying asset is one that takes substantial period of time to prepare for its intended use or sale. Qualifying asset includes iintangible assets.Borrowing costs are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised and form part of COA. Other borrowing costs are recognized as expense.Investment income generated from investment out of loan funds specifically taken for qualifying asset shall be deducted from borrowing cost.When the borrowing is made out of general pool of funds, the borrowing cost shall be capitalised using the capitalization rate.When the active development of asset is suspended for extended periods, the capitalisation of borrowing cost should also be suspended.When substantially all preparatory actions are complete the capitalization of borrowing costs should cease. The disclosure shall be made in respect of accounting treatment used for borrowing cost, amount of borrowing costs capitalized during the year and capitalization rate used.	AS 16	Borrowing Costs	Now the borrowing cost standard is applicable to intangible assets also.The borrowing cost shall be capitalised on the basis of effective interest rate method.When the borrowing is made out of general pool of funds, the borrowing cost shall be capitalised using the capitalization rate. The deffered fund raising expenses are deducted from borrowings. Exchange differences arising from the FC borrowings to the extent these are regarded as an adjustment to interest costs. ( No guidance has yet been provided on the computation.)
24	Related Party Disclosures	Applicable	Identify the related parties as per Ind AS 24 and related party transactions. Identify the outstanding balances with the related parties. Identify when to disclose the related and party and what to disclose. As per the definition of related party, joint venturer is a related party. Member of of KMP of the enterprise as well as member of KMP of parent, both are considered as related parties. Hence there is need to evaluate whether more disclosure in RPD required for disclosing the transactions with KMPs. Transactions with directors of the entity and its parent are considered as related party transactions. A person who has the authority and responsibility for planning, directing and controlling the activities of the entity is a related party.The relationship with the parties shall be disclosed irrespective of the transaction during the year. A party established for the post employment benefit plan is also considered as a related party.	AS 18	Related Party Disclosures	The relationship with the parties shall be disclosed irrespective of the transaction during the year. A party established for the post employment benefit plan is also considered as a related party.
32	Financial Instruments: Presentation	Applicable	The objective of the standard is to establish principles for presenting the financial instruments as liabilities or equity and for offsetting financial assets and financial liaibilities. A financial instrument is any contract that gives rise to financial asset of one entity and a financial liability or equity instrument of another entity.The standard requires an issuer to classify the instrument, or its component parts on recognition as a financial liability, a financial asset or an equity instrument in accordance with the substance of the contractual arrangement. The presentation shall be made on the basis of substance over form for compound financial instruments. Interest, dividends, losses and gains related to FA and FL may be recognised as income or expense in income statement or revenue reserves depending on the classification. An entity shall offset FA and FL only when it has legally enforceable right to set off and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.	AS 31	Financial Instruments: Presentation	Financial instruments shall be bifurcated into derivative and non-derivative financial instruments. Disclosure shall be made in respect of cash and cash equivalent, Available for sale financial assets, Loans and receivables and Trade and other payables. Disclosure shall be made in respect of forward contracts entered for hedging.
33	Earnings per Share	Applicable	An entity shall disclose EPS in its SFS as well as CFS. Basic and Diluted EPS shall be calculated and shall be presented on the face of income statement. EPS be presented even if is negative. Potential equity shares should be considered only if their conversion would decrease the basic EPS.	AS 20	Earnings per Share	No change. The existing procedure EPS/DEPS would continue.
34	Interim Financial Reporting	Applicable	An entity that presents its first Ind AS Financial statements is a first -time adopter and should apply Ind AS 101 in the preparation of those financial statements.It should also apply Ind AS 101 in each interim report prepared under Ind AS 34 Interim Financial Reporting for part of a period covered by its first Ind AS financial statements.For a company 31 March year end , this will mean that if Ind AS 34 is adopted for quarterly reporting, first financial information prepared under Ind AS will be at 30 June 2016 and the company will need to apply Ind AS 101 in the preparation of quarterly report. Moreover, comparable quarter, i.e.30 June 2015 numbers shall also be presented Ind AS. If first time adopter presents an interim financial report under Ind AS 34 , then the report should include : 1) A reconciliation of its equity under previous GAAP at the end of that comparable interim period to its equity under Ind AS at that date.A reconciliation with its total comprehensive income under the previous GAAP for that period.The starting point for that reconciliation shall be total comprehensive income under the previous GAAP for that period or, if an entity did not report such a total, profit or loss under the previous GAAP.	AS 25	Interim Financial Reporting	Minimum contents of interim financial reports are : a) condensed balance sheet,b) condensed income statement, c) condensed cashflow statement,d) condensed statement showing changes in equity, and e) selected explanatory notes The first interim financials of an entity shall ensure to include : a reconciliation of its equity under previous GAAP at the end of that comparable interim period to its equity under Ind AS as on that date.A reconciliation with its total comprehensive income under the previous GAAP for that period.The starting point for that reconciliation shall be total comprehensive income under the previous GAAP for that period or, if an entity did not report such a total, profit or loss under the previous GAAP.
36	Impairment of Assets	Applicable	Ind AS 36 requires that an entity should estimate the following assets for impairment. This impairment test may be performed at any time during an annual period , provided it is performed at the same time every year.1) An intangible asset with an indefinite useful life 2) an intangible asset that is not yet available for use 3) goodwill acquired in a business combination. Ind AS 36 does not permit an impairment loss recognized for goodwill to be reversed in subsequent period.	AS 28	Impairment of Assets	No change
37	Provisions, Contingent Liabilities and Contingent Assets	Applicable	The objective of the standard is to ensure the proper recognition criteria and the measurement bases are applied to provisions, contingent liabilities and contingent assets.Provisions are distinguished from liabilities in respect of uncertainty of timing or amount. Contingent liability is a possible obligation depending on the occurrence or non-occurrence of uncertain future events or a present obligation but not recorded as there is no probability of payment or obligation can not be measured. A provision shall be recorded in the books on the basis of estimation but the contingent liability shall not be recorded but needs disclosure. A provision shall be discounted using a pre tax discount rate where the time value of money is material. Provision should not be recorded for future operating losses. The expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognised when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement shall be treated as a separate asset.Provisions shall be reviewed at the end of each reporting period and adjusted to reflect the current best estimate. A provision shall be used only for expenditures for which the provision was originally recognized. The movement for each class of provision shall be disclosed.	AS 29	Provisions, Contingent Liabilities and Contingent Assets	Estimates used in IGAAP can be carried in Ind AS, unless there are errors is a carve out available for smooth transition. If it is certain that the reimbursements will be received against the provision, a separate asset shall be recognised for the reimbursements.The provision shall be recognised in full. This will be applicable in case of Provision for Interest on Excise duty on TOP. A provision shall be used only for expenditures for which the provision was originally recognized. The movement for each class of provision shall be disclosed.
38	Intangible Assets	Applicable	Ind AS 38 requires an intangible asset to be amortised over its useful life. In accordance with Ind AS 38 , several methods may be used for amortization of an intangible asset with finite useful life.Under Ind AS 38 Intangible Assets , an intangible asset can have indefinite useful lives.Such assets are required to be tested for impairment at least on an annual basis and are not amortized.Ind AS 38 prohibits the use of revenue based amortization method.	AS 26	Intangible Assets	No impact.
39	Financial Instruments: Recognition and Measurement	Applicable	This standard deals with accounting for financial assets and financial liabilities with reference to recognition, classification and treatment for gain / loss. A financial instrument is any contract that gives rise to a financial asset of one company and financial liability or equity instrument of another company.FA or FL shall be recognised when the entity becomes the party to the contract. Hence derivatives shall be recorded in the books though there is marginal or no initial investment. The classification determines measurement of item at amortised cost or at fair value and whether the gain / loss should be recognised either profit or loss or reserves. FA are classified in four categories i.e. FVTPL. HTM, Loans and receivable and AFS. FL are classified in two categories FVTPL & amortized cost. Derivatives shall be measured at FVTPL.In case of effective hedge, FV can be recognised in reserves. Hedge accounting is a risk management technique designed to offset changes in fair value or cash flow. There are two types of hedges i.e. fair value hedge and cash flow hedge. The objective of hedge accounting is that gains and losses on the hedging instrument and hedge item are recognised in the same period. Hedge accounting is optional. Risk management policies and hedging activities, terms conditions and accounting policies, interest rate risk, credit risk shall be disclosed.	AS 30	Financial Instruments: Recognition and Measurement	The loans shall be carried at amortized cost using effective rate of interest method. The effective rate of interest method should be followed from the opening balance sheet. The forward contracts are the hedging instruments. These forward contracts shall be valued marked to market.
101	First-time Adoption of Indian Accounting Standards	Applicable	An entity shall use the same accounting policies in its opening Ind AS balance sheet and through out all periods presented in its Ind AS financials statements.Those accounting policies shall comply with each Ind AS effective at the end of its first Ind AS reporting period, except as specified in Ind AS 101.It shall in opening Ind AS Balance Sheet : 1) recognise all assets and liabilities whose recognition is required by Ind ASs, 2) not recognise items as assets or liabilities if Ind AS do not permit such recognition, 3) reclassify items that it recognised in accordance with previous GAAP as one type of assets, liability or component of equity , but a different type of asset, liability or component of equity in accordance with Ind ASs and 4) apply Ind ASs in measuring all recognised assets and liabilities.The accounting policies in opening Ind AS Balance Sheet may differ from those it used for the same date using previous GAAP. The resulting adjustments arise from events and transactions before the date of transition to Ind ASs shall be recognised directly in retained earnings. Ind AS 101 provides option to use carrying values of all such assets as on the date of transition to Ind ASs, in accordance with previous GAAP as an acceptable starting point under Ind AS.If an entity uses this exemption , the fact and the accounting policy shall be disclosed by the entity until such time that those items of property , plant and equipment , investment properties or intangible assets , as the case may be , are significantly depreciated , impaired or derecognised from the entity’s Balance Sheet.	NA	NA	1) Opening Ind As balance sheet shall : a) recognise all assets and liabilities whose recognition is required by Ind ASs, b) derecognise the asset or liability if not permitted by Ind AS : C) reclassify items that it recognised in accordance with previous GAAP as one type of asset, liability or component of equity, but are a different type of assets, liability or component of equity in accordance with Ind ASs.d) apply Ind ASs in measuring all recognised assets and liabilities. 2) Accounting policies to change as per rquirements of Ind AS 3) adoption of new policies if any 4) An entity shall have to explain how the transition from previous GAAP to Ind AS affected its reported Balance Sheet, financial performance and cash flows.
107	Financial Instruments: Disclosures	Applicable	The objective of the standard is to provide disclosure in FS that enable users to evaluate the significance of financial instruments for the entity’s financial position and performance and nature and extent of risks arising from financial instruments to which the entity is exposed during the period and at reporting date and how the entity manages those risks.The disclosures shall be made on the basis of categories of FA or FL, collateral, compound financial instruments, defaults and breaches, hedge accounting, fair value of the instruments, credit risk, liquidity risk and market risk.	NA	NA	Financial instruments shall be bifurcated into derivative and non-derivative financial instruments. Disclosure shall be made in respect of cash and cash equivalent, Available for sale financial assets, Loans and receivables and Trade and other payables. Disclosure shall be made in respect of forward contracts entered for hedging.
108	Operating Segments	Applicable	Definition of operating segment: It is a component of an undertaking that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by CODM. IND AS adopts management reporting approach to identify operating segments. IND AS 108 does not impose the requirement to report segment information on a product or geographical basis. This standard requires operating segments to be identified on the basis of internal reports on components of the entity that are regularly reviewed by the Chief Operating Decision Maker (CODM), in order to allocate the resources and also to assess its performance. Unlike AS 17, IND AS 108 does not define segment revenue, segment profit and loss, segment assets and segment liabilities. As a result diversity of reporting practices will increase. On adoption of IND AS, company will have to compile information of revenue generated by each customer to furnish disclosures required by IND AS 108. Under this, disclosures are required when an entity receives more than 10% of its revenue from a single customer. In such instance, an entity must disclose this fact, the total amount of revenue earned from each such customer and the name of the operating segment that reports the revenue. CODM could be CEO, COO or group of executives such as board of directors or a management committee. If the policies followed for computing information for MIS does not match with financial statements, an entity will need to furnish reconciliation. Hence entities need to devise or upgrade systems to prepare reconciliation between MIS and the accounting system.	AS 17	Segment Reporting	Operating segments are identified based on financial information regularly reviewed by CEO. Segment profit/loss is reported based on same measurement basis as used by CEO. Reconciliation of segment performance measures with corresponding amounts reported in financial statements is required.
115	Revenue from contracts with customers	Applicable	The entity should perform 5 steps in recognizing revenue. (1) Identify the customer (2) Identify the performance obligations in the contract (3) Determine the transaction price (4) Allocate the transaction price to performance obligations in the contract and last (5) Recognize the revenue when the entity satisfies as and when obligations are satisfied. Under this, revenue is to be measured at the amount of consideration to which the entity expects to be entitled (rather than contractually specified) in exchange for transferring promised goods & services. Unlike AS 9 where no guidance is available, this standard introduced the concept of variable consideration. Under the new standard, if transaction price is subject to variability, an entity would be required to estimate transaction price by using either (i) the expected value (probability-weighted) approach or (ii) the most likely amount approach depending on which method the entity expects to better predict the amount of consideration to which the entity is entitled. As far as services are concerned, entity should recognize revenue over time by measuring progress towards completion. Under the new standard, entities recognise revenue as “control” of the goods or services underlying a performance obligation is transferred to the customer. This control-based model differs from the risks-and-rewards model generally applied under current revenue recognition guidance. Entities must first determine whether control is transferred over time.	AS 9	Revenue Recognition	Need to review contracts with the customers.
	Carve outs	Applicable	(1) Ind As 21 permits an option to recognise exchange differences from translation of certain long term monetary items from FC to functional currency directly in equity.The accumulated exchange differences to be amortized to profit or loss in appropriate manner. (2) Fair value of liabilities which upon initial recognition are designated at FVTPL , any change in FV consequent to change in entity’s own credit risks shall be ignored.(3) Entity may use carrying value of all items of PPE on the date of transition in accordance with previous GAAP as an acceptable starting point under Ind AS. (4) Where there is a breach of a material provision of the long term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand , the entity does not classify the liability as current, if the lender agreed, after the reporting period and before the approval of the FS, not to demand payment as a consequence of breach. (5) Ind AS 17 requires lease rentals should be charged to statement of profit or loss in accordance with the lease agreement.