Beruflich Dokumente
Kultur Dokumente
Basis
Presentation of
financial statements
Components of
financial statements
INDIAN GAAP
IFRS
INDIAN AS(NEW)
AS 1- disclosures of accounting
IAS 1 Presentation of
Indian AS 1 Presentation of
policies
financial statements
financial statements
AS 5- net profit or loss for the
period, prior period items and
change in accounting policies
As per the requirement relating to Under IFRS financial statement Under IFRS financial statement
financial statements presentation comprises
comprises
setup by various regulatory bodies
(a) Statement of financial
(a) Statement of financial
such as schedule VI of companies act
position
position(Notes including
1956, schedule III of Banking
(b) Statement
of
summary of accounting
regulation act(for banks), IRDA(for
comprehensive
income
policies and explanatory
insurance
companies),
SEBI
(displaying profit and
notes)
guidelines (for mutual funds) :
loss)
(b) Statement
of
Presentation
of Schedule VI of companies Act 1956
financial statements- have provided formats of P&L A/C
Formats
and Balance sheet.
Formats can be modified if any
changes are required.
Presentation
of Items, the knowledge of which might Omission or misstatements are
financial statements- influence the decisions of the user of material if individually or
definition of material the financial statements.
collectively they could affect the
economic decisions that users
takes on the basis of financial
statements.
Fair presentation of Fair presentation requires compliance Fair presentation needs faithful
financial statements
with regulatory framework applicable representation of the effects of the
and AS framework. Departure from transactions, other events and
framework
and
regulatory conditions in accordance with the
174
comprehensive income
(displaying profit and
loss)
(c) Statement of cash flow
(d) Statement of changes in
equity
Comparative figures for one year
are also to be presented.
Indian as do not mandate which
entities are required to prepare
consolidated financial statements
as the required to prepare
consolidated
financial
as
required to present consolidated
or separate financial statements
is regulated by governing
statutes in India.
AS 1 does not include any
illustrative format of financial
statement though Ind AS 27 does
set out the form in which
consolidated financial statement
are to be presented.
-Same as IFRS-
-Same as IFRS-
Classification
of
financial
liabilities
under
refinancing
arrangements
Presentation
of
income
statement/statement
of
comprehensive
income
-Same as IFRS-
-Same as IFRS-
Presentation
of
income
statement/statement
of
comprehensive
income
-Same as IFRS-
Is to be presented as a part of
balance
sheet
containing
information similar to IFRS.
-Same as IFRS-
Estimation
uncertainty
Capital
INVENTORIESPRIMARY
Scope
AS 2- Valuation of Inventories
No scope exemption for any
inventories held by commodity traders.
AS 2 totally excludes from its scope
producer inventories of livestock
agriculture and forest products, and
mineral oils, ores and gases to the
extent that they are measured at net
releasable value on the basis of wellsettled practices of that industry.
WIP of service providers in ordinary
course has been scoped out of AS 2.
-Same as IFRS-
-Same as IFRS-
Ind AS 2- Inventories
-Same as IFRS-
Classification
inventories
Cash
statements
-Same as IFRS-
Changes in ownership
interest
Investing activities
Accounting policies,
changes
in
accounting estimates
and errors change
Similar to IFRS
May
be
classified
as
operating/investing/financing
activities in a manner consistent
from time to time.
in
accounting
policies
Accounting policies,
changes
in
Accounting Estimates
and Errors changes
in accounting policies
Errors
New
accounting No requirements to disclose
pronouncements
Similar to IFRS
or interpretation that
specifically applies to
a transaction
pronouncements
by
other
standards setting bodes that use
similar conceptual framework of
IFRS to the extent these do not
conflict with IFRS.
specifically
applies
to
a
transaction, other events or
condition, the management while
developing accounting policy ,
should first consider the most
recent pronouncements of the
IASB and in absence thereof
standards set by other standards
setting bodies that use similar
conceptual
framework
of
developing AS.
Events
occurring AS 4 contingencies and events IAS 10 events after the Ind AS 10 events after the
after the reporting occurring after the balance sheet reporting period
reporting period
periodprimary date
literature
As per schedule VI disclosures of Declared
Dividends
dividends
to
be
Similar as IFRS
proposed dividends in the notes to recognized in the period when it
accounts. However AS 4 overrides the is declared.
requirements
of
Schedule
VI,
dividends declared or proposed after
balance sheet date but before approval
of financial statements will have to be
recorded as a liability.
AS 7: construction contracts
Construction
IAS 11: Construction Contracts Ind AS 11: construction
contracts primary Guidance note(Issued by ICAI) on IFRIC 12: Service concession contracts
recognition of revenue by Real estate Arrangements
literature
Ind AS 11: appendix A
developers
IFRIC 15: Agreements for the service
concession
construction of the real estate
Arrangements: Disclosures
SIC 29: Service concession (Implementation
of
Arrangements: Disclosures
Notification of Appendix A &
B has been deferred for further
time)
Service
concession No specific guidelines, ICAI have Prescribes accounting by private Similar to IFRS
182
Arrangements: Scope
Service
concession No specific guidelines
Arrangements:
Recognition
Similar to IFRS
184
Deferred
taxes
Recognition
deferred tax
and liabilities
Recognition of taxes
on items recognized
in
other
comprehensive
income or directly in
equity
Similar to IFRS
Similar to IFRS
Similar to IFRS
Similar to IFRS
Scope
Replacement costs
Revaluation
Depreciation
Compensation
impairments
Transfer
from Transfer may be through profit and loss
account.
revaluation reserve
Residual value
Similar to IFRS
Similar to IFRS
Similar to IFRS
Reassessment
of Not required
Similar to IFRS
useful
life
and
depreciation method
Change in method of Requires retrospective re-computation
Similar to IFRS
of depreciation and any excess or
depreciation
deficit is required to be adjusted in the
period in which such change is
affected. Such a change is treated as a
change in accounting policy and its
effect is quantified and disclosed.
Entities might routinely sells items Similar to IFRS
Routine sale of assets No guidance
of property, plant and equipment
previously held for
that they have previously held for
rental purpose
rental to others, proceeds received
from the sale of such assets should
187
LEASESPRIMARY
LITERATURE
AS 19 - LEASES
be recognized as revenue in
accordance with IAS 18.
IAS 17 LEASES
IFRIC 4 DETERMINING
WHEATHER
AN
ARRANGEMENT CONTAINS
A LEASE
SIC 15 OPERATING LEASE
INCENTIVES
SIC 27 EVALUATING THE
SUBSTANCE
OF
TRANSACTIONS INVOLVING
THE LEGAL FORM OF
LEASE
IND AS 17 LEASES
IND AS 17 APPENDIX AOPERATING
LEASE
INCENTIVES
IND AS 17 APPENDIX BDETERMINING WHEATHER
AN
ARRANGEMENT
CONTAINS A LEASE
IND AS 17 APPENDIX CDETERMINING WHEATHER
AN
ARRANGEMENT
CONTAINS A LEASE
(Notification of appendix C has
been deferred. The effective date
for its implementation will be
announced separately)
Same as IFRS except a property
interest in an operating lease
cannot be accounted for as
investment property as the fair
value model is not permissible by
Ind AS 40.
Similar to IFRS
189
Similar to IFRS
Same as IFRS
Evaluating
the No specific guidance
substance
of
transactions involving
the legal form of
lease
Leases - initial direct
costs of lessors for
assets under a finance
lease
Same as IFRS
Similar to IFRS.
Similar to IFRS
Similar to IFRS
Ind AS 18 Revenue
Ind AS 18 appendix A, B, C
Similar to IFRS.
XX
Revenue - principal No specific guidance is given on Guidance on whether an entity is Similar to IFRS
versus agent
determining whether an agency acting as a principal or as an
relationship exists.
agent is included in the
illustrative
examples
accompanying (but not forming
part of) IAS 18. T he guidance
lists down features that indicate
that an entity is acting as a
principal.
Revenue
- Revenue is recognized at the nominal Fair value of revenue from sale of Similar to IFRS.
measurement
amount of consideration receivable.
goods and services when the
inflow of cash and cash
On AS 30 becoming effective, there equivalents
is
deferred
is
will be no difference between AS 9 determined by discounting all
and IAS 18.
future receipts using an imputed
rate of interest. The difference
between the fair value and the
nominal amount of consideration
is recognized as interest income
using the effective interest
method.
Revenue - exchange
No specific guidance.
The
accounting
treatment Similar to IFRS.
transactions
depends on whether the exchange
transaction involves goods and
services of similar nature and
value (for example, exchange of
commodities like oil or milk).
Exchanges of similar assets:
Carrying amount of the asset
received
= Carrying amount of the asset
surrendered + cash or cash
193
equivalent transferred
applicable.
On AS 30 becoming effective, there
will be no difference between AS 9
and IAS 18.
Revenue - dividend Dividend income declared out of
recognition in the post-acquisition profits should be
separate
financial recognized in the statement of profit
statements
and loss. Dividends declared out of
pre-acquisition profits will go to
reduce the cost of the investment.
Requires
recognition
using Similar to IFRS.
percentage of completion method.
Revenues from installation fees
and production commission are
recognized with reference to
stages of completion, unless the
installation is incidental to sale.
Fair value of services provided is Similar to IFRS.
measured with reference to nonbarter similar transactions that
occur frequently, represent a
substantial number of the
transactions,
consideration
involves cash or other securities
that has a reliable measure of fair
value and do not involve
transaction with the same
195
Customer
Programs.
Employee
definitions
197
Absences
where
the Similar to IFRS
compensation for the absences is
due to be settled within 12
months after the end of the
reporting period in which the
employees render the related
service.
curtailments
and reductions as curtailments or negative future salary increases are linked
negative past service past service cost.
to benefits payable for the past
cost
service will be a case of
curtailment.
Government Grants AS
12
Accounting
- primary literature Government Grants
Similar to IFRS.
Similar to IFRS.
Similar to IFRS.
T he asset and the grant may be T he asset and the grant should
accounted
at
fair
value. be accounted at fair value.
Alternatively, these can be
recorded at nominal amount.
Prohibited to be classified as an
extraordinary item.
Foreign Exchange - AS 11 - The Effects of Changes in IAS 21 - The Effects of Changes Ind AS 21 - The Effects of
primary literature
Foreign Exchange Rates
in Foreign Exchange Rates
Changes in Foreign Exchange
Rates
Effects of Changes in Foreign currency is a currency other Functional currency is the Similar to IFRS.
203
Foreign
Exchange
Rates functional
and
presentation
currency
Effects of Changes in
Foreign
Exchange
Rates exchange
differences
Effects of Changes in
Foreign
Exchange
Rates translation in
the
consolidated
financial statements
Effects of Changes in
Foreign
Exchange
Rates scoping for
derivatives
Effects of Changes in
Foreign
Exchange
Rates
forward
contracts
206
Similar to IFRS.
Similar to IFRS.
Similar to IFRS.
party
Related
definition
member
family.
Partyof close
of
the
Related
Party
Disclosures post
employment benefit
Similar to IFRS.
plans
Related
Disclosures
exemptions
Party
-
Related
Party
Disclosures -items to
be disclosed.
Related
Party
Disclosures key
management
personnel
Accounting
and There is no equivalent standard.
Reporting
By
Retirement Benefit
Plan
primary
literature
Accounting
and There is no equivalent standard.
Reporting by
Retirement
Benefit
Plan
Consolidated
AS 21 - Consolidated Financial
Financial
Statements
Statements
primary literature
no
equivalent
Sets
out
the
reporting There is no equivalent standard.
requirements
by defined contribution and
benefit plans, including a
statement of net assets available
for benefits and disclosure of the
actuarial present value of
promised benefits.
Specifies the need for actuarial
valuation of the defined benefits
and the use of fair values for plan
investments.
IAS 27 (2008) - Consolidated Ind AS 27 - Consolidated and
and
Separate Financial Statements
Separate Financial Statements
Ind AS 27 - Append ix A
SIC 12 - Consolidation - Special Consolidation
Special
Purpose Entities
Purpose Entities
consolidate
their consolidated financial statements. T
investments
in he accounting standard is required to
subsidiaries
in be followed if consolidated financial
accordance with IAS statements are presented.
27.
The Securities and Exchange Board
A subsidiary is an of India requires entities listed and to
entity
that
is be listed to present consolidated
controlled by another financial statements.
entity (known as the
parent).
financial
statements
as
requirements
to
present
consolidated or separate financial
statements is regulated by
governing statutes in India.
Similar to IFRS.
of an enterprise; or
b. 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.
Consolidated
and
Separate
Financial
Statements dual
control
Consolidated
and
Separate
Financial
Statements potential
voting rights
Consolidated
and
Separate
Financial
Statements
exclusion
of
subsidiaries,
associates and joint
ventures
Consolidated
and
Separate
Financial
Statements - uniform
accounting policies
Consolidated
and
Separate
Financial
Statements - reporting
dates
Consolidated
and
Separate
Financial
Statements - noncontrolling interest
currently
exercisable
or
convertible, including potential
voting rights held by another
entity, are considered when
assessing control.
If on acquisition a subsidiary Similar to IFRS.
meets the criteria to be classified
as held for sale in accordance
with IFRS 5, it is included in the
consolidation but is accounted for
under that standard.
Statements
- equity of the subsidiary and any
allocation of losses to further losses applicable to minority
non-controlling
are adjusted against majority interest
interests
except to the extent that the minority
has a binding obligation to, and is
able to, make good the losses.
Consolidated
and No specific guidance.
Separate
Financial
Statements - disposals
Consolidated
and
Separate
Financial
Statements
Accounting
for
investments
in
subsidiaries
in
separate
financial
statements of the
parent
Consolidated
and
Separate
Financial
Statements special
purpose
entities
(SPEs)
Investments
in
Associates - primary
literature
Investments
in
Associates
significant influence
Investments
in
Associates - potential
voting rights
Investments
in Currently there is no exemption for
Associates - scope
investments made by venture capital
organizations, mutual funds, unit
trusts and similar entities from
applying the equity method.
The limited revision to AS 23, on
becoming effective, eliminates this
difference between AS 23 and IAS
28.
IAS 28 Associates
Investments
in Ind AS 28 - Investments in
Associates
Similar to IFRS.
Similar to IFRS.
Investments
in Loss in excess of the carrying amount Losses recognized under the
Associates - share of of investment is not recognized.
equity method in excess of the
losses
investors investment in ordinary
shares are applied to other
components of the investors
interest such as long-term loans.
Investment
in No specific guidance.
On disposal resulting in loss of
Associates - disposals
significant
influence,
the
remaining
investment
is
remeasured at fair value, with
gain or loss recognized in profit
or loss.
Investments
in Capital reserve arising on the Any excess of the investors share
Associates
acquisition of an associate by an of net fair value of the associates
capital investor should be included in the identifiable assets and liabilities
reserve/negative
carrying amount of investment in the over the cost of investments is
goodwill
associate but should be disclosed included as income in the
separately.
determination of the investors
share of associates profit or loss.
Similar to IFRS.
Similar to IFRS.
Investments
in If not practicable to use uniform
Associates - uniform accounting polices while applying the
accounting policies
equity method, that fact should be
disclosed together with a brief
description of the differences
between the accounting policies.
Investments
in The maximum difference between the The difference between the
Associates
- reporting date of the associate and reporting date of the associate and
reporting date
that of the parent is not specified.
that of the parent shall be no more
than three months.
Investments
in At cost less impairment loss.
Associates - separate
financial statements The limited revision to AS 23, on fair value recognized in other
of the investor
becoming effective, eliminates this comprehensive income.
difference between AS 23 and IAS
28.
If measured at cost (less
impairment), on classification as
held for sale, IFRS 5 will apply.
Reporting
in There is no equivalent standard.
IAS 29 - Financial Reporting in
Hyperinflationary
Hyperinflationary Economies
Economies primary
literature
IFRIC 7 - Applying the
Restatement Approach under
IAS 29
Financial Reporting There is no equivalent standard.
in Hyperinflationary
Economieshyperinflationary
Financial Reporting There is no equivalent standard.
in Hyperinflationary
Economies basic
principle
Ind AS 29 - Financial
Reporting in hyperinflationary
Economies
Ind AS 29 - Append ix A
Applying the Restatement
Approach under Ind AS 29
Generally an economy is Similar to IFRS.
hyperinflationary
when
the
cumulative inflation rate over 3
years is approaching or exceeds
100%.
Financial statements should be Similar to IFRS.
stated in terms of the measuring
unit current at the end of the
reporting period. Comparative
figures for prior period(s) should
be restated into the same current
measuring unit.
Restatements are made by Similar to IFRS.
applying a general price index.
Items such as monetary items that
are already stated at the
measuring unit at the end of the
reporting period are not restated.
Other items are restated based on
the change in the general price
218
Applying
the
Restatement
Approach under IAS
29
Interests in Joint
Ventures - primary
literature
Interests
Ventures
control
in
-
separately.
There is no equivalent standard.
When the economy of an entitys Similar to IFRS.
functional currency becomes
hyperinflationary, IAS 29 is
applied as if the economy was
always hyperinflationary.
AS 27 - Financial Reporting of IAS 31 - Interests in Joint Ind AS 31 - Append ix A Interests in Joint Ventures
Ventures
Jointly Controlled Entities Non-Monetary Contributions
SIC 13 - Jointly Controlled by Venturers
Entities
Non-Monetary
Contributions by Venturers
31.
Interests in Joint
Ventures - separate
financial statement of
The venturer
Interests in Joint
Ventures - alternative
accounting methods
Similar to IFRS.
classification of
financial liabilities
Financial
Instruments:
Presentation
treasury shares
Financial
Instruments:
Presentation
offsetting
Financial
Instruments:
Presentation
classification
convertible debts
Financial
equity.
of
Similar to IFRS.
Similar to IFRS.
Similar to IFRS.
Instruments:
guidance.
Presentation
conversion
option
embedded in foreign
currency convertible
bonds
Financial
Instruments:
Presentation
puttable instruments
etc.
Similar to IFRS.
Financial
Instruments:
Presentation
classification of rights
issue
Similar to IFRS.
financial statements
Similar to IFRS.
Similar to IFRS.
Similar to IFRS.
Similar to IFRS.
Ind AS 36 - Impairment of
Assets
test for goodwill and there is an indication that they may indefinite life intangible assets are
intangibles
be impaired.
required to be tested for
impairment at least on an annual
AS 26, Intangible Assets requires basis or earlier if there is an
intangible assets that are not available impairment indication.
for use and intangible assets that are
amortized over a period exceeding
ten years to be assessed for
impairment at least at each financial
year end even if there is no indication
that the asset +is impaired.
Impairment of Assets Impairment loss for goodwill is Impairment loss recognized for
reversal
of reversed if the impairment loss was goodwill is prohibited from
impairment loss for caused by a specific external event of reversal in a subsequent period.
goodwill
an exceptional nature that is not
expected to recur and subsequent Goodwill impaired in an interim
external events have occurred that period is not subsequently
reverse the effect of that event.
reversed in subsequent interim or
annual financial statements.
Provisions,
AS 29 - Provisions, Contingent IAS 37 - Provisions, Contingent
Contingent Assets Liabilities and Contingent Assets
Liabilities
and
Contingent
and
Contingent
Assets
Liabilities - primary
literature
IFRIC 5 - Rights to Interests
arising from Decommissioning,
Restoration and Environmental
Funds
IFRIC 6 - Liabilities arising
from Participating in a Specific
Market - Waste Electrical and
Electronic Equipment
227
Similar to IFRS.
Ind AS 37 - Provisions,
Contingent Liabilities and
Contingent Assets
Ind AS 37 - Append ix A Rights to Interests arising from
Decommissioning, Restoration
and Environmental Funds
Ind AS 37 - Append ix B Liabilities
arising
from
Participating in a Specific
Market - Waste Electrical and
Electronic
Provisions,
Contingent
Liabilities
and
Contingent
Assets - recognition
of
provisions
Provisions,
Contingent Liabilities
and
Contingent
Assets - discounting
Liabilities
arising No specific guidance.
from Participating in
a Specific Market
Waste Electrical and
Electronic Equipment
Similar to IFRS.
Similar to IFRS.
Similar to IFRS.
Similar to IFRS.
Provisions,
Contingent Liabilities
and
Contingent
Assets - contingent
assets
Provisions,
Contingent Liabilities
and
Contingent
Assets - restructuring
cost
Financial
Instruments:
Recognition
and
Measurement
general recognition
principle
Financial
Instruments:
Recognition
and
Measurement
investments,
and
loans and receivables
Investment in a Foreign
The differences discussed below are Operation
based on AS 13.
IFRIC 19 - Extinguishing
Financial
Liabilities
with
Equity Instrument
Note : IFRS 9 will come into
effect from 1-4-2015
T here is no definition of financial All financial assets and financial
instrument. Currently, derivatives are liabilities are recognized in the
not required to be recognized in the statement of financial position
balance sheet except for certain when these meet the definition
forward exchange contracts within and recognition criteria of a
the scope of AS 11, and for entities financial instrument.
not following AS 30, losses in respect
of all outstanding derivative contracts A financial instrument is a
not covered by AS 11 (see the contract that gives rise to a
caption
Financial
Instruments: financial asset in one entity and a
Recognition and Measurement - financial liability or equity in
derivatives and hedge accounting).
another entity.
Per AS 13, investments are classified Financial
instruments
are
as long-term or current. A current classified as fair value through
investment is an investment that is by profit or loss
its nature readily realisable and is (FVTPL), held to maturity, loans
intended to be held for not more than and receivables or available for
one year from the date on which such sale.
investment is made. A long term A
financial
instrument
is
investment is an investment other classified as FVTPL if it is held
than a current investment.
for trading or has been designated
Accordingly, the assessment of as at FVTPL upon initial
whether an investment is long-term recognition.
A
financial
has to be made on the date the instrument is classified as held for
investment is made.
trading if these are acquired or
Long-term investments are carried at incurred principally for the
231
Similar to IFRS.
Financial
Instruments:
Recognition
and
Measurement
changes in fair value
of financial liabilities
due to changes in
credit risk
Financial
No specific rules for reclassification Non-derivative financial assets
Instruments:
of investments
can be reclassified out of FVTPL
Recognition
and
or available for sale categories
Measurement
only in certain circumstances
reclassifications
except
for
non-derivative
financial assets that have been
designated at FVTPL. This
triggers some disclosures to be
made as required by IFRS 7.
Financial
An enterprise should assess the Impairment is recognized if, and
Instruments:
provision for doubtful debts at each only if, there is objective
Recognition
and period end which, in practice, is evidence of impairment as a
233
Similar to IFRS.
Measurement
impairment
financial assets
- based
of as:
Financial instruments:
Recognition
and
Measurement
derivatives
and
embedded derivatives
transaction,
then
the
change in fair value of the
hedging instrument is
recognized
in
other
comprehensive
income
until such time as those
future cash flows affect
profit or loss. T he
ineffective portion of the
gain or loss on the
hedging instrument is
recognized in profit or
loss in the period of such
change; and
Hedge of a net investment
in a foreign entity: treated
similar to cash flow
hedge.
A hedge of foreign currency risk
in a firm commitment may be
accounted for as a fair value
hedge or as a cash flow hedge.
Financial
Instruments:
Recognition
and
Measurement
eligible hedged items
Financial
Instruments:
Recognition
and
Measurement
derecognition
of
financial assets and
securitization
Financial
Instruments:
Recognition
and
Measurement
derecognition
of
financial liabilities
Financial
Instruments:
Recognition
and
Measurement
- under the contract becomes probable and subsequently at the higher of
financial
guarantee and is measured as the best estimate
fair value at initial
contracts
of the amount to be settled.
recognition
less
cumulative amortization
in accordance with IAS 18
and
the amount determined in
accordance with IAS 37.
Reassessment
of No specific guidance.
When certain non-derivative Similar to IFRS.
Embedded
financial
instruments
are
Derivatives
transferred out of FVTPL
categories as permitted by IAS
39, the embedded derivatives
have to reassess and, if necessary,
separately accounted for in the
financial statements.
Hedges of a Net No specific guidance.
A parent may designate as a Similar to IFRS.
Investment
in
a
hedged risk only the foreign
Foreign Operation
exchange differences arising from
a difference between its own
functional currency and that of its
foreign operation.
The hedging instrument for the
hedge of a net investment in a
foreign operation may be held by
any entity or entities within the
group. On derecognition of a
foreign operation, IAS 39 must be
applied to determine the amount
that needs to be reclassified to
profit or loss from the foreign
currency translation reserve in
respect of the hedging instrument,
238
Extinguishing
No specific guidance.
Financial Liabilities
with
Equity
Instruments
additional
present additional comparatives for presentation of memorandum
comparatives as per
under previous GAAP (See Ind AS comparatives, the first
previous GAAP
Exhibit 1).
time adopter shall present latest
corresponding previous periods
240
The
unrealised
exchange
differences arising on long -term
monetary assets and liabilities are
recognized immediately in profit
or loss.
241
accumulated
should
be
transferred to profit or loss over
the period of maturity of such
long-term monetary items in an
appropriate
manner.
The
aforesaid option is irrevocable
and, if elected, should be applied
for all long-term monetary items.
242
The
aforesaid
option
of
accumulating the exchange gains
or loss in equity may be
exercised prospectively and such
unrealised exchange differences
on said items may be deemed to
be zero on the date of transition.
If it is impracticable to
retrospectively
apply
the
effective interest method or the
impairment requirements for
financial instruments, the fair
value of the financial asset at the
date of transition shall be the
new amortized cost of that
financial asset at the date of
transition.
Ind AS 101 provides transitional
relief while applying Ind AS 105
- Non-current Assets Held for
Sale
and
Discontinued
Operations. Under Ind AS 101,
an entity may use the transitional
date circumstances to measure
Share-based
There is no equivalent standard.
Payment - primary However, the ICAI has issued a
literature
Guidance Note on Accounting for
Employee Share-based Payments.
This guidance note deals only with
employee share-based payments.
The SEBI has also issued the
Securities and Exchange Board of
India (Employee Stock Option
Scheme and Employee Stock
Purchase Scheme) Guidelines,
1999.
Share-based Payment Both the guidance note and the SEBI
- measurement
techniques
Ind AS 103
Combinations
Business
as
the
and
accumulated in equity as capital
reserve if there is a clear
evidence of
the underlying
classification
reason
for
Business
Combinations
business
combinations
achieved in stages
Business
Combinations
Subsequent
measurement
goodwill
Business
Combinations
Contingent
consideration
Business
No specific guidance.
Combinations
acquisition
related
costs
Business
No specific guidance.
Combinations
Contingent
consideration
classified as an asset or a liability
that is a financial instrument
within the scope of IAS 39 should
be measured at fair value, with
any resulting gain or loss
recognized in profit or loss or in
other comprehensive income, as
appropriate. If it is not within the
scope of IAS 39, it should be
accounted for in accordance with
IAS 37 or other IFRSs as
appropriate.
Acquisition related costs such as Similar to IFRS.
finders fee, due diligence costs,
etc.
are accounted for as expenses in
the
period in which the costs are
incurred
and the services are received.
If the initial accounting for a Similar to IFRS.
business combination can be
determined only provisionally by
the end of the first reporting
period, the combination is
accounted for using provisional
values.
Adjustments
to
provisional values relating to new
information about facts and
circumstances that existed at the
acquisition date are permitted
within one year of the acquisition
249
Insurance Contracts
- primary literature
Non-current Assets
Held for Sale and
Discontinued
Operations
primary
literature
- Assets
Non-current Assets
Held for Sale and
Discontinued
Operations
recognition
and
measurement
Non-current Assets
Held for Sale and
Discontinued
Operations - non-cash
assets
held
for
distribution to owners
Non-current Assets
Held for Sale and
Discontinued
Operations-
An operation is classified as
discontinuing at the earlier of (a)
binding sale agreement for sale of the
operation and (b) on approval by the
classification
5.2 CONCLUSION
In the above table of differences it is clearly evident that there are a lot of changes in Existing Indian GAAP. As IFRS are made on the basis
of international environment so it was necessary to make them feasible and adoptable in Indian scenario because are accounting is affected by
various regulatory requirements. So from the above table it is clearly evident that India is not accepting these standards as it is. In India,
Ministry of corporate Affairs (MCA) and ICAI have developed NEW INDIAN AS for convergence. New standards are the Combo of IFRS
and our regulatory requirements. It is clearly evident from above discussion that we Indian AS are mostly same as IFRS and changes as per
regulatory requirements have been implemented as and when required.
Sources/ References:
1. Deloitte, Indian GAAP, IFRS and Indian AS : A comparison
252
5.3.1 Net Profits Ratios*: This ratio is the very first indicator ratio which is necessary to
check direct impact on total profitability of a company. Net Profit ratio is relation between Net
Profit after taxes and Net sales of a company.
253
Company's name
Reconciliation
13.8
-0.98
14.78
9.92
9.92
Infosys
24.85
0.04
24.81
Tata Motors
3.48
-2.61
6.09
Siemens
7.29
-1.34
8.63
Sterlite
24.3
-0.25
24.55
WIPRO
17.05
-0.12
17.17
TCS
16.67
-6.05
22.72
30
25
20
15
10
Indian GAAP(2010-11)(In %)
IFRS(2010-11)(In %)
254
Company's name
Reconciliation
13.79
-0.95
14.74
5.96
5.96
Infosys
24.7
0.05
24.65
Tata Motors
2.65
-3.21
5.86
Siemens
8.16
1.06
7.1
Sterlite
21.3
-1.42
22.72
WIPRO
15.07
0.02
15.05
TCS
11.72
-2.66
14.38
IFRS (2011-12)(In %)
255
5.3.2 Return on Capital Employed*: This ratio is an indicator which shows that
company is giving how much return on capital employed. This ratio is relation between Profit
before taxes and capital employed.
Company's name
Reconciliation
24.88
-1.36
26.24
7.01
7.01
Infosys
35.66
2.63
33.03
Tata Motors
22.74
4.81
17.93
Siemens
33.8
17.97
15.83
Sterlite
43.33
3.18
40.15
WIPRO
22.4
-0.88
23.28
TCS
13.92
-2.91
16.83
256
Company's name
Reconciliation
26.8
2.51
24.29
6.03
6.03
Infosys
36.88
0.36
36.52
Tata Motors
11.91
-3.09
15
Siemens
18.77
-0.82
19.59
Sterlite
45.02
43.02
WIPRO
23.45
1.54
21.91
TCS
14.23
0.34
13.89
257
5.3.3 Return on Shareholders Funds*: This ratio shows that how much return is
ultimately received by shareholders who are the ultimate owners of the company. This ratio is a
relation between Profit after taxes and shareholders fund.
Company's name
Reconciliation
24.77
5.55
19.22
11.43
11.43
Infosys
26.14
1.65
24.49
Tata Motors
9.05
-25.86
34.91
Siemens
22.74
3.08
19.66
Sterlite
37
3.38
33.62
WIPRO
23
0.82
22.18
TCS
12.17
-4.58
16.75
258
Company's name
26.07
1.24
24.83
7.98
7.98
Infosys
26.59
0.5
26.09
Tata Motors
8.66
-6.01
14.67
Siemens
44.77
9.63
35.14
Sterlite
35.2
0.16
35.04
WIPRO
20.74
1.18
19.56
TCS
10.48
-2.81
13.29
259
5.3.5 Earnings per Share Basic (EPS)*: This ratio indicates that how much is the
companys earnings which can be allocated on each share.
Companys name
Reconciliation
59.06
-6.22
65.28
15.93
15.93
Infosys
119.66
0.21
119.45
Tata Motors
31.05
6.45
24.6
Sterlite
46.27
2.562
43.708
WIPRO
21.72
-0.02
21.74
TCS
15
0.45
14.55
140
120
100
80
60
40
20
260
Reconciliation
84.16
7.4
76.76
11.22
11.22
Infosys
145.83
0.28
145.55
Tata Motors
9.75
4.66
5.09
Siemens
42.58
6.18
36.4
Sterlite
53.07
-4.42
57.49
WIPRO
22.83
0.14
22.69
TCS
14.36
2.76
11.6
*Calculated value EPS is taken from annual reports and Form 20-F.
160
140
120
100
80
60
40
20
0
261
5.4 Analysis:
In both financial years i.e. in 2010-11 & 2011-12 no significant difference have been found in
profitability of companies as per statistical tools used by researcher. Although differences in
actual figures of profits are material and it can affect the decision of any decision maker.
After collecting data relating to profitability of 8 Companies researcher has calculated
profitability ratios and to test the significance, researcher has applied t-test using SPSS. The
following table shows the t-value at 95% confidence level and table value at 5% level of
significance.
The table is as follows:
Ratios - 2012
1. Net Profit
Calculated t- value at
Table value on df 7 at
Correlation
5% level of significance
1.711
2.365
0.981
-0.565
2.365
0.993
-0.31
2.365
0.967
-1.546
2.365
0.997
Ratio
2. Return on
Capital
Employed
3. Return on
shareholders
fund
4. EPS
In every profitability measure Calculated t value < table value of t so null hypothesis have been
accepted and it can be concluded that implementation of IFRS does not bring any significant
difference on the profitability of companies in 2011-12.
Ratios -2011
Calculated t value at
Table value on df = 7 at
Correlation
5% level of significance
1.923
2.365
0.962
2. Return on
-1.254
2.365
0.832
-0.559
2.365
0.338
0.344
2.447(df=6)
0.995
Capital Employed
3. Return on
shareholders fund
4. EPS
In every profitability measure Calculated t value < table value of t so null hypothesis have
been accepted and it can be concluded that implementation of IFRS does not bring any
significant difference on the profitability of companies in Financial year 2010-11.
Conclusion:
On comparing profitability as per IFRS and Indian GAAP in Financial year 2010-11 & 2011-12,
researcher has been reached at following conclusions:
1. On applying statistical tools it was found that there is no significant difference between
Profitability as per IFRS and Indian GAAP and null hypothesis is satisfied.
2. Although statistical tools accepts null hypothesis between profitability as per Indian
GAAP and IFRS but there is still significant difference between various profitability
measures. Although the percentages of difference are very short but in reality amounts
are significantly changed and are material in nature.
3. TATA Motors is the highly affected due to convergence process.
263
Properly Familier- 17
34%
66%
Figure 10: Question 1
264
Yes-10
No-40
20%
80%
3. Do you think adoption of IFRS would be just a technical accounting
exercise or will change the way business transactions are correctly
conducted?
Accounting change- 10
Change the way business is managed-10
Both-30
20%
20%
60%
12%
Less insight-5
0%
No difference-6
10%
78%
265
Dont know
38%
62%
c) Cant say
18% 0%
82%
7. What is your assessment of the impact of IFRS adoption on reported
profit?
a) Profits will increase-13
24%
26%
50%
266
c) No impact-12
Negative- 10
No effect
Cant say-25
30%
50%
20%
9. Which of the following do you think is/are critical challenges for
transitions?
Regulatory environment and regulatory clarity-16
Lack of trained and experienced resources- 25
Educating investors and Board of Directors
Significant onetime cost-09
18%
32%
50%
10. What in your assessment is the critical success factor to a smooth
transition?
267
8%
14%
0%
10%
68%
b) Do not agree-5
Cant say
10%
90%
12.Should the tax laws/tax reporting be aligned to IFRS reporting?
268
a) Yes-50
b) No
c) Dont know
0%
100%
13.Has your company summarized its concerns and made representation
to regulatory bodies?
Yes-10
0%
20%
14%
66%
14.How confident are you in terms of having trained staff on IFRS?
Confident- have adequate trend work force
Dont have trained work force
11%
25%
64%
269
15.Do you think your current Auditor has the essential expertise to help
you in smooth transition to IFRS?
a) Yes-5
b) No
5%0%
95%
16.Have you taken expert professional supervision so as to smoothen the
convergence process?
Yes-12
24%
10%
66%
a) Yes- 42
b) No- 08
16%
84%
270
Yes- 26
No- 5
Cant say-19
38%
52%
10%
19.How would you summarize the overall preparedness of your company?
Not started -08
Training and awareness started-32
Project plan and implementation process in place-10
Actual implementation started-0
0% 0%
Implementation completed-0
16%
20%
64%
20.What is the most likely method that you will adopt to assist the
company in smooth transition to IFRS?
a.
b.
c.
d.
Respondents gave first rank to (b) Attend seminars and workshops to acquire knowledge to
acquire knowledge about IFRS. Second Rank is obtained by (c) appointment of external
consultant is for smooth transition.
271
b) In progress-25
c) No-5
10%
40%
50%
5.6 Analysis:
Following is the brief analysis of primary data collected through questionnaire:
1. Almost 2/3rd population is either quite familiar or not worked with IFRS just 1/3rd of the
population is familiar with IFRS in proper way. So in successful convergence with IFRS
the training and knowledge about IFRS will create a big problem if the first person
responsible to make accounts is still not aware with IFRS then how can India converge its
accounts with IFRS? Is the biggest Question.
2. Only 20% respondents companies and concerns have started implementation of IFRS
rest have not started till now. This can be possible because government also delayed the
convergence process due to some reasons such as conflicts under Indian regulatory
compliance and regulations, fair valuation measures etc.
3. Most of the respondents believe that IFRS will change the way of business so it is clear it
will cause some benefits to business or also can cause problems. The benefits are it will
create some international opportunities for business concerns and books will show vary
clear picture of business. Problems in converging accounts with IFRS will be the changes
in accounting process which will require some major training programs and some new
professional which will cost more to companies in initial stage.
4. Most of the respondents think that with the use of IFRS financial statements will become
more comparable and credible and rest thinks consistency of financial statements among
272
various stakeholders is the benefit. So majority believes that IFRS will facilitate the
features of comparison of financial statements within not only in India but also overseas
also.
5. Majority is agreeing that IFRS should be applicable on all public interest entities. So
public will be capable to know that about exact position of companies in which they have
interest. And this will facilitate the investors to make decision.
6. Majority believes that IFRS will facilitate investments decision. Due to fair value
measurements, if an investors will able to know the exact position about the net worth of
companies then he will take a good and viable decision of investment for growth of his
investments.
7. In initial stages respondents were not able to answer what will be the change in profits
whether it will increase or decrease but on analyzing the companys annual reports of
company it is found that on initial stage when a company started convergence profits are
highly affected but as years passes the profits becomes normal i.e. deviation in profits
becomes less.
8. Share holders are in doubt whether they will get any benefit after convergence or not.
Shareholders are also not sure about their investments.
9. Half respondents believes that lack of trained and experienced resources is the critical
challenge in convergence process because IFRS needs expert knowledge of IFRS which
is lacking in our country as we discussed in question 1 that majority population is not
perfectly aware about IFRS regulations. IFRS are created at international level and our
laws do not takes place in IFRS so the need arose for some other rules which are parallel
with IFRS and regulatory requirements. So ICAI made and sent new Indian AS to
Ministry of corporate Affairs (MCA) and now Ind AS will be applicable at the place of
IFRS.
10. Majority agrees that for convergence availability of knowledgeable advisors is tough in
current scenario so its necessary to start training and certification programs at wide level
to maintain supply of trained knowledgeable advisors.
11. Almost 90% respondent agreed that convergence process will be cumbersome as per
regulatory requirements. Majority believes that convergence is a hectic program which
will cause many problems as per our regulatory requirements because our regulatory
273
requirements are not parallel with IFRS but ICAI and MCA have framed Ind AS which
will reduce the stress but Ind AS also are in initial phase which will need some changes
in future and major portion of Ind AS are same as IFRS. So the result will come when
India Inc. will accept and give results. 10% could not answer.
12. Our accounting is majorly influenced by the taxation laws i.e. are accounting is also
based on taxation laws such as Income tax Act, Excise laws, Custom Act, Service Tax
etc. and IFRS are not connected with these regulatory requirements so this is the big need
of IFRS that IFRS should be aligned with tax laws. And all the respondents are agreeing
for it.
13. Due to delay by government of India majority of companies are following wait and watch
scenario as government will mandate the reporting with IFRS they start at that point of
time only 20% says that there company have taken initiatives for convergence.
14. Approximately half population says that they still not started active training programs
that are why they think that they do not have trained workforce for convergence process.
And without trained workforce assumption of successful convergence is not correct.
15. Majority respondents says that they need to judge their present auditors as they are aware
about IFRS or not rest says that their auditors are able to audit under IFRS environment.
16. Majority have not started till date even they have not started expert advice for
convergence. 10% have sufficient efficient work force for convergence.
17. Not only professionals but investors, bankers etc also need education about IFRS for their
use as they also needs accounting informations about companies so they should also get
education about IFRS. So majority suggests that education program should also be
provided to investors and bankers etc.
18. Majority says that internal controls will also requires changes in convergence process a
big part says that they cant say because when the need will arise they will change the
internal control.
19. Majority says that their orgainisation have started training process so as to prepare work
force aware for changes.
20. Respondents have given highest rank to attend seminars and workshops to acquire
knowledge about IFRS.
consultant is good way for smooth transition. Majority of the respondents gave highest
274
rank for attending workshops and seminars on timely manner they will be able to get
knowledge about IFRS
21. Majority have not started to identify the disclosure requirements and what changes have
to be done so this thing shows the slow mood of corporate about convergence.
From the analysis of primary data it cannot be wrong to say that we are going to converge our
accounts with IFRS with half preparedness and less knowledge thats why the date for transition
is again and again shifting forward and it will be harmful to implement IFRS with less
knowledge.
275