AS vs IND AS (Old vs New Indian Accounting Standards)
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AS vs IND AS (Old vs New Indian Accounting Standards)

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This presentation takes one through the differences between Indian GAAP (old) vs IND AS (based on IFRS). All major differences have been covered in addition to IFRS carve outs.

This presentation takes one through the differences between Indian GAAP (old) vs IND AS (based on IFRS). All major differences have been covered in addition to IFRS carve outs.

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  • 1. Indian Accounting Std (old) vs IND AS (New) CA Sandesh Mundra www.consolidationofaccounts.com
  • 2. Console ™ Lets Automate Consolidation…….. • We have developed a software to automate the process of preparation of consolidated financial statements. • To check out the same visit http://www.slideshare.net/sandeshmundra/c onsole-13130822 CA Sandesh Mundra www.consolidationofaccounts.com
  • 3. Consolidation Process One time activity Currency Adjustment Fixed Assets Schedule JV Proportion LBLA Setup Master Minority Goodwill Consolidation Intra Group Transactions Equity Impact Upload Trial Balances Balance Sheet Accounting Policies Adjustment CA Sandesh Mundra www.consolidationofaccounts.com Profit and Loss Account
  • 4. Overview of Significant Differences between IND AS and Current Indian GAAP CA Sandesh Mundra www.consolidationofaccounts.com
  • 5. TOPICS COVERED Differences with respect to: • Conceptual Accounting Framework • Accounting Differences • Carve Outs CA Sandesh Mundra www.consolidationofaccounts.com
  • 6. ACCOUNTING FRAMEWORK Historical cost IFRS: Historical cost, but intangible assets, property plant and equipment (PPE) and investment property may be revalued. Derivatives, biological assets and most securities must be revalued. Indian GAAP: Historical cost, but fixed assets, other than intangibles, may be revalued. CA Sandesh Mundra www.consolidationofaccounts.com
  • 7. ACCOUNTING FRAMEWORK First-time adoption of accounting frameworks IFRS: Full retrospective application with some optional exemptions. Indian GAAP: particular standards specify the transitional treatment upon the first-time application of those standards CA Sandesh Mundra www.consolidationofaccounts.com
  • 8. LIST OF IND AS, IFRS AND AS CA Sandesh Mundra www.consolidationofaccounts.com
  • 9. Ind AS IFRS AS Ind AS 1 Presentation of Financial Statements IAS 1 Presentation of Financial Statements AS 1 Disclosures of Accounting Principles and Policies Ind AS 2 Inventories IAS 2 Inventories AS 2 Valuation of Inventories Ind AS 7 Statement of Cash Flows IAS 7 Statement of Cash Flows AS 3 Cash Flow Statements Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors IAS 8 Accounting AS 4 Contingencies and Policies, Changes in Events occurring after Accounting Estimates and Balance Sheet Date Errors Ind AS 10 Events after the Reporting Period Ind AS 10 Appendix A IAS 10 Events after the Reporting Period IFRIC 17 Distribution of Non-cash Assets to owners AS 5 Net Profit or Loss for the period, Prior Items and Changes in Accounting Policies
  • 10. Ind AS 11 Construction Contracts Ind AS 11 Appendix A (deferred) Ind AS 11 Appendix B (deferred) IAS 11 Construction AS 7 Construction Contracts Contracts IFRIC 12 Service Concession Arngmt SIC 29 Disclosure – Service Concession Arrangements Ind AS 12 Income Taxes Ind AS 12 Appendix A IAS 12 Income Taxes AS 22 Accounting for Taxes on Income SIC 21 Income Taxes – Recovery of Revalued NonDepreciable Assets SIC 25 Income Taxes – Changes in the Tax Status of an Enterprise or its Shareholders Ind AS 12 Appendix B Ind AS 16 Property, Plant and Equipment IAS 16 Property, Plant and Equipment AS 10 Accounting for Fixed Assets AS 6 Depreciation Accounting
  • 11. Ind AS 16 Appendix A IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities Ind AS 17 Leases Ind AS 17 Appendix A IAS 17 Leases AS 19 Leases SIC 15 Operating Leases – Incentives SIC 27 Evaluating the Substance of Transaction involving the Legal Form of a Lease IFRIC 4 Determining Whether an Arrangement contains a Lease Ind AS 17 Appendix B Ind AS 17 Appendix C (Deferred) Ind AS 18 Revenue Ind AS 18 Appendix A Ind AS 18 Appendix B Ind AS 18 Appendix C IAS 18 Revenue AS 9 Revenue Recognition SIC 31 Revenue – Barter Transactions Involving Advertising IFRIC 13 Customer Loyalty Programmes IFRIC 18 Transfer of Assets from Customers
  • 12. Ind AS 19 Employee Benefits Ind AS 19 Appendix A Ind AS 19 Employee Benefits Ind AS 19 Appendix A AS 15 Employee Benefits Ind AS 20 Accounting For Government Grants and Disclosure of Government Assistance Appendix A Government Assistance – No Specific Relation in Operating Activities Ind AS 20 Accounting For Government Grants and Disclosure of Government Assistance Appendix A Government Assistance – No Specific Relation in Operating Activities AS 12 Accounting for Government Grants Ind AS 21 The Effects of Changes in Foreign Exchange Rates Ind AS 21 The Effects of Changes in Foreign Exchange Rates AS 11 The Effects of Changes in Foreign Exchange Rates Ind AS 23 Borrowing Costs Ind AS 23 Borrowing Costs AS 16 Borrowing Costs
  • 13. Ind AS 24 Related Party Disclosure IAS 24 Related Party Disclosure AS 18 Related Party Disclosures No Near Final Draft IAS 26 Accounting and Reporting by Reporting by Retirement Benefits Plans No standard Ind AS 27 / IFRS 10 Consolidated and Separated Financial Statements Ind AS 27 Appendix A IAS 27 Consolidated Separated and Financial Statements AS 21 Consolidated Financial Statements SIC 12 Consolidation – Special Purpose Entities Ind AS 28 Investment IAS 28 Investment in Associates in Associates AS 23 Accounting for Investments in Associates in Consolidated Financial Statements Ind AS 29 Financial Reporting in Hyperinflationary Economies Ind AS 29 Appendix A No standard IAS 29 Financial Reporting in Hyperinflationary Economies IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies
  • 14. Ind AS 31 Interest in Joint Ventures / IFRS 11 Ind AS 31 Appendix A IAS 31 Interest in Joint Ventures Ind AS 32 Financial Instruments: Presentation Ind AS 32 Appendix B IAS 32 Financial Instruments: Presentation AS 31 Financial Instruments : Presentation Ind AS 33 Earning Per Share IAS 33 Earning Per Share AS 20 Earnings per Share Ind AS 34 Interim Financial Reporting Ind AS 34 Appendix A IAS 34 Interim Financial Reporting AS 25 Interim Financial Reporting SIC 13 Jointly Controlled Entities – Non-Monetary Contributions by Venturers AS 27 Financial Reporting of Interests in Joint Ventures IFRIC 10 Interim Financial Reporting and Impairment. Ind AS 36 Impairment Of Assets IAS 36 Impairment Of Assets AS 28 Impairment of Assets Ind AS 38 Intangible Assets Ind As 38 Appendix A IAS 38 Intangible Assets AS 26 Intangible Assets SIC 32 Intangible Assets – Website Costs
  • 15. Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets Ind AS 37 Appendix A Ind AS 37 Appendix B Ind AS 39 Financial Instruments : Recognition and Measurement Ind AsS39 Appendix C Ind AS 39 Appendix D Ind AS 39 Appendix E IAS 37 Provisions, Contingent Liabilities and Contingent Assets AS 29 Provisions, Contingent Liabilities and Contingent Assets IFRIC 5 Rights to Interest Arising from Decommissioning, Restoration and Environmental Rehabilitation Funds IFRIC 6 Liabilities Arising from Participating in a Specific Market – Waste Electrical and Electronic Equipment IAS 39 Financial Instruments : Recognition and Measurement IFRIC 9 Reassessment of Embedded Derivatives IFRIC 16 Hedges of a net Investment in Foreign Operation IFRIC 19 Extinguishing Financial liabilities with Equity instruments AS 30 Financial Instruments : Recognition and Measurement
  • 16. Ind AS 40 Investment Property IAS 40 Investment Property No standard No near Final Draft IAS 41 Agriculture No standard Ind AS 101 First Time Adoption of Indian Accounting Standards IFRS 1 First Time Adoption of International Financial Reporting Standards No standard Ind AS 102 Share Based Payment IFRS 2 Share Based Payment No standard Ind AS 103 Business Combination IFRS 3 Business Combination No standard Ind AS 39 Insurance Contracts IFRS 4 Insurance Contracts No standard Ind AS 105 Non-Current Assets Held for Sale and Discontinuing operations IFRS 5 Non-Current Assets Held for Sale and Discontinuing operations No standard Ind AS 106 Exploration for and Evaluation of Mineral Resources IFRS 6 Exploration for and Evaluation of Mineral Resources No standard
  • 17. Ind AS 107 Financial Instruments : Disclosures IFRS 7 Financial Instruments : Disclosures No standard Ind AS 108 Operating Segments IFRS 8 Operating Segments No standard Not covered in Ind AS It was earlier covered in Exposure Draft IFRIC 2 Members’ Share in Co-operative Entities and Similar Instruments No standard Not covered in Ind AS Not Relevant in India SIC 7 Introduction of Euro No standard
  • 18. Major Carve Outs • Revenue Recognition (IND AS 18) – IFRIC 15 – Agreement for construction of real estate has not been adopted CA Sandesh Mundra www.consolidationofaccounts.com
  • 19. Major Carve Outs • Effects of changes in Foreign Exchange Rates (IND AS 21) – Option to recognise exchange differences on translation of long term monetary items in equity CA Sandesh Mundra www.consolidationofaccounts.com
  • 20. Major Carve Outs • Related Party Disclosures (IND AS 24) – Overriding nature of statue – Definition of relative as per Co.s Act CA Sandesh Mundra www.consolidationofaccounts.com
  • 21. Major Carve Outs • Business Combinations (IND AS 103) – Recognition of gain on day one accounting for a business combination in capital reserve as opposed to income statement under IFRS 3 – Guidance on Common Control Transactions CA Sandesh Mundra www.consolidationofaccounts.com
  • 22. Major Carve Outs • Employee Benefits (IND AS 19) – Government bond rate as discount rate – Recognition of acturial gains and losses – Other long term employee benefits – only in OCI and not P&L or P&L amort – Frequency of Acturial Valuation CA Sandesh Mundra www.consolidationofaccounts.com
  • 23. Major Carve Outs • Financial Instruments – Rec and Msrmt (IND AS 39) – Change in fair value of a financial liability due to entitiy’s own credit risk. CA Sandesh Mundra www.consolidationofaccounts.com
  • 24. Major Carve Outs • Investment in Associates (IND AS 28) – Different accounting periods and policies of associates CA Sandesh Mundra www.consolidationofaccounts.com
  • 25. Major Carve Outs • Investment Property (IND AS 40) – Only Cost Model CA Sandesh Mundra www.consolidationofaccounts.com
  • 26. Major Carve Outs • EPS (IND AS 33) – Both Standalone and CFS CA Sandesh Mundra www.consolidationofaccounts.com
  • 27. Major Carve Outs • Govt Grants (IND AS 20) – Non-monetary government grants only at fair value and not at nominal value CA Sandesh Mundra www.consolidationofaccounts.com
  • 28. Inventories IND AS 2 VS AS 2 CA Sandesh Mundra www.consolidationofaccounts.com
  • 29. IND-AS 2 - Inventories Fair value of purchases CA Sandesh Mundra www.consolidationofaccounts.com
  • 30. IND-AS 2 - Inventories Timing of recognition of purchases CA Sandesh Mundra www.consolidationofaccounts.com
  • 31. IND-AS 2 - Inventories Cost of inventories of a service provider CA Sandesh Mundra www.consolidationofaccounts.com
  • 32. Changes in Accounting Policies, Estimates, Prior Period Itesm IND AS 8 VS AS 5 CA Sandesh Mundra www.consolidationofaccounts.com
  • 33. IND AS 8 - Acc pol., changes in acc est., errors Changes in accounting policies CA Sandesh Mundra www.consolidationofaccounts.com
  • 34. IND AS 8 - Acc pol., changes in acc est., errors Changes in method of depreciation CA Sandesh Mundra www.consolidationofaccounts.com
  • 35. IND AS 8 - Acc pol., changes in acc est., errors Prior period items - errors or omissions arising from a failure to use or misuse of reliable information - Retro CA Sandesh Mundra www.consolidationofaccounts.com
  • 36. IND AS 8 - Acc pol., changes in acc est., errors extraordinary items CA Sandesh Mundra www.consolidationofaccounts.com
  • 37. Events after Balance Sheet Date IND AS 10 VS AS 4 CA Sandesh Mundra www.consolidationofaccounts.com
  • 38. IND AS 10 - Events after reporting date • Proposed dividend CA Sandesh Mundra www.consolidationofaccounts.com
  • 39. Construction Contracts IND AS 11 VS AS 7 CA Sandesh Mundra www.consolidationofaccounts.com
  • 40. IND AS 11 - Construction Contracts Service Concession Arrangements (Ex) CA Sandesh Mundra www.consolidationofaccounts.com
  • 41. Ex – Service Concession Agrmt. • A incurs cost of INR 1,000,000 for construction of a road. • In consideration, A receives a right to charge toll of INR 30 on each vehicle plying on that road for 30 years CA Sandesh Mundra www.consolidationofaccounts.com
  • 42. Construction Contracts Agreements for construction of real estate CA Sandesh Mundra www.consolidationofaccounts.com
  • 43. Revenue Recognition IND AS 18 VS AS 9 CA Sandesh Mundra www.consolidationofaccounts.com
  • 44. IND AS 18 – Revenue Recognition Multiple element arrangements (Ex) CA Sandesh Mundra www.consolidationofaccounts.com
  • 45. IND AS 18 – Revenue Recognition Example • A sells a machine with a two year maintenance service for INR 1,000,000 to a customer. • A two year maintenance service is provided to other customers at a consideration of INR 200,000. CA Sandesh Mundra www.consolidationofaccounts.com
  • 46. IND AS 18 – Revenue Recognition Linked transactions Examples – Loan origination fees charged by banks CA Sandesh Mundra www.consolidationofaccounts.com
  • 47. IND AS 18 – Revenue Recognition Customer loyalty programmes CA Sandesh Mundra www.consolidationofaccounts.com
  • 48. IND AS 18 – Revenue Recognition Extended credit CA Sandesh Mundra www.consolidationofaccounts.com
  • 49. IND AS 18 – Revenue Recognition Barter transactions • Recognition of transactions that were previously not recognised (for example, certain advertising barter transactions); • Non-recognition of transactions that are currently being recognised (for example, certain oil barter transactions). CA Sandesh Mundra www.consolidationofaccounts.com
  • 50. IND AS 18 – Revenue Recognition • Percentage Completion CA Sandesh Mundra www.consolidationofaccounts.com
  • 51. Business Combination and Consolidations IND AS 27/28/31/103 VS AS 14/21/23/27 CA Sandesh Mundra www.consolidationofaccounts.com
  • 52. Business Combination / Consolidation Definition of Control – Substance over form – Temporary – SPE CA Sandesh Mundra www.consolidationofaccounts.com
  • 53. Business Combination / Consolidation Contingent Consideration / Acq Date CA Sandesh Mundra www.consolidationofaccounts.com
  • 54. Business Combination / Consolidation • Goodwill – Fair Value of assets & liabilities acquired – Amortisation CA Sandesh Mundra www.consolidationofaccounts.com
  • 55. Business Combination / Consolidation • Minority – Fair Value – Negative CA Sandesh Mundra www.consolidationofaccounts.com
  • 56. Business Combination / Consolidation Uniform Accounting Policy & Time Gaap CA Sandesh Mundra www.consolidationofaccounts.com
  • 57. Business Combination / Consolidation Proportionate Consolidation CA Sandesh Mundra www.consolidationofaccounts.com
  • 58. Business Combination / Consolidation Step up and Step down CA Sandesh Mundra www.consolidationofaccounts.com
  • 59. Property, Plant & Equipment IND AS 16 VS AS 10 CA Sandesh Mundra www.consolidationofaccounts.com
  • 60. IND AS 16 –Property, Plant & Eqpmt • Overhead allocation • Component approach CA Sandesh Mundra www.consolidationofaccounts.com
  • 61. IND AS 16 –Property, Plant & Eqpmt Site Restoration CA Sandesh Mundra www.consolidationofaccounts.com
  • 62. IND AS 16 –Property, Plant & Eqpmt • Revaluation of assets • Depreciation on the same CA Sandesh Mundra www.consolidationofaccounts.com
  • 63. IND AS 16 –Property, Plant & Eqpmt • Cash Price Equivalent CA Sandesh Mundra www.consolidationofaccounts.com
  • 64. IND AS 16 –Property, Plant & Eqpmt • Residual Value and Useful life CA Sandesh Mundra www.consolidationofaccounts.com
  • 65. Borrowing Costs IND AS 23 VS AS 16 CA Sandesh Mundra www.consolidationofaccounts.com
  • 66. IND AS 23 - Borrowing Costs (BC) No period as 12 months CA Sandesh Mundra www.consolidationofaccounts.com
  • 67. IND AS 23 - Borrowing Costs (BC) Consolidation :– Special case of capitalisation of BC – Group Average borrowing rate CA Sandesh Mundra www.consolidationofaccounts.com
  • 68. Cash Flow Statement IND AS 7 VS AS 3 CA Sandesh Mundra www.consolidationofaccounts.com
  • 69. IND AS 7 - Cash Flow • Undistributed profits of associates and noncontrolling interests’ under operating activities. CA Sandesh Mundra www.consolidationofaccounts.com
  • 70. IND AS 7 - Cash Flow • Ind AS 7 requires to report the aggregate amount of the cash paid or received as consideration for obtaining or losing control CA Sandesh Mundra www.consolidationofaccounts.com
  • 71. Deferred Tax IND AS 12 VS AS 22 CA Sandesh Mundra www.consolidationofaccounts.com
  • 72. IND AS 12 Balance sheet approach (Ex) CA Sandesh Mundra www.consolidationofaccounts.com
  • 73. IND AS 12 Examples – on revaluation of PPE; – indexation benefits for freehold land and investments; – fair value changes for available for sale securities; CA Sandesh Mundra www.consolidationofaccounts.com
  • 74. IND AS 12 Deferred Taxes arising in consolidation CA Sandesh Mundra www.consolidationofaccounts.com
  • 75. IND AS 12 Reconciliation of current tax as per actual basis and as per applicable statutory rate CA Sandesh Mundra www.consolidationofaccounts.com
  • 76. Leases IND AS 17 VS AS 19 CA Sandesh Mundra www.consolidationofaccounts.com
  • 77. IND AS 17 - Lease Embedded leases (Ex) CA Sandesh Mundra www.consolidationofaccounts.com
  • 78. Ex of an Embedded Lease • A enters in a purchase contract with B to purchase 1,000 units of product every month at INR 25 per unit. • Product can only be manufactured on a specific machine owned by B. • In case of any shortfall in procurement, A will compensate B at the rate of INR 25 per unit of shortfall. • The entire output from machine is availed by A. CA Sandesh Mundra www.consolidationofaccounts.com
  • 79. IND AS 17 - Lease Leases of land CA Sandesh Mundra www.consolidationofaccounts.com
  • 80. IND AS 17 - Lease • Lease incentives – Initial rent free period ? CA Sandesh Mundra www.consolidationofaccounts.com
  • 81. IND AS 17 - Lease • Lease deposits CA Sandesh Mundra www.consolidationofaccounts.com
  • 82. Employee Benefits IND AS 19 VS AS 15 CA Sandesh Mundra www.consolidationofaccounts.com
  • 83. IND AS 19 - Employee Benefits • Actuarial gains and losses in OCI – defined benefit plans and other long term employment benefit plans. CA Sandesh Mundra www.consolidationofaccounts.com
  • 84. Foreign Exchange IND AS 21 VS AS 11 CA Sandesh Mundra www.consolidationofaccounts.com
  • 85. IND AS 21 – Foreign Exchange • Functional Currency vs Domicile Currency CA Sandesh Mundra www.consolidationofaccounts.com
  • 86. IND AS 21 – Foreign Exchange • Permits FE diff on long term monetary items to be posted to equity. The accumulated diff can be transferred to P/L over the term of such item CA Sandesh Mundra www.consolidationofaccounts.com
  • 87. IND AS 21 – Foreign Exchange • Existing AS 11 permits capitalisation / deferral of Fe Gain/Loss arising from long term monetary items CA Sandesh Mundra www.consolidationofaccounts.com
  • 88. Government Grants IND AS 20 VS AS 12 CA Sandesh Mundra www.consolidationofaccounts.com
  • 89. IND AS 20 – Govt Grants • • • • No credit to Reserves No credit to PPE Concessional Loans Non-Monetary Grants CA Sandesh Mundra www.consolidationofaccounts.com
  • 90. Related Party IND AS 24 VS AS 18 CA Sandesh Mundra www.consolidationofaccounts.com
  • 91. IND AS 18 – Related Party • • • • Defines close members of family KMP of parents Non-executive directors Group companies CA Sandesh Mundra www.consolidationofaccounts.com
  • 92. Earning Per Share IND AS 33 VS AS 20 CA Sandesh Mundra www.consolidationofaccounts.com
  • 93. IND AS 33 – EPS • Amounts debited to Share Premium • Compulsory convertible instruments • Shares held by Trust CA Sandesh Mundra www.consolidationofaccounts.com
  • 94. Share Based Payments • Fair Value Model • Grants to employees of Parent • Shares Held in Trust CA Sandesh Mundra www.consolidationofaccounts.com
  • 95. • • • • • • Intangibles – Life – Finite or Indefinite Investment Property – Classification Financial Instruments Segments Provisions Impairments CA Sandesh Mundra www.consolidationofaccounts.com
  • 96. Contact Details Aarna Soft Solutions Private Limited Email: info@aarnasoft.net Mobile: +91 94260 24975 Web: www.aarnasoft.net Thank You ! CA Sandesh Mundra www.consolidationofaccounts.com