The document summarizes the key aspects of India's transition to Indian Accounting Standards (Ind AS) converged with International Financial Reporting Standards (IFRS). It discusses that India committed to convergence with IFRS at the G20 summit in 2009. The Ministry of Corporate Affairs then issued a roadmap for adoption of Ind AS beginning 2011, though implementation was suspended due to unresolved issues. In 2014, the Finance Minister announced adoption of Ind AS. The MCA subsequently notified the transition dates and standards to be applied in phases beginning 2016.

1. Implementation of IND AS
DIBYENDU

2. India made a commitment towards the convergence of Indian accounting standards with IFRS
at the G20 summit in 2009. In line with this, the Ministry of Corporate Affairs, Government of
India (MCA) previously issued a roadmap for implementation of Indian Accounting Standards
(Ind AS) converged with International Financial Reporting Standards (IFRS) beginning April
2011.
However, this plan was suspended due to unresolved tax and other issues. n the presentation
of the Union Budget 2014–15,the Honorable Minister for Finance, Corporate Affairs and
Information and Broadcasting proposed the adoption of Ind AS. The Minister clarified
that the respective regulators will separately notify the date of implementation for banks and
insurance companies. Also, standards for tax computation would be notified separately. In
accordance with the Budget statement, the MCA has notified Company (Indian Accounting
Standard) Rules 2015 vide its G.S.R dated 16 February 2015. Accordingly, it has notified 39 Ind
AS and has laid down an Ind AS transition road map for companies other than banking
companies, insurance companies and non- banking finance companies.
INTRODUCTION
INDIAN ACCOUNTING STANDARD

3. Transition to Ind AS is not just an “accounting change”
Considering the potential wide-ranging effects of the transition, the
implementation effort would impact functions outside of the finance department,
including IT, legal, sales, marketing, human resources, investor relationsand senior
management.
A number of related workstreams should be considered in this effort, including:
• Accounting and financial reporting
• Tax
• Business processes and systems
• Change management, communication and training
In addition, it is critical to have strong project management skillsto coordinate the
roles of the various business functions and to keep the workstreams running
smoothly and on schedule.
INDIAN ACCOUNTING STANDARD

4. Early adoption permitted from 1st April 2015, with one year comparatives.
Once it is adopted, cannot be revoked.
Phase I :- applicable from 1 April 2016 onward to:
• Listed or unlisted companies whose net worth is >= INR 500 crores
• Holding, subsidiaries, joint ventures or associates of these companies
Phase 2 :- is applicable from 1 April 2017 onward to:
• Listed companies whose net worth is < INR 500 crores
• Unlisted companies whose net worth is >= INR 250 crores but < INR 500 crores
• Holding, subsidiaries, joint venturesor associates of these companies
• Net worth for a company is to be calculated inaccordance with its stand-alone
financial statements as on 31 March 2014 or the first audited financial statements
for accounting period which ends after that date. Accordingly,if any company’s
networth is more than INR 500 crore as of March 31, 2015, then itwill be covered
in Phase 1 itself.
IND AS Roadmap

5. Significant
Changes
There are many areas where IND AS has major differences from Indian GAAP
Revenue being the most important part of financial statement , heavily
scrutinised by investors and all sorts regulators.
• So, IND AS 115 Revenue from Contracts with Customers supersede AS 9
Revenue Recognition and AS 7 Construction Contracts.
• Ind AS 115 has introduced a five-step model with a single principle for
recognizing revenue that applies to all contracts.
Step 1: Identify the contract(s) with the customer
Step 2: Identify the separate performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to separate performance obligations
Step 5: Recognise revenue when (or as) each performance obligation is satisfied
Ind AS 115 Revenue Recognition

6. As per Indian GAAP revenue is recognised when there is a “transfer of risk and
Rewards”.
IND AS 115 says when customer obtains control on goods & services
Indian GAAP does not include mandatory guidance on accounting for financial
instruments. Standards for accounting for financial instruments are used as a
reference and have not been notified by the MCA. As per the existing roadmap,
India will directly transition to Ind AS 109, ahead of the equivalent IFRS 9, which will
be implemented in 2018. In one word this will strengthen the valuation maximum
asset and liabilites will take the path of fair value approach. We will show certain
significant points.
Income
Under Ind AS 109, interest income is recognised based on effective interest rate
(EIR) method, whereas under Indian GAAP, it is recognised based on an instrument’s
interest coupon.
Derivative Instrument
Under Ind AS 109, an entity should recognise all derivative instruments at fair
value on the balance sheet.
Ind AS 109 Financial Instrument

7. Investment
All investments (including unquoted equity shares) generally measured at
fair value at each reporting period.
Financial Assets
Initial recognition of all financial assets and financial liabilities at fair value (security
deposits, employee loans, sales tax deferral, etc.).
Impairment
Ind AS 109 requires a provision for impairment to be recognized at inception. The
measurement basis depends on whether there has been a significant increase in
credit risk since initial recognition. Thus, under Ind AS, a day one impairment loss is
recognized even if the entity does not expect any default in repayment.
Ind AS 109 has introduced a new “expected credit loss model” for the impairment
of financial assets. It applies to financial assets that are not measured at FVTPL(Fair
Value Vhrough Profit & Loss), including loans, lease and trade receivables, debt
securities, contract assets under Ind AS 115 and specified financial guarantees and
loan commitments issued.
IND AS 109 7

8. IND AS 102 Share Base Payment
Ind AS 102, Share-based Payment,provides an extensive guidance on
share-based payments. Currently, under Indian GAAP, there is a Guidance Note on
Accounting for Employee Share-based Payments issued by the ICAI. Following are
some of the critical GAAP differences between Indian GAAP and Ind AS:
• Mandatory use of fair value and resultant increase in employee compensation
costs
• Accelerated costs for options with graded vesting
• Consolidation of trusts dealing with employee share-based payment plans.
Accounting for group ESOPs
Under Ind AS, employee share-based payments should be accounted for using the
fair value method. In contrast, Indian GAAP permits an option of using either the
intrinsic value method or the fair value method.

9. IND AS 19 vs Indian GAAP AS 15
Actuarial gains and losses on defined benefit obligations
Upon Ind AS adoption, actuarial gains and losses on defined benefit obligations will
now be recognised in other comprehensive income in equity and will no longer get
recycled into profit or loss. Under Indian GAAP, these amounts are recognised in the
income statement. This will reduce any volatility in reported profit or loss upon Ind
AS adoption.
IND AS 16 vs Indian GAAP AS 10 (Fixed Asset)
Fixed Asset :-
1. Ind AS 16 Property, Plant and Equipment mandates component accounting,
whereas AS 10 recommends, but does not require it. However, the Companies Act
will require companies following AS 10 to apply component accounting mandatorily
from financial years commencing 1 April 2015.

10. 2. Major repairs and overhaul expenditure are capitalized under Ind AS 16 as
replacement costs, if they satisfy the recognition criteria. In most cases, Indian GAAP
requires these to be charged off to the profit and loss account as incurred.
3. Ind AS 16 requires estimates of useful lives, depreciation method and residual
values to be reviewed at least at the end of each financial year. Indian GAAP does not
mandate an annual review of these, but recommends periodic review of useful lives.
4. Ind AS 16 requires estimates of useful lives, depreciation method and residual
values to be reviewed at least at the end of each financial year. Indian GAAP does not
mandate an annual review of these, but recommends periodic review of useful lives.
5. Any change in depreciation method is treated as an accounting policy change
under Indian GAAP whereas it is treated as a change in estimate under Ind AS.
Fixed Asset

11. 6.Under Indian GAAP, an entity has an option to recognize unrealized exchange
differences on translation of certain long-term monetary assets/liabilities as
adjustment to cost of an asset. Such an amount shall be depreciated over the balance
useful life of the asset. Under Ind AS, all foreign exchange differences shall generally
be charged to profit and loss account. However, the transitional relief under Ind AS
allows companies to continue with the capitalization of foreign exchange differences
for long term monetary items that were recognized under Indian GAAP.
7.Component accounting
Under Ind AS16, a component of an item of property, plant and equipment with a cost
that is significant in relation to total cost of the item, shall be separately depreciated.
Hence, entities need to divide the cost of an asset into significant parts if their useful
life is different, and depreciate them separately.
Fixed Asset

12. Revaluation of fixed assets
Indian entities, which have selectively revalued fixed assets or intend to revalue the
fixed assets, will have to determine whether they want to continue with the
revaluation model or not. This decision is crucial for an entity if it wants to continue
with the revaluation model. It will have to:
o Adopt the revaluation model for the entire class of assets that cannot be restricted
to some selective location
o Update such revaluation on regular basis
o Take a depreciation charge in the income statement based on revalued amounts.
Fixed Asset

13. 1. AS 22 Accounting for Taxes on Income is based on the income statement liability
method, which focuses on timing differences. Ind AS 12 Income Taxes is based on
the balance sheet liability method, which focuses on temporary differences. One
example of the temporary vs. timing difference approach is revaluation of fixed
assets. Under Indian GAAP, no deferred tax is recognized on upward revaluation of
fixed assets where such revaluation is credited directly to revaluation reserve.
Under Ind AS, companies will recognize deferred tax on revaluation.
Income Tax IND AS 12 vs Indian GAAP AS 22

14. 1. Impact on an organization and its processes Ind AS 12 implementation requires
accounting personnel to work effectively with the tax department to:
• Monitor and calculate tax bases of assets and liabilities
• Monitor tax losses and tax credits of all components in the group
• Assess recoverability of deferred tax assets
• Determine possible offsets between deferred tax assets and liabilities
• Monitor changes in tax rates and collect applicable tax rates to determine the
amount of deferred tax in the event of asset disposal
• Understand implications of double tax treaty, where there are foreign operations
• Prepare more detailed disclosures — tax reconciliation
Income Tax IND AS 12 vs Indian GAAP AS 22

15. 1. Definition of related party according to Ind AS 24 is more enhanced than AS 18.
Under Ind AS 24, KMP of holding company, associate or joint venture of a member
of a group of which the other entity is a member, another joint venture of the
same third party, one entity is a joint venture of a third entity and the other entity
is an associate of the third entity, post-employment benefit plan for the benefit of
employees of either the company or an entity related to the company results in
related party relationship.
2. According to Ind AS 24, an entity discloses that the terms of related party
transactions are equivalent to those that prevail in arm’s length transactions, only
if such terms can be substantiated. AS 18 has no such stipulation on substantiation
of related party transactions when the same is disclosed to be on arm’s length
3. Ind AS 24 requires disclosure of key management personnel’s compensation in
total and for certain specified categories, such as short-term employee benefits
and post-employment benefits. AS 18 does not have such requirement.
Related Party Transaction IND AS 24 vs Indian GAAP AS 18

16. Ind AS17 deals specifically with land leases. Land leases are classified as finance or
operating leases based on the general criteria laid down in the standard. When a lease
includes both land and building elements, an entity assesses the classification of each
element as a finance lease or an operating lease separately. Under Indian GAAP, no
accounting standard deals with land leases. According to an Expert Advisory
Committee (EAC) opinion, long-term land lease may be treated as finance lease.
Leases IND AS 17 vs Indian GAAP

17. Ind AS 17 requires an entity to determine whether an arrangement, comprising a
transaction or a series of related transactions, that does not take the legal form of a
lease but conveys a right to use an asset in return for a payment or series of payments,
is a lease. Under Appendix C of Ind AS 17, Determining whether an Arrangement
contains a Lease, such determination shall be based on the substance of the
arrangement, e.g., power purchase agreements and outsourcing
contracts may have the substance of lease. Indian GAAP does not provide any
guidance for such arrangements.
Leases IND AS 17 vs Indian GAAP

18. a) Ind AS 21 is based on functional currency approach whereas existing AS 11 is not.
b) The existing AS 11 is based on integral foreign operations and non-integral foreign
operations approach for accounting for a foreign operation, whereas Ind AS 21 is
based on the functional currency approach. However, in Ind AS 21 the factors to be
considered in determining an entity’s functional currency are similar to the indicators
in existing AS 11 to determine the foreign operations as non-integral foreign
operations. As a result, despite the difference in the term, there are no substantive
differences in respect of accounting of a foreign operation.
c) As per Ind AS 21, presentation currency can be different from local currency and it
gives detailed guidance on this, whereas the existing AS 11 does not explicitly state so.
Ind AS 21 vs AS 11 (Foreign Exchange)