CA Krishanu Bhattacharyya

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Presentation transcript:

CA Krishanu Bhattacharyya BY: CA Krishanu Bhattacharyya

AN OVERVIEW

Presentation of Final Statements IAS 1 IND AS 1 Inventories IAS 2 DESCRIPTION IAS / IFRS IND AS Presentation of Final Statements IAS 1 IND AS 1 Inventories IAS 2 IND AS 2 Statement of Cash Flow IAS 7 IND AS 7 Accounting Policy, Change in Accounting Estimates & Errors IAS 8 IND AS 8 Events After The Reporting Period IAS 10 IND AS 10 Income Taxes IAS 12 IND AS 12

Property, Plant & Equipments IAS 16 IND AS 16 Leases IAS 17 IND AS 17 DESCRIPTION IAS / IFRS IND AS Property, Plant & Equipments IAS 16 IND AS 16 Leases IAS 17 IND AS 17 Employee Benefits IAS 19 IND AS 19 Accounting for Govt. Grants & Disclosure of Govt. Assistant IAS 20 IND AS 20 Effect of Changes in Foreign Exchange Rates IAS 21 IND AS 21 Borrowing Costs IAS 23 IND AS 23

Related Party Disclosures IAS 24 IND AS 24 DESCRIPTION IAS / IFRS IND AS Related Party Disclosures IAS 24 IND AS 24 Separate Financial Statements IAS 27 IND AS 27 Investment in Associates & Joint Ventures IAS 28 IND AS 28 Financial Reporting in Hyperinflationary Economics IAS 29 IND AS 29 Financial Instruments : Presentation IAS 32 IND AS 32

Interim Financial Reporting IAS 34 IND AS 34 Impairment of Assets DESCRIPTION IAS / IFRS IND AS Earnings per Share IAS 33 IND AS 33 Interim Financial Reporting IAS 34 IND AS 34 Impairment of Assets IAS 36 IND AS 36 Provisions, Contingent Liabilities & Contingent Assets IAS 37 IND AS 37 Intangible Assets IAS 38 IND AS 38 Investment Property IAS 40 IND AS 40 Agriculture IAS 41 IND AS 41

First Time Adoption Of Indian Accounting Standards IFRS 1 Ins As 101 DESCRIPTION IAS / IFRS IND AS First Time Adoption Of Indian Accounting Standards IFRS 1 Ins As 101 Share – Based payments IFRS 2 IND AS 102 Business Combinations IFRS 3 IND AS 103 Insurance Contracts IFRS 4 IND AS 104 Non – Current Asset held for sale & Discontinued Operations IFRS 5 IND AS 105 Exploration for & Evaluation of Mineral Resources IFRS 6 IND AS 106

Financial Instruments : Disclosures IFRS 7 IND AS 107 DESCRIPTION IAS / IFRS IND AS Financial Instruments : Disclosures IFRS 7 IND AS 107 Operating Segments IFRS 8 IND AS 108 Financial Instruments IFRS 9 IND AS 109 Consolidated Financial Statements IFRS 10 IND AS 110 Joint Arrangements IFRS 11 IND AS 111 Disclosure of Interests In Other Entities IFRS 12 IND AS 112 Fair Value Measurement IFRS 13 IND AS 113

Regulatory Deferral Accounts Revenue From Contracts with Customers DESCRIPTION IAS / IFRS IND AS Regulatory Deferral Accounts IFRS 14 IND AS 114 Revenue From Contracts with Customers IFRS 15 IND AS 115

IND AS 101

FIRST TIME ADOPTION OF INDIAN ACCOUNTING STANDARDS

OBJECTIVE To ensure that an entity’s first Ind-AS financial statements, and its interim financial reports for part of the period covered by those financial statements, contain high quality information that:

can be generated at a cost that does not exceed the benefits is transparent for users and comparable over all periods presented; provides a suitable starting point for accounting in accordance with IndAS; can be generated at a cost that does not exceed the benefits

SCOPE An entity shall apply this Ind-AS in: its first Ind-AS financial statements each interim financial report, if any, that it presents in accordance with Ind AS 34 Interim Financial Reporting for part of the period covered by its first Ind-AS financial statements.

An entity’s first Ind-AS financial statements are the first annual financial statements in which the entity adopts Ind-ASs, in accordance with Ind-ASs notified under the Companies Act, 1956 and makes an explicit and unreserved statement in those financial statements of compliance with Ind As

RECOGNITION AND MEASUREMENT Opening Ind-AS Balance Sheet (Para 6) Accounting policies Estimates (Para 14)

PRESENTATION & DISCLOSURE Comparative Information (Para 21) Entity’s First Ind As Financial Statements shall include: At least 3 Balance Sheets 2 Statements of Profit & Loss 2 Statements of Cash Flow 2 Statements of changes in Equity Related Notes

Reconciliations Explanation of Transition to Ind As (Para 23) Non –Ind As Comparative information & Historical Summaries Explanation of Transition to Ind As (Para 23) Reconciliations Designation of Financial Assets or Financial Liabilities (Para 29)

Use of Deemed Cost for Oil & Gas Assets Use of Fair Value as Deemed Cost (Para 30) Use of Deemed Cost for Investments in Subsidiaries, Joint Ventures & Associates. Use of Deemed Cost for Oil & Gas Assets Use of Deemed Cost for Operations subject to Rate Regulations.

Interim Financial Reports. Use of Deemed Cost After Severe Hyperinflation Interim Financial Reports.

EXEMPTIONS FROM OTHER IND AS(s) share-based payment transactions insurance contracts deemed cost leases employee benefits

cumulative translation differences and accumulated exchange differences investments in subsidiaries, jointly controlled entities and associates assets and liabilities of subsidiaries, associates and joint ventures compound financial instruments designation of previously recognized financial instruments

fair value measurement of financial assets or financial liabilities at initial recognition decommissioning liabilities included in the cost of property, plant and equipment financial assets or intangible assets accounted for in accordance with Appendix A to Ind AS 11 borrowing costs transfers of assets from customers

non-current assets held for sale and discontinued operations extinguishing financial liabilities with equity instruments non-current assets held for sale and discontinued operations Severe hyperinflation Joint Arrangements

Designation of contracts with customers stripping costs in the production phase of a surface mine Designation of contracts with customers Revenue from contracts with customers.

Mandatory Exceptions (From Retrospective Application of Other IND As (S) Estimates De-recognition of financial assets & financial liabilities

Non-Controlling Interests Hedge Accounting Non-Controlling Interests Classification & Measurement of Financial Assets Impairment of Financial Assets Embedded Derivatives Government Loans

IND AS 101 VS IFRS 1

CHALLENGES OF FIRST TIME ADOPTION Re-grouping / Re-classification Industry Comparatives Introduction of Fair Value Concept Introduction of Time Value of Money Concept.

External communications Internal Changes Accounting Policy Changes Awareness at Board Level External communications Internal Changes Accounting Policy Changes

SYSTEMATIC APPROACH TO IMPLEMENT IND AS 101

PHASE-II: Impact Analysis & Quantification PHASE -I: Plan Conversion PHASE-II: Impact Analysis & Quantification PHASE-III: Redefine / Redesign PHASE-IV: Opening Balance Sheet as per IND AS PHASE-V: Reporting Date – the IND AS financial statements

PRACTICAL PROBLEMS What will not amount to first time adoption? What are the steps involved in first time adoption of Ind As? How should opening Ind As balance sheet be prepared?

Is it mandatory to publish opening Ind As balance sheet? How should the effects of adjustments be recorded in the opening Ind As balance sheet? Is it mandatory to publish opening Ind As balance sheet? Whether Ind As 101 is a transitional standard for India?

IND AS 115

Revenue from contracts with customers

OBJECTIVE To establish the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer.

CORE PRINCIPLE An entity shall recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

An entity shall consider the terms of the contract and all relevant facts and circumstances when applying this Standard. An entity shall apply this Standard, including the use of any practical expedients, consistently to contracts with similar characteristics and in similar circumstances. When accounting for a portfolio, an entity shall use estimates & assumptions that reflect the size & composition of the portfolio.

This Standard specifies the accounting for an individual contract with a customer. However, as a practical expedient, an entity may apply this Standard to a portfolio of contracts (or performance obligations) with similar characteristics if the entity reasonably expects that the effects on the financial statements of applying this Standard to the portfolio would not differ materially from applying this Standard to the individual contracts (or performance obligations) within that portfolio.

SCOPE (PARA 5 & 6) An entity shall apply this Standard to all contracts with customers, except the following: Lease contracts within the scope of Ind AS 17 insurance contracts within the scope of Ind AS 104

financial instruments and other contractual rights or obligations within the scope of Ind AS 109, Ind AS 110, Ind AS 111, Ind AS 27, and Ind AS 28. non-monetary exchanges between entities in the same line of business to facilitate sales to customers or potential customers.

An entity shall apply this Standard to a contract (other than a contract listed in preceding slides) only if the counterparty to the contract is a customer. A customer is a party that has contracted with an entity to obtain goods or services that are an output of the entity’s ordinary activities in exchange for consideration.

A counterparty to the contract would not be a customer if, for example, the counterparty has contracted with the entity to participate in an activity or process in which the parties to the contract share in the risks and benefits that result from the activity or process (such as developing an asset in a collaboration arrangement) rather than to obtain the output of the entity’s ordinary activities.

IMPORTANT DEFINATIONS CONTRACT: An agreement between two or more parties that creates enforceable rights and obligations CONTRACT LIABILITIES : An entity’s obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer.

CONTRACT : An entity’s right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time (for example, the entity’s future performance). CUSTOMER: A party that has contracted with an entity to obtain goods or services that are an output of the entity’s ordinary activities in exchange for consideration.

Income arising in the course of an entity’s ordinary activities. Increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in an increase in equity, other than those relating to contributions from equity participants. REVENUE: Income arising in the course of an entity’s ordinary activities.

PERFORMANCE OBLIGATION: A promise in a contract with a customer to transfer to the customer either: a good or service (or a bundle of goods or services) that is distinct; or (b) a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.

STAND ALONE SELLING PRICE: The price at which an entity would sell a promised good or service separately to a customer. TRANSACTION PRICE: The amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

RECOGNIZATION Identifying the contract Definition of contract Duration of Contract

Contract remains wholly unperformed if both the following criteria are met: entity has not yet transferred any promised goods or services to the customer , and entity has not yet received & is not yet entitled to receive any consideration in exchange for promised goods or services.

If criteria above not met & entity receives consideration, such consideration shall be recognized as revenue if either of the following events have occurred: The entity has no remaining obligations to transfer goods or services to customers & all or substantially all of the consideration promised by the customer has been received & is non-refundable. or The contract has been terminated & the consideration received from the customer is non refundable.

Satisfied at a point of time Combination of contract Contract modifications Identifying performance obligations Definition of distinct goods & services Satisfaction of performance obligations Satisfied over time Satisfied at a point of time Measuring progress towards complete satisfaction

MEASUREMENT Determining the transaction price Determinants of transaction price Variable consideration Existence of a significant financing component in the contract

Non cash consideration Consideration payable to a customer Allocating the transaction price to performance obligation Allocation based on stand-alone selling price Allocation of discount to stand-alone price Changes in transaction price Contract cost

PRESENTATION (PARA 105) When either party to a contract has performed, an entity shall present the contract in the balance sheet as a contract asset or a contract liability, depending on the relationship between the entity’s performance and the customer’s payment. An entity shall present any unconditional rights to consideration separately as a receivable.

DISCLOSURE Objective of Disclosure Requirements Contracts with Customers Disaggregation of Revenue Contract Balances

Performance Obligation Transaction Price Allocated To The Remaining Performance Obligation Determining The Timing Of Satisfaction Of Performance Obligations Determining The Transaction Price and The Amounts Allocated to Performance Obligations Assets Recognized From The Costs To Obtain Or Fulfill a Contract with the Customer.

APPLICATION GUIDANCE This application guidance is organized into the following categories: performance obligations satisfied over time methods for measuring progress towards complete satisfaction of a performance obligation

sale with a right of return warranties principal versus agent considerations customer options for additional goods or services customers’ unexercised rights non-refundable upfront fees (and some related costs)

repurchase agreements consignment arrangements licensing repurchase agreements consignment arrangements bill-and-hold arrangements customer acceptance disclosure of disaggregated revenue

Five Step Model Framework STEP-I: Identify the contract with a customer STEP-II: Identify the performance obligations in the contract

STEP-III: Determine the transaction price STEP-IV: Allocate the transaction price to the performance obligations in the contracts STEP-V: Recognize revenue when (or as ) the entity satisfies a performance obligations.

IND AS 115 VS IFRS 15

Particulars IND AS 115 IFRS 15 Terminology Balance Sheet & Statement of Profit & Loss Statement of Financial Position & Statement of Comprehensive Income Transitional Provision Not Given Given Para 109AA Inserted for excise duty ------