IND AS 1 PRESENTATION OF

FINANCIAL STATEMENTS
IND AS CERTIFICATION COURSE – DAY 1 OF IND AS BATCH

Faculty : CA. (Dr.) ALOK K. GARG

Ind AS Certification Course Secretariat, Accounting Standards Board
The Institute of Chartered Accountants of India
New Delhi, India
Disclaimer: The views expressed herein are solely those of the Faculty/Presenter and not that of the ICAI or any of
its committees. The ICAI or the Faculty or Preparer of this material do not accept any responsibility for omission
or inadequacy of the contents in this document and also for loss caused to any person who acts or refrains from
acting in reliance on the contents of this document irrespective of the cause of / reason for the loss.
AGENDA
ASB, ICAI

1 Objective and Scope

2 Important Definitions
3 Components/ Complete set of financial statements
4 General Features/Overall Considerations of financial statements
5 Structure and Content of Financial Statements
6 Carve Out
7 Key differences between IFRS, Ind AS and Indian GAAP

2
OBJECTIVE
ASB, ICAI

• for presentation of general purpose financial

To prescribe the basis statements

• With entity’s own FS of previous periods

To ensure comparability
• With FS of other entities

• Overall requirements for the presentation of

financial statements
To set • Guidelines for their structure
• Minimum requirements for their content

3
SCOPE
ASB, ICAI

Applicable in preparing and presenting general

purpose financial statements in accordance with Ind
ASs.
Other Ind ASs set out the recognition, measurement
and disclosure requirements for specific transactions
and other events.
It is not applied to Structure and content of condensed
Interim financial statement under Ind AS 34 except for
general features of FS
It applies equally to all entities, including those that
present CFS.

4
DEFINITIONS
ASB, ICAI

 General Purpose financial Statement

are financial statements intended to meet the needs of users who are not in a position to require
an entity to prepare reports tailored to their particular information needs

 Ind AS
Indian Accounting Standards (Converged with IFRS) prescribed under Section 133 of the
Companies Act, 2013

 Material
Information is material if omitting, misstating or obscuring it could reasonably be expected to
influence decisions that the primary users of the financial statements make on the basis of those
financial statements, which provides a financial information about a specific reporting entity.

5
COMPONENTS/ COMPLETE SET OF FINANCIAL
STATEMENTS ASB, ICAI

Balance sheet
Statement of profit and loss
Statement of changes in equity
Cash flow statement
Notes
• Accounting policies
• Explanatory notes
Comparative information
A Balance sheet as at the beginning of the earliest comparative period
• When an entity applies an accounting policy retrospectively
• makes a retrospective restatement of items in its FS
• when it reclassifies items in its financial statements
6
GENERAL FEATURES/ OVERALL CONSIDERATIONS
ASB, ICAI

Presentation of true and fair view & compliance with Ind ASs
Going concern
Accrual basis
Aggregation and materiality
Off-setting
Frequency of reporting
Comparative information
Consistency of presentation

7
GOING CONCERN
ASB, ICAI

When preparing financial statements, management shall make an

assessment of an entity’s ability to continue as a going concern :

• An entity shall prepare financial statements on a going concern basis

unless
• there is intention to liquidate or to cease trading or
• no other alternative except to do so

• Disclose in case of Material uncertainty

• If FS are not prepared on Going Concern basis – Disclose fact, basis
and reason for that

9
GOING CONCERN – CASE STUDY
ASB, ICAI

An entity is engaged in a plastic product manufacturing in a particular area. The entity

is a profitable entity and has huge orders in hand as at March 31, 2020. The
government has announced on March 31, 2020 to ban trading and manufacturing of
plastic after 30th September 2020. This is the only product in which the company is
engaged. Advise the company on going concern aspect as per Ind AS 1.

In this case, although, neither the company has ceased trading nor management intends to
liquidate the entity but there is no alternative except to do so due to government
announcement within 12 months from the reporting period. Hence, there is impact on going
concern.
10
MATERIALITY & AGGREGATION AND OFFSETTING
ASB, ICAI

Materiality & Aggregation Offsetting

Assets, Liabilities, Income and expenses
Material - present separately shall not be offset unless required or
permitted
Immaterial - aggregate with other items
For e.g: Revenue recognised is after
offsetting trade discounts and volume
rebates. Same is allowed by Ind AS
(Measuring assets net of valuation
allowances- for e.g. obsolescence
allowances on inventories and doubtful
debts allowances on receivables is not
offsetting)

12
COMPARATIVE INFORMATION
ASB, ICAI

Comparative information - Includes narrative & descriptive information

If an entity changes the presentation or classification of items in its FS, it shall reclassify
comparative amounts unless reclassification is impracticable.

When an entity reclassifies comparative amounts, it shall disclose: (Para 41)

(a) the nature of the reclassification;
(b) the amount of each item or class of items that is reclassified; and
(c) the reason for the reclassification.

When it is impracticable to reclassify comparative amounts, an entity shall disclose: (Para 42)
(a) the reason for not reclassifying the amounts, and
(b) the nature of the adjustments that would have been made if the amounts had been
reclassified
13
STRUCTURE AND CONTENT
Identification of financial
statements
• Clearly distinguished from
other information
ASB, ICAI
Reporting period Information required
• At least annually, • Name and change, if any
• To explain if longer or • Individual or group
shorter financials
• Period covered
• Currency
• Level of rounding
14
STRUCTURE AND CONTENT –BALANCE SHEET
ASB, ICAI

Current Vs Non current distinction or

Classify based on liquidity if more relevant

Obligatory line items on face of B/S

Disclosure required on face or in notes

• Relevant sub-classifications of items above
• Information on share capital and reserves
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STRUCTURE AND CONTENT –BALANCE SHEET
 Line Items on face of Balance Sheet
 Property, Plant and Equipment
 Investment Property
 Intangible Assets
 Financial Assets
 Trade and Other receivables
 Cash and Cash Equivalents
 Biological Assets
 Inventories
 Investments Accounted for
using the equity method
ASB, ICAI
o Non Current Assets & Liabilities classified as HFS
o Trade and Other Payables
o Provisions
o Financial liabilities
o Liabilities and Assets for current tax
o Deferred tax assets and liabilities
o Non Controlling interest within equity
o Issued Capital and reserves attributable to equity
holders of the parent
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CURRENT & NON CURRENT DISTINCTION
Current Assets
It expects to realise the asset, or
intends to sell or consume it, in its
normal operating cycle
It holds the asset primarily for the
purpose of trading
It expects to realise the asset within 12
months after the reporting period
The asset is cash or a cash
equivalent (as defined in Ind AS 7)
unless the asset is restricted from being
exchanged or used to settle a liability
for at least 12 months after reporting
period
Asset which is not current, is Non Current
ASB, ICAI
Current Liability
• Settled in the normal course of
operating cycle or due to be
settled within 12 month of the
balance sheet date
• Held primarily for the purpose of
being traded
• No unconditional right to defer
settlement for at least 12 months
Liability which is not current, is Non Current
17
CARVE OUT – LONG TERM LOANS CLASSIFICATION
ASB, ICAI

Long term loan is classified as current where there is a breach of a material provision of a long-
term loan arrangement on or before the end of the reporting period resulting in to loan becoming
payable
EXCEPT

if the lender agreed, after the reporting period and before the approval of the financial
statements for issue, not to demand payment as a consequence of the breach or provided
grace period of more than 12 months to rectify the breach.

18
 CASE STUDY – CARVE OUT
ASB, ICAI

Riley’s Roosters, Inc. (RRI) has a December 31 year end. As of June 30, 2019, RRI obtains a
$100,000 loan from a bank for a new chicken coop facility. The loan is due in 24 months. In
December 2019, RRI spends too much of its cash on its holiday party and incurs a debt covenant
violation as of December 31, 2019. As a result of the violation, the loan becomes due within 30
days. At this time, RRI asks the bank to waive the violation. RRI tells the bank it will recoup some
of its cash by selling its party residuals. On January 5, 2020, the bank agrees to waive the
violation. RRI issues its financial statements on January 25, 2020.

How should this loan be classified (current or non-current) on RRI’s

balance sheet as of December 31, 2019 under IFRS and Ind AS?

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STRUCTURE AND CONTENT – STATEMENT OF
PROFIT AND LOSS ASB, ICAI

 Concepts of profit and loss and OCI:

 Profit or loss is defined as "the total of income less expenses, excluding the components
of OCI".

 OCI is defined as comprising "items of income and expense (including reclassification

adjustments) that are not recognised in profit or loss as required or permitted by other Ind
ASs".

 Total comprehensive income is defined as "the change in equity during a period resulting
from transactions and other events, other than those changes resulting from transactions
with owners in their capacity as owners".
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STRUCTURE AND CONTENT – STATEMENT OF
PROFIT AND LOSS ASB, ICAI

 Includes Profit or loss and OCI.

 obligatory line items on face of statement of Profit & loss

 To show as allocation:
 Profit or loss attributable to NCI
 Profit or loss attributable to equity holders of the parent

 expenses analysed on basis of Nature only like Salaries, depreciation, etc. (allowed in
both IFRS and Ind AS)
 Classification based on function like Selling and distribution, Administration etc. (allowed
in IFRS but not allowed in Ind AS)

21
 STRUCTURE AND CONTENT – STATEMENT OF
PROFIT AND LOSS ASB, ICAI

 line Items on the face of the Profit & Loss :

 Revenue
 Finance Costs
 Impairment losses
 Share of profit or loss of associate and JV by equity method
 Tax expense
 Sum of profit or loss on discontinued operations plus gain or loss on the disposal of
discontinued operations assets
 gains and losses arising from the derecognition of financial assets measured at
amortised cost.

 No extraordinary items

22
STRUCTURE AND CONTENT – OTHER
COMPREHENSIVE INCOME ASB, ICAI

(A) Items that will not be reclassified to profit or loss:

(i) Changes in revaluation surplus (as per Ind AS 16 and Ind AS 38) ;
(ii) Remeasurements of the defined benefit plans (as per Ind AS 19) ;
(iii) Gain and losses in Investments in Equity Instruments designated at FVTOCI (Ind AS 109) ;
(iv) Fair value changes relating to own credit risk of financial liabilities designated at FVTPL (Ind
AS 109) ;
(v) Share of OCI in Associates and Joint Ventures, to the extent not to be classified into profit or
loss (Ind AS 28)

23
 STRUCTURE AND CONTENT – OTHER
COMPREHENSIVE INCOME ASB, ICAI

(B) Items that will be reclassified to profit or loss;

(i) Exchange differences in translating the financial statements of a foreign operation (as per Ind AS 21) ;
(ii) Gains and losses on financial assets measured at Fair Value through OCI ;
(iii) effective portion of gains and loss on hedging instruments in a cash flow hedge and the gains and losses
on hedging instruments that hedge investments in equity instruments measured at FVTOCI ;
(iv) changes in the value of the forward elements of forward contracts when separating the forward element
and spot element of a forward contract and designating as the hedging instrument only the changes in the spot
element, and changes in the value of the foreign currency basis spread of a financial instrument when
excluding it from the designation of that financial instrument as the hedging instrument (as per Ind AS 109), &
(v) changes in the value of the time value of options when separating the intrinsic value and time value of an
option contract and designating as the hedging instrument only the changes in the intrinsic value (as per Ind
AS 109).
(vi) Share of OCI in Associates and Joint Ventures, to the extent to be classified into profit or loss
24
STRUCTURE AND CONTENT – SOCIE
ASB, ICAI

 Separate component of financial statements

 On the face for each component of equity a reconciliation between carrying amount at
beginning and at end of period
 Profit or loss for the period
 other comprehensive income
 Effect of retrospective application or restatement

 Also in statement or in the notes

 Capital transactions with owners
 Movements in accumulated profit
 Movements in capital and reserves

25
STRUCTURE AND CONTENT – STATEMENT OF CASH
FLOWS ASB, ICAI

 Cash flow statement in accordance with Ind AS 7, Statement of Cash Flows

26
STRUCTURE AND CONTENT – NOTES
ASB, ICAI

present information about the disclose the information

basis of preparation of the required by Ind ASs that is
financial statements and the not presented elsewhere in
specific accounting policies; the financial statements; and

provide information that is not

presented elsewhere in the
financial statements, but is
relevant to an understanding
of any of them.

27
 STRUCTURE AND CONTENT – NOTES
ASB, ICAI
notes shall be presented in a systematic manner
and cross-reference in the following order:

Statement of summary of
compliance with Ind significant accounting
AS policies applied

supporting other disclosures,

information for items including: contingent
presented in FS, in liabilities and
unrecognised
the order in which contractual
each statement and commitments, and
each line item is other non-financial
presented; and disclosures
28
STRUCTURE AND CONTENT – OTHER DISCLOSURES
ASB, ICAI

 Critical Management Judgments

Examples:
 Substance over form issues
 Sale of goods/ financing arrangements
 Existence of control over SPEs

 Critical Estimates
Examples:
 Recoverability of internally generated intangible assets
 Impairment of goodwill
 Useful lives of property, plant and equipment etc.
 Capital Management policies 29
KEY DIFFERENCES
ASB, ICAI

Particulars Ind AS Indian GAAP

Applicable Ind AS 1: Presentation of financial statements. AS 1: Disclosure of Accounting policies.

Guidance
SOCIE - Presentation of all transactions with equity Statement is not required. Movements in
Requirement holders in the capacity of equity holder in the share capital and reserves are to be
statement of changes in equity. presented in the notes to accounts.
OCI Requires - Presentation of such statement as Concept of OCI does not exist.
part of Financial statements.
Extraordinary Presentation of any items of income or expense Specifically require disclosure of such
Items as extraordinary is Prohibited. items.

Statement of Explicit and unreserved statement of No Such requirement

compliance compliance is required in the notes to accounts
30
KEY DIFFERENCES
ASB, ICAI

Particulars Ind AS Indian GAAP

Key source of Disclosure is required for key sources of No such disclosure required.
uncertainty estimation uncertainty that have a significant
risk of causing a material adjustment to the
carrying amounts of assets and liabilities.
Judgements used Requires Disclosure of Critical Judgments No such disclosure required.
in finalisation of made by management in applying accounting
accounting policy policies.
Requirement of In case of change in accounting policy, Impact is treated in the current year
presenting 3rd reclassification and error, 3rd Balance Sheet is financials and disclosed in notes to
Balance sheet as required to be presented. accounts only.
comparative

31
MCQ
ASB, ICAI

1. The objective of Ind AS 1 is to prescribe the basis for:

(a) Disclosure of accounting policies

(b) Presentation and disclosure in general purpose financial statements
(c) Presentation of general purpose financial statements.
(d) Disclosure in general purpose financial statements

32
MCQ
ASB, ICAI

2. Does complete set of financial statements as per Ind AS 1 includes Notes to

Accounts?
(a) Yes.
(b) No
(c) It depends on entity’s choice

33
MCQ
ASB, ICAI

3. Name the two new components of set of financial statements under Ind AS
Framework.

(a) Statement of Financial Position and Statement of Financial Performance

(b) Significant Accounting Policies and critical accounting policies
(c) OCI and SOCIE.
(d) None of the above

34
MCQ
ASB, ICAI

4. Ind AS 1 is not fully applicable to:

(a) balance sheet

(b) statement of profit and loss
(c) statement of changes in equity
(d) interim financial statements.

35
MCQ
ASB, ICAI

5. Ind AS 1 does not:

(a) prescribes the accounting policies.
(b) guidelines for balance sheet
(c) guidelines for statement of changes in equity
(d) guidelines for statement of profit and loss

36
MCQ
ASB, ICAI

6. Which one of the following is not required to be presented as minimum

information on the face of the balance sheet, according to Ind AS 1?

(a) Investment property

(b) Investments accounted for under the equity method
(c) Biological assets
(d) Contingent liability.

37
MCQ
ASB, ICAI

7. Which of the following is not specifically a required disclosure of Ind AS 1?

(a) Name of the reporting entity or other means of identification, and any change in that
information from the previous year
(b) Names of major/significant shareholders of the entity.
(c) Level of rounding used in presenting the financial statements
(d) Whether the financial statements cover the individual entity or a group of entities

38
MCQ
ASB, ICAI

8. Which of the following reports is not a component of the financial statements

according to Ind AS 1?

(a) Balance sheet

(b) Statement of changes in equity
(c) Director’s report.
(d) Notes to the financial statements

39
MCQ
ASB, ICAI

9. An entity whose financial statements comply with Ind ASs shall make an
_______ statement of such compliance in the notes.

(a) Explicit and reserved

(b) Implicit and unreserved
(c) Explicit and unreserved
(d) Implicit and reserved

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 ASB, ICAI

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 ASB, ICAI

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