APPLICABILITY

OF IND AS Bokaro Steel City CPE Study Chapter

(21st December 2023)

CA. Arvind Kumar

FCA, FCMA, CIMA Adv. Dip MA, DipIFR (ACCA, UK)

N. C. Banerjee & Co.

 Indian India deciding to converge with IFRS and not Adopt IFRS
Accounting
Standards (Ind Convergence with IFRS means that IFRS as
AS) issued by the International Body would not be
applied but India made its own accounting
standards in sync with the International
Financial Reporting Standards. And these
synced Indian Accounting Standards are
named as ‘Ind-AS’.
The Ministry of Corporate Affairs (MCA) notified on
16 February 2015, MCA notified the Companies
(Indian Accounting Standards) Rules, 2015.

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 Components Balance sheet as at the end of the period;
of financial Statement of profit and loss;
statements Statement of changes in equity;
Statement of cash flows;
Notes including summary of accounting
policies and other explanatory information

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 Accounting Standards vs Ind AS (Old vs New Principles)

REASONS – few examples

Generally, one country follow one
set of accounting principles.
There may be time gap in
implementing the same but down
the line we will have only one
accounting principles.
• Property Plant and Equipment Fixed
assets
• Change in depreciation methods / useful
life
• Capitalization of General overhead
• Major capital spares (insurance spares)
• Capitalization of de-commissioning
liability
• Substance over Form
• Lease Accounting - Right of use
• Fair valuation
• Prior period items – Materiality
• Dividend accounting (paying company
perspective)
• Expected credit loss

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 EFFECTIVE INTEREST METHOD: EXAMPLE

ABC Ltd. took a loan of Rs.4,00,000/- (Nominal) on year 1 and incurred Rs.
84,474/- as processing. Loan of Rs.4,00,000/- is repayable on year 5. Interest
rate = 4%. Considering the above facts IRR comes to 9.5%.

Year Op. Balance Finance cost Actual Interest Closing

(a) (P/L) (c = Rs. 4L*4%) Balance
(b = a*9.5%) (a+b-c)
1 315526 29975 16000 329501
2 329501 31303 16000 344804
3 344804 32756 16000 361560
4 361560 34348 16000 379908
5 379908 36092 16000 400000

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 Implementation road map for Ind AS by companies

Covered companies [excluding Banking, Insurance and NBFCs Companies]

Phase II Phase I
Year of adoption FY2017-18 FY2016-17
Comparative year FY2016-17 FY2015-16
a. Listed companies All companies whose equity or debt All companies whose equity or debt
securities are listed or in the process securities are listed or in the process
of being listed of being listed
b. Unlisted companies Companies having a net worth Companies having a net worth
>= INR250 crore >= INR500 crore
c. Group companies Applicable to holding, subsidiaries, joint ventures, or associates of companies
covered in (a) and (b) above. This will also impact fellow subsidiary companies
while preparing Consolidated Financial Statements (CFS) of the holding
company.

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 Implementation road map for Ind AS by companies

NBFCs Companies

Phase II Phase I
Year of adoption FY2019-20 FY2018-19
Comparative year FY2018-19 FY2017-18
a. Listed companies All companies whose equity or debt All companies whose equity or debt
securities are listed or in the process securities are listed or in the process
of being listed of being listed
b. Unlisted companies Companies having a net worth Companies having a net worth
>= INR250 crore >= INR500 crore
c. Group companies Applicable to holding, subsidiaries, joint ventures, or associates of companies
covered in (a) and (b) above. This will also impact fellow subsidiary companies
while preparing Consolidated Financial Statements (CFS) of the holding
company.

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 Implementation road map for Ind AS by companies

Mutual Fund (MF) schemes

Timeline for applicability

Year of adoption FY2023-24
Comparative year FY2022-23
a. Companies All mutual fund schemes will be covered in the Ind AS road map

b. Group companies Applicable to holding, subsidiaries, joint ventures, or associates of companies

covered in (a) and (b) above. This will also impact fellow subsidiary companies
while preparing Consolidated Financial Statements (CFS) of the holding
company.

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 Implementation road map for Ind AS by companies

Banking and Insurance Companies

RBI through a notification dated 22 March 2019, deferred the implementation of Ind AS for
banks till further notice.

IRDAI through its circular no IRDA/F&A/CIR/ACTS/023/01/2020 dated 21 January 2020

deferred the implementation of Ind AS in the insurance sector in India till further notice.

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 Clarification by Ind AS Technical Facilitation Group (ITFG) on Applicability of Ind AS
ICAI has made Ind AS Technical Facilitation Group (formerly known as, Ind AS Transition
Facilitation Group) (ITFG) for providing timely clarifications to members and others
concerned on issues while implementing Ind AS.
Issues ITFG Clarification
Net worth criteria  Based on Separate Financial Statements of the company;
 based on previous closing year (e.g., as on 31 March 2014 for
phase I company);
 once implemented should be continued even if it goes below
the limit
Section 8 companies Required
Capital reserve & Employee To be included in the calculation of net worth of the Company
Stock Option Plan (ESOP)
reserve
Branch of a company Not applicable to a branch of a company not incorporated in
incorporated outside India India

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 Clarification by Ind AS Technical Facilitation Group (ITFG) on Applicability of Ind AS
Continued…
Issues ITFG Clarification
Company listed its debentures in May 2017, and Since company is not listed, or in the process
they were delisted in January 2018 of being listed either at the beginning or end
of the year, it is not required to prepare Ind
AS financial statements for FY2017-18.
A parent (ABC Ltd.) and its unlisted subsidiary PQR Ltd. is required to continue preparing
PQR Ltd. (with net worth of INR50 crore) financial statements as per Ind AS.
complied with Ind AS beginning 1 April 2017 Ind AS does not apply to XYZ Ltd. simply by
considering the requirements of the road map. virtue of being PQR's parent. However, it may
During financial year 2018-19, ABC Ltd. sold off opt to apply Ind AS voluntarily.
substantially all of its investment in PQR Ltd. to
an unrelated unlisted company, XYZ Ltd.
An Ind AS complied company gets converted to Ind AS would cease to apply as it is governed
an LLP. by the provisions of the Limited Liability
Partnership Act, 2008.
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 Implementation of Ind As or a single
What we can
standard
offer
Preparation of Ind AS Complied FS from AS
complied trial balance or vice versa
Conversion of IFRS complied accounts in to
Ind AS complied FS or vice versa
Book writing for foreign clients
Training

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 APPLICABILITY OF IND AS

• Thank you …

N. C. Banerjee & Co.

 Financial One step to bring all entities' FS in one
Statements of format
Non-Corporate Effective date 01.04.2024 (i.e., FY 2024-25)
Entities Format of FS is like Schedule III, Division –I
Freedom to change the format of FS as per
the requirement of entity
Entities are segregated into 4 levels and
Level –I must comply all AS and for other
levels relaxations are there.
Notes and disclosures are not stringent like
Schedule III, Division –I

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