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

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.

1. Indian Accounting Std (old) vs IND AS (New)

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4. Overview of Significant Differences between IND AS and Current Indian GAAP

5. TOPICS COVERED Differences with respect to: Conceptual Accounting Framework Accounting Differences Carve Outs

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 .  

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

8. LIST OF IND AS, IFRS AND AS

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 Policies, Changes in Accounting Estimates and Errors AS 4 Contingencies and Events occurring after Balance Sheet Date 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 Contracts IFRIC 12 Service Concession Arngmt SIC 29 Disclosure – Service Concession Arrangements AS 7 Construction Contracts Ind AS 12 Income Taxes Ind AS 12 Appendix A Ind AS 12 Appendix B IAS 12 Income Taxes SIC 21 Income Taxes – Recovery of Revalued Non-Depreciable Assets SIC 25 Income Taxes – Changes in the Tax Status of an Enterprise or its Shareholders AS 22 Accounting for Taxes on Income 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 Ind AS 17 Appendix B Ind AS 17 Appendix C (Deferred) IAS 17 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 AS 19 Leases Ind AS 18 Revenue Ind AS 18 Appendix A Ind AS 18 Appendix B Ind AS 18 Appendix C IAS 18 Revenue SIC 31 Revenue – Barter Transactions Involving Advertising IFRIC 13 Customer Loyalty Programmes IFRIC 18 Transfer of Assets from Customers AS 9 Revenue Recognition

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 SIC 12 Consolidation – Special Purpose Entities AS 21 Consolidated Financial Statements Ind AS 28 Investment in Associates IAS 28 Investment 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 IAS 29 Financial Reporting in Hyperinflationary Economies IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies No standard

14. Ind AS 31 Interest in Joint Ventures / IFRS 11 Ind AS 31 Appendix A IAS 31 Interest in Joint Ventures SIC 13 Jointly Controlled Entities – Non-Monetary Contributions by Venturers AS 27 Financial Reporting of Interests 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 IFRIC 10 Interim Financial Reporting and Impairment. AS 25 Interim Financial Reporting 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 SIC 32 Intangible Assets – Website Costs AS 26 Intangible Assets

15. Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets Ind AS 37 Appendix A Ind AS 37 Appendix B IAS 37 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 AS 29 Provisions, Contingent Liabilities and Contingent Assets Ind AS 39 Financial Instruments : Recognition and Measurement Ind AsS39 Appendix C Ind AS 39 Appendix D Ind AS 39 Appendix E 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

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

20. Major Carve Outs Related Party Disclosures (IND AS 24) Overriding nature of statue Definition of relative as per Co.s Act

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

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

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.

24. Major Carve Outs Investment in Associates (IND AS 28) Different accounting periods and policies of associates

25. Major Carve Outs Investment Property (IND AS 40) Only Cost Model

26. Major Carve Outs EPS (IND AS 33) Both Standalone and CFS

27. Major Carve Outs Govt Grants (IND AS 20) Non-monetary government grants only at fair value and not at nominal value

28. IND AS 2 vs AS 2 Inventories

29. IND-AS 2 - Inventories Fair value of purchases

30. Timing of recognition of purchases IND-AS 2 - Inventories

31. Cost of inventories of a service provider IND-AS 2 - Inventories

32. IND AS 8 vs AS 5 Changes in Accounting Policies, Estimates, Prior Period Itesm

33. IND AS 8 - Acc pol., changes in acc est., errors Changes in accounting policies

34. Changes in method of depreciation IND AS 8 - Acc pol., changes in acc est., errors

35. Prior period items - errors or omissions arising from a failure to use or misuse of reliable information - Retro IND AS 8 - Acc pol., changes in acc est., errors

36. extraordinary items IND AS 8 - Acc pol., changes in acc est., errors

37. IND AS 10 vs AS 4 Events after Balance Sheet Date

38. Proposed dividend IND AS 10 - Events after reporting date

39. IND AS 11 vs AS 7 Construction Contracts

40. IND AS 11 - Construction Contracts Service Concession Arrangements (Ex)

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

42. Construction Contracts Agreements for construction of real estate

43. IND AS 18 vs AS 9 Revenue Recognition

44. IND AS 18 – Revenue Recognition Multiple element arrangements (Ex)

45. 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. IND AS 18 – Revenue Recognition

46. Linked transactions Examples – Loan origination fees charged by banks IND AS 18 – Revenue Recognition

47. Customer loyalty programmes IND AS 18 – Revenue Recognition

48. Extended credit IND AS 18 – Revenue Recognition

49. 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). IND AS 18 – Revenue Recognition

50. Percentage Completion IND AS 18 – Revenue Recognition

51. IND AS 27/28/31/103 vs AS 14/21/23/27 Business Combination and Consolidations

52. Business Combination / Consolidation Definition of Control Substance over form Temporary SPE

53. Business Combination / Consolidation Contingent Consideration / Acq Date

54. Business Combination / Consolidation Goodwill Fair Value of assets & liabilities acquired Amortisation

55. Business Combination / Consolidation Minority Fair Value Negative

56. Business Combination / Consolidation Uniform Accounting Policy & Time Gaap

57. Business Combination / Consolidation Proportionate Consolidation

58. Business Combination / Consolidation Step up and Step down

59. IND AS 16 vs AS 10 Property, Plant & Equipment

60. IND AS 16 –Property, Plant & Eqpmt Overhead allocation Component approach

61. Site Restoration IND AS 16 –Property, Plant & Eqpmt

62. Revaluation of assets Depreciation on the same IND AS 16 –Property, Plant & Eqpmt

63. Cash Price Equivalent IND AS 16 –Property, Plant & Eqpmt

64. Residual Value and Useful life IND AS 16 –Property, Plant & Eqpmt

65. IND AS 23 vs AS 16 Borrowing Costs

66. IND AS 23 - Borrowing Costs (BC) No period as 12 months

67. IND AS 23 - Borrowing Costs (BC) Consolidation :- Special case of capitalisation of BC Group Average borrowing rate

68. IND AS 7 vs AS 3 Cash Flow Statement

69. IND AS 7 - Cash Flow Undistributed profits of associates and non-controlling interests’ under operating activities.

70. Ind AS 7 requires to report the aggregate amount of the cash paid or received as consideration for obtaining or losing control IND AS 7 - Cash Flow

71. IND AS 12 vs AS 22 Deferred Tax

72. IND AS 12 Balance sheet approach (Ex)

73. IND AS 12 Examples on revaluation of PPE; indexation benefits for freehold land and investments; fair value changes for available for sale securities;

74. IND AS 12 Deferred Taxes arising in consolidation

75. IND AS 12 Reconciliation of current tax as per actual basis and as per applicable statutory rate

76. IND AS 17 vs AS 19 Leases

77. IND AS 17 - Lease Embedded leases (Ex)

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.

79. Leases of land IND AS 17 - Lease

80. Lease incentives Initial rent free period ? IND AS 17 - Lease

81. Lease deposits IND AS 17 - Lease

82. IND AS 19 vs AS 15 Employee Benefits

83. IND AS 19 - Employee Benefits Actuarial gains and losses in OCI defined benefit plans and other long term employment benefit plans.

84. IND AS 21 vs AS 11 Foreign Exchange

85. IND AS 21 – Foreign Exchange Functional Currency vs Domicile Currency

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

87. IND AS 21 – Foreign Exchange Existing AS 11 permits capitalisation / deferral of Fe Gain/Loss arising from long term monetary items

88. IND AS 20 vs AS 12 Government Grants

89. IND AS 20 – Govt Grants No credit to Reserves No credit to PPE Concessional Loans Non-Monetary Grants

90. IND AS 24 vs AS 18 Related Party

91. IND AS 18 – Related Party Defines close members of family KMP of parents Non-executive directors Group companies

92. IND AS 33 vs AS 20 Earning Per Share

93. IND AS 33 – EPS Amounts debited to Share Premium Compulsory convertible instruments Shares held by Trust

94. Share Based Payments Fair Value Model Grants to employees of Parent Shares Held in Trust

95. Intangibles – Life – Finite or Indefinite Investment Property – Classification Financial Instruments Segments Provisions Impairments

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