Indian Accounting Standard (Ind AS) 1 : Presentation of Financial Statements


1. This Standard prescribes the basis for presentation of general purpose financial statements to ensure comparability both with the entitys financial statements of previous periods and with the financial statements of other entities. It sets out overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content.


2. An entity shall apply this Standard in preparing and presenting general purpose financial statements in accordance with Indian Accounting Standards (Ind ASs).

3. Other Ind ASs set out the recognition, measurement and disclosure requirements for specific transactions and other events.

4. This Standard does not apply to the structure and content of condensed interim financial statements prepared in accordance with Ind AS 34 Interim Financial Reporting. However, paragraphs 1535 apply to such financial statements. This Standard applies equally to all entities, including those that present consolidated financial statements and those that present separate financial statements as defined in Ind AS 27 Consolidated and Separate Financial Statements.

5. This Standard uses terminology that is suitable for profit-oriented entities, including public sector business entities. If entities with not-for-profit activities in the private sector or the public sector apply this Standard, they may need to amend the descriptions used for particular line items in the financial statements and for the financial statements themselves.

6. Similarly, entities whose share capital is not equity may need to adapt the financial statement presentation of members interests.


7. The following terms are used in this Standard with the meanings specified:

General purpose financial statements (referred to as financial statements) are those 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.

Impracticable Applying a requirement is impracticable when the entity cannot apply it after making every reasonable effort to do so.

Indian Accounting Standards (Ind ASs) are Standards prescribed under Section 211(3C) of the Companies Act, 1956.

Material Omissions or misstatements of items are material if they could, individually or collectively, influence the economic decisions that users make on the basis of the financial statements. Materiality depends on the size and nature of the omission or misstatement judged in the surrounding circumstances. The size or nature of the item, or a combination of both, could be the determining factor.

Assessing whether an omission or misstatement could influence economic decisions of users, and so be material, requires consideration of the characteristics of those users. The Framework for the Preparation and Presentation of Financial Statements issued by the Institute of Chartered Accountants of India states in paragraph 25 that users are assumed to have a reasonable knowledge of business and economic activities and accounting and a willingness to study the information with reasonable diligence. Therefore, the assessment needs to take into account how users with such attributes could reasonably be expected to be influenced in making economic decisions.

Notes contain information in addition to that presented in the balance sheet (including statement of changes in equity which is a part of the balance sheet), statement of profit and loss and statement of cash flows. Notes provide narrative descriptions or disaggregations of items presented in those statements and information about items that do not qualify for recognition in those statements.

Other comprehensive income comprises items of income and expense (including reclassification adjustments) that are not recognised in profit or loss as required or permitted by other Ind ASs.

The components of other comprehensive income include:

(a) changes in revaluation surplus (see Ind AS 16 Property, Plant and Equipment and Ind AS 38) Intangible Assets);

(b) actuarial gains and losses on defined benefit plans recognised in accordance with paragraph 92 and 129A of Ind AS 19 Employee Benefits;

(c) gains and losses arising fro m translating the financial statements of a foreign operation (see Ind AS 21 The Effects of Changes in Foreign Exchange Rates);

(d) gains and losses on remeasuring available-for-sale financial assets (see Ind AS 39 Financial Instruments: Recognition and Measurement);

(e) the effective portion of gains and losses on hedging instruments in a cash flow hedge (see Ind AS 39).

Owners are holders of instruments classified as equity.

Profit or loss is the total of income less expenses, excluding the components of other comprehensive income.

Reclassification adjustments are amounts reclassified to profit or loss in the current period that were recognised in other comprehensive income in the current or previous periods.

Total comprehensive income is 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.

Total comprehensive income comprises all components of profit or loss and of other comprehensive income.

8. [Refer to Appendix 1)]

8A. The following terms are described in Ind AS 32 Financial Instruments: Presentation and are used in this Standard with the meaning specified in Ind AS 32:

(a) puttable financial instrument classified as an equity instrument (described in paragraphs 16A and 16B of Ind AS 32)

(b) an instrument that imposes on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation and is classified as an equity instrument (described in paragraphs 16C and 16D of Ind AS 32).

Financial statements

Purpose of financial statements

9. Financial statements are a structured representation of the financial position and financial performance of an entity. The objective of financial statements is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions. Financial statements also show the results of the managements stewardship of the resources entrusted to it.

To meet this objective, financial statements provide information about an entitys:

(a) assets;

(b) liabilities;

(c) equity;

(d) income and expenses, including gains and losses;

(e) contributions by and distributions to owners in their capacity as owners; and

(f) cash flows.

This information, along with other information in the notes, assists users of financial statements in predicting the entitys future cash flows and, in particular, their timing and certainty.

Complete set of financial statements

10. A complete set of financial statements comprises:

(a) a balance sheet as at the end of the period (including statement of changes in equity which is presented as a part of the balance sheet);

(b) a statement of profit and loss for the period;

(c) [Refer to Appendix 1 ];

(d) a statement of cash flows for the period;

(e) notes, comprising a summary of significant accounting policies and other explanatory information; and

(f) a balance sheet as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements.

11. An entity shall present with equal prominence all of the financial statements in a complete set of financial statements.

12. As per paragraph 81, an entity shall present the components of profit or loss and components of other comprehensive income as part of a single statement of profit and loss.

13. Many entities present, outside the financial statements, a financial review by management that describes and explains the main features of the entitys financial performance and financial position, and the principal uncertainties it faces. Such a report may include a review of:

(a) the main factors and influences determining financial performance, including changes in the environment in which the entity operates, the entitys response to those changes and their effect, and the entitys policy for investment to maintain and enhance financial performance, including its dividend policy;

(b) the entitys sources of funding and its targeted ratio of liabilities to equity; and

(c) the entitys resources not recognised in the balance sheet in accordance with Ind ASs.

14. Many entities also present, outside the financial statements, reports and statements such as environmental reports and value added statements, particularly in industries in which environmental factors are significant and when employees are regarded as an important user group. Reports and statements presented outside financial statements are outside the scope of Ind ASs.

General features

Presentation of True and Fair View and compliance with Ind ASs

15. Financial statements shall present a true and fair view of the financial position, financial performance and cash flows of an entity. Presentation of true and fair view requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the Framework. The application of Ind ASs, with additional disclosure when necessary, is presumed to result in financial statements that present a true and fair view.

16. An entity whose financial statements comply with Ind ASs shall make an explicit and unreserved statement of such compliance in the notes.

An entity shall not describe financial statements as complying with Ind ASs unless they comply with all the requirements of Ind ASs.

17. In virtually all circumstances, presentation of a true and fair view is achieved by...

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