Indian Accounting Standard (Ind AS) 101 : First-time Adoption of Indian Accounting Standards

Objective

  1. The objective of this Indian Accounting Standard (Ind AS) is to ensure that an entitys 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:

    (a) is transparent for users and comparable over all periods presented;

    (b) provides a suitable starting point for accounting in accordance with Ind-ASs; and

    (c) can be generated at a cost that does not exceed the benefits.

    Scope

  2. An entity shall apply this Ind-AS in:

    (a) its first Ind-AS financial statements1 and

    (b) 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.

  3. An entitys 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-ASs.

  4. [Refer to Appendix 1]

  5. This Indian Accounting Standard does not apply to changes in accounting policies made by an entity that already applies Ind-ASs. Such changes are the subject of:

    (a) requirements on changes in accounting policies in Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors; and

    (b) specific transitional requirements in other Ind-ASs.

    Recognition and measurement

    Opening Ind -AS Balance Sheet

  6. An entity shall prepare and present an opening Ind-AS Balance Sheet at the date of transition to Ind-ASs. This is the starting point for its accounting in accordance with Ind-ASs.

    Accounting policies

  7. An entity shall use the same accounting policies in its opening Ind-AS Balance Sheet and throughout all periods presented in its first Ind-AS financial statements. Those accounting policies shall comply with each Ind-AS effective at the end of its first Ind-AS reporting period, except as specified in paragraphs 1319 and Appendices BE.

  8. An entity shall not apply different versions of Ind-ASs that were effective at earlier dates. An entity may apply a new Ind-AS that is not yet mandatory if that Ind-AS permits early application.

    Example: Consistent application of latest version of Ind-ASs

    Background

    The end of entity As first Ind-AS reporting period is 31 March 2014. Entity A presented financial statements in accordance with its previous GAAP annually to 31 March each year up to, and including, 31 March 2013.

    Application of requirements

    Entity A is required to apply the Ind-ASs effective for financial year/periods ending on 31 March 2014 in:

    (a) preparing and presenting its opening Ind-AS Balance Sheet as at 1 April 2013 which is the date of transition to Ind-AS; and

    (b) preparing and presenting its Balance Sheet as at 31 March 2014,statement of profit and loss and statement of cash flows for the year ending 31 March 2014 and disclosures.

    If Entity A; decides to present comparative information in those financial statements for one year (see paragraph 21).the requirements apply as follows:

    Entity A is required to apply the Ind-ASs effective for financial year/periods ending on 31 March 2014 in:

    a. preparing and presenting its opening Ind-AS Balance Sheet as at 1 April, 2012 on a memorandum basis for compilation of comparative period financial statements assuming that deemed date of transition is April 1, 2012; and

    b. preparing and presenting its opening Ind-AS Balance Sheet as at 1 April 2013 which is the date of transition to Ind-AS

    c. preparing and presenting its Balance Sheet as at 31 March 2014 (including comparative amounts for 31 March, 2013),statement of profit and loss and statement of cash flows for the year ending 31 March 2014 (including comparative amounts for corresponding periods of year ending 31 March, 2013) and disclosures (including comparative information for previous period).

    If a new Ind-AS is not yet mandatory but permits early application, entity A is permitted, but not required, to apply that Ind-AS in its first Ind-AS financial statements.

  9. The transitional provisions in other Ind-ASs apply to changes in accounting policies made by an entity that already uses Ind-ASs; they do not apply to a first-time adopters transition to Ind-ASs, except as specified in Appendices BE.

  10. Except as described in paragraphs 1319 and Appendices BE, an entity shall, in its opening Ind-AS Balance Sheet:

    (a) recognise all assets and liabilities whose recognition is required by Ind-ASs;

    (b) not recognise items as assets or liabilities if Ind-ASs do not permit such recognition;

    (c) reclassify items that it recognised in accordance with previous GAAP as one type of asset, liability or component of equity, but are a different type of asset, liability or component of equity in accordance with Ind-ASs; and

    (d) apply Ind-ASs in measuring all recognised assets and liabilities.

  11. The accounting policies that an entity uses in its opening Ind-AS Balance Sheet may differ from those that it used for the same date using its previous GAAP. The resulting adjustments arise from events and transactions before the date of transition to Ind-ASs. Therefore, an entity shall recognise those adjustments directly in retained earnings (or, if appropriate, another category of equity) at the date of transition to Ind-ASs.

  12. This Indian Accounting Standard establishes two categories of exceptions to the principle that an entitys opening Ind-AS Balance Sheet shall comply with each Ind-AS:

    (a) paragraphs 1417 and Appendix B prohibit retrospective application of some aspects of other Ind-ASs.

    (b) Appendices CE grant exemptions from some requirements of other Ind-ASs.

    Exceptions to the retrospective application of other Ind-ASs

  13. This Indian Accounting Standard prohibits retrospective application of some aspects of other Ind-ASs. These exceptions are set out in paragraphs 1417 and Appendix B.

    Estimates

  14. An entitys estimates in accordance with Ind-ASs at the date of transition to Ind-ASs shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

  15. An entity may receive information after the date of transition to Ind-ASs about estimates that it had made under previous GAAP. In accordance with paragraph 14, an entity shall treat the receipt of that information in the same way as non-adjusting events after the reporting period in accordance with Ind AS 10 Events after the Reporting Period. For example, assume that an entitys date of transition to Ind-ASs is 1 April 2011 and new information on 15 May 2011 requires the revision of an estimate made in accordance with previous GAAP at 31 March 2011. The entity shall not reflect that new information in its opening Ind-AS Balance Sheet (unless the estimates need adjustment for any differences in accounting policies or there is objective evidence that the estimates were in error). Instead, the entity shall reflect that new information in profit or loss (or, if appropriate, other comprehensive income) for the year ended 31 March 2012.

  16. An entity may need to make estimates in accordance with Ind-ASs at the date of transition to Ind-ASs that were not required at that date under previous GAAP. To achieve consistency with Ind AS 10, those estimates in accordance with Ind-ASs shall reflect conditions that existed at the date of transition to Ind-ASs. In particular, estimates at the date of transition to Ind-ASs of market prices, interest rates or foreign exchange rates shall reflect market conditions at that date.

  17. Paragraphs 1416 apply to the opening Ind-AS Balance Sheet. In addition, they also apply to a comparative period presented in an entitys first Ind-AS financial statements, where an entity decides to present comparative information in those financial statements for one year (see paragraph 21), in which case the references to the date of transition to Ind-ASs are replaced by references to the end of that comparative period.

    Exemptions from other Ind-ASs

  18. An entity may elect to use one or more of the exemptions contained in Appendices CE. An entity shall not apply these exemptions by analogy to other items.

  19. Some exemptions in Appendices CE refer to fair value. In determining fair values in accordance with this Ind-AS, an entity shall apply the definition of fair value in Appendix A and any more specific guidance in other Ind-ASs on the determination of fair values for the asset or liability in question. Those fair values shall reflect conditions that existed at the date for which they were determined.

    Presentation and disclosure

  20. This Indian Accounting Standard does not provide exemptions from the presentation and disclosure requirements in other Ind-ASs.

    Comparative information

  21. To comply with Ind AS 1, an entitys first Ind-AS financial statements shall include at least three Balance Sheets (including two statements of changes in equity), two statements of profit and loss, two statements of cash flows and related notes for those periods. However, in accordance with this Ind-AS, a first time adopter need not provide the corresponding previous period financial statements in accordance with Ind-AS when it reports its first Ind-AS financial statements. Irrespective of any of the following two options elected, in terms of this Ind AS the first time adopter shall present latest corresponding previous periods financial statements prepared as per the previous GAAP when presenting its first Ind-AS financial statements:

    (a) The first Ind-AS financial statements includes only two Balance Sheets (including one statement of changes in equity) and one statement of profit and loss, one statement of cash flows and related notes for the financial year prepared under Ind-AS. This first Ind-AS financial statements...

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