What we offer?
- Preparation of Accounting Policy in compliance with IND AS
- Conversion of Opening Balancesheets
- Impact Analysis on implementation of IND AS
- Training to employees with respect to accounting and presentation as per IND AS
- Implementation of IND AS in the Financial Statements
- Preparation of Financials as per IND AS
- Advisory and Consultation with respect to a particular IND AS
Process of IND AS Implimentation
The Ministry of Corporate Affairs has notified the Companies (Indian Accounting Standards) Rules 2015. These rules specify the obligation to comply with Indian Accounting Standards in the following phased manner:
Applicability will be checked on Standalone basis. Once applicable to one company it is applicable for Holding, Subsidiary, Associate company or Joint Venture
|IND AS No||IGAAP||IND AS|
Spare Parts and Servicing:
|IND AS-17||Excluded||Land Lease: Land Lease is included. Therefore, accounting treatment is similar to that of other leasehold items (operating and finance lease)|
|IND AS-18||Excise Duty:It is shown as a deduction from revenue||
|IND AS-24||Post-employment benefit plans are not included as related parties||Related Party includes post-employment benefit plans for the benefit of employees of the reporting entity or any entity that is related to the reporting entity|
|IND AS-33||No separate disclosure for EPS from continuing and discontinued operations||Separate disclosure for EPS from continuing and discontinued operations|
Provisions: Provisions are not recognised based on constructive obligations
Contingent Asset: Contingent assets are neither recognised nor disclosed in the financial statements.
Property, Plant and Equipment’s:
Roadmap or Planning
Planning is very important as it helps in completing the tasks in the timely manner and everything is well informed for taking actions. It also helps comply with SEBI by giving the reports/results on time.
The next step is to identify the differences, analyse the impact of the differences in the Financials Statements of the Company
IND AS 40:
Investment Property: Investment property is property (land or a building—or part of a building—or both) held (by the owner or by the lessee under a finance lease) to earn rentals or for capital appreciation or both.
Examples of Investment Property:
- A building owned by the entity and leased out under one or more operating leases
- A building that is vacant but is held to be leased out under one or more operating leases
Examples that are not Investment property:
- Owner occupied property, which included property held for future use as owner occupied property
- Property occupied by employees
Duel Use Properties:
Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. For example, an office could be sub divided by the owner with some floors being rented to tenants while retaining others for own use.
IND AS 40 states that if the two portions could be sold separately, an entity should account for the portions separately. In the event that no separation is possible, the property is an investment property only if an insignificant proportion is used for non-investment property purposes.
IND AS 105:
A component of an entity that either has been disposed of or is classified as held for sale
- A single amount in the statement of profit or loss comprising the total of post-tax profit or loss of discontinued operations
Analysis of single amount into
The analysis shall be presented in the notes.
- The revenue, expense and pre-tax profit or loss of discontinued operations
- The related income tax expense as
- The net cash flows attributable to the operating, investing and financing activities of discontinued operations. These disclosers may be presented in notes or in Financial Statements
If the Land and Building is held for the sale then it must be classified as Non-Current Assets held for Sale. Depreciation for the same must not be provided after it is decided that it is held for Sale. The value of Non-Current Asset held Sale shall be the carrying value or the fair value less cost of sales whichever is lower.
Liabilities associate with the above Asset will be also be disclosed separately on the face of Balance sheet.
IND AS 32:
Financial Assets: A financial asset is any asset that is:
- an equity instrument of another entity
- a contractual right to receive cash or another financial asset from another entity
Financial Liabilities: A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another entity.
IND AS 109:
As per IND AS the concept of provision for IND AS is changed and is computed as Expected Credit Loss. The below mentioned example illustrates the same:
Expected Credit Loss
An entity must frame a provision matrix (risk matrix) to estimate the Expected Credit Loss (ECL).
For example: ABC Ltd a manufacturer has a portfolio of trade receivables of Rs 6 Crores. ABC Ltd uses a provision matrix to estimate the ECL. The matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. Every year, the historically observed default rates are observed and changes in the estimates are analysed. ABC Ltd has the following provision matrix and calculated the ECL on its Trade receivables of Rs 6 Crores as follows:
|Default Rate||Gross carrying amount||Lifetime expected Credit Loss (Gross carrying amount X Default Rate)|
|1-30 days past due||1.6%||1,50,00,000||2,40,000|
|31-60 days past due||3.6%||80,00,000||2,88,000|
|61-90 days past due||6.6%||50,00,000||3,30,000|
|More than 90 days past due||10.6%||20,00,000||2,12,000|
Preference Share Capital: As per IND AS 109 Preference Share Capital shall be classified either as Share Capital or as Financial Liability as per its nature. Ex: Convertible Preference Share is classified as Share Capital as after the expiry of the said period the shares are converted as equity shares which is part of Share Capital. If the Preference share capital is in the nature of finance like non-convertible redeemable preference share it will be classified as Financial Liability and disclosed separately in the face of Balance Sheet.
Preference Share Capital with below market rate of dividend: If Preference Share are issued with below market rate of dividends then the Equity portion and Financial Liability portion will be classified separately. The difference between the Fair Value of the Preference Share Capital and the carrying value will be the Equity Component. The Equity Component will be amortised over the period of the Preference Share Capital
IFRS Advisory Services
International Financial Reporting Standards (IFRS) are a set of accounting standards developed by the International Accounting Standards Board (IASB). These are becoming the global standards for the preparation of public company financial statements.
Every corporate has to take the necessary step in understanding the new standards, training its staff and paving a smooth transition.
The cost of convergence or first time adoption of IFRS is dependent on
- Time and Efforts involved
- Type of Industry
Our dedicated and diverse team of professionals, which possesses extensive experience will provide you with the following services in this regard
- Frame accounting policies
- Convergence and first time adoption of IFRS
- Transaction accounting
- IFRS impact analysis/study
- Training on IFRS concepts
- Preparation of IFRS Accounting manual