CHAPTER – 6

COMPARATIVE STUDY
OF INDIAN GAAP,
IFRS & IND AS
 Chapter – 6 Comparative Study of Indian GAAP, IFRS and IND AS

6.1 A COPARATIVE STUDY OF INDIAN GAAP, IFRS AND IND AS ............... 241

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 Chapter – 6 Comparative Study of Indian GAAP, IFRS and IND AS

CHAPTER – 6 COMPARATIVE STUDY OF INDIAN GAAP, IFRS AND

IND AS

“I was no longer following a trail, I was learning to follow myself” – Aspen Matis

6.1 A COPARATIVE STUDY OF INDIAN GAAP, IFRS AND IND AS

As one of the objective of this research study is to make comparative analysis of Indian
GAAP, IFRS and IND AS, Researcher has made table of comparative study of the same
by taking different issues which are common in all three standards. (Deloitte, 2015)
Following is the table showing Comparison among Indian GAAP, IFRS and IND AS.
(Table 6.1)

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 Chapter – 6 Comparative Study of Indian GAAP, IFRS and IND AS

Table 6.1 Comparative Study of Indian GAAP, IFRS AND IND AS

Topic Indian GAAP IFRS IND AS

Presentation of AS 1 – Disclosure of Accounting IAS 1 – Presentation of Financial Ind AS 1 – Presentation of
Financial Statements Policies/Schedule III to the Statements Financial Statements
– primary literature Companies Act, 2013 AS 5 – Net
Profit or Loss for the Period,
Prior Period Items and Changes
in Accounting Policies Note:
An exposure draft of AS 1
(Revised), Presentation of
Financial Statements has been
issued by the ICAI. Pending
finalization, the discussion below
is based on AS 1 as notified
under the Companies
(Accounting Standards) Rules,
2006.
Presentation of The requirements for the A complete set of financial A complete set of financial
Financial Statements presentation of financial statements statements under IFRS comprises statements under Ind AS comprises
– components of are set out in Schedule III to the a) a statement of financial position; a) a balance sheet as at the end of
financial statements Companies Act, 2013, Schedule III b) a statement of profit or loss and the period;
to the Banking Regulation Act, other comprehensive income; b) statement of profit and loss;
1949 (for banks), the regulations c) a statement of changes in equity; c) statement of changes in equity;
issued by the Insurance Regulatory d) a statement of cash flows; and d) a statement of cash flows;
and Development Authority (for e) Notes comprising significant e) Notes including summary of
insurance companies) and the SEBI accounting policies and other accounting policies and other
Guidelines for Mutual Funds (for explanatory information. explanatory information.
mutual funds) together with the Comparative figures are presented Comparative figures are presented
Accounting Standards notified for one year. When a change for one year. When a change in
under the Companies (Accounting in accounting policy has been accounting policy has been applied

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Standards) Rules, 2006. As per the applied retrospectively or items of retrospectively or items of financial
Companies Act, 2013 ‘financial financial statements have been statements have been restated/
statement’ in relation to a restated/ reclassified, a statement reclassified, a balance sheet is
company, includes of financial position is required as required as at the beginning of the
(a) a balance sheet as at the end of at the beginning of the earliest earliest period presented.
the financial year; comparative period. Additional
(b) a profit and loss account, or in comparative information may be
the case of a company carrying on presented, if it is in accordance
any activity not for profit, an with IFRS, but it need not Similar to IFRS.
income and expenditure account comprise a complete set of
for the financial year; financial statements.
(c) cash flow statement for the
financial year;
(d) a statement of changes in
equity, if applicable; and
(e) Any explanatory note annexed
to, or forming part of, any
document referred to above.
Comparative (corresponding)
figures are presented for one
year as per the requirements of
Schedule III.
Separate financial statements are
required to be presented by all
entities. The Companies Act 2013
requires a company having one or
more subsidiaries, to prepare a
consolidated financial statement of
the company and of all the
subsidiaries in the same form and
manner as that of its own. The term

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‘subsidiary’ includes an associate

company and joint venture. Certain
relaxations have been provided
from the preparation of
consolidated financial statements.
Please refer to the topic
'Consolidated Financial Statements
– scope' for the relaxations
provided. Equity listed companies
are required to present
consolidated financial statements
in addition to separate financial
statements of the parent in terms of
the Listing Agreement with the
Stock Exchanges and the SEBI
Guidelines.
Presentation of Schedule III prescribes the Specifies the line items to Ind AS 1 does not include
Financial Statements minimum requirements for be presented in the statement any illustrative format for the
– formats disclosure on the face of the of financial position, statement presentation of financial statements.
balance sheet and statement of of profit or loss and The ICAI has issued an exposure
profit and loss and notes. other comprehensive income and draft of the Ind AS-compliant
AS 3 provides guidance on line statement of changes in equity. Schedule III.
items to be presented in the Recent amendments provide The recent amendments to IAS 1
statement of cash flows. guidance for identifying 'Disclosure Initiatives' are yet to be
additional line items and sub- made to Ind AS 1.
totals, clarify aggregation or Ind AS 7 provides guidance on line
disaggregation of line-items, items to be presented in the
clarify method of presentation statement of cash flows.
of other comprehensive income
of equity-accounted associates
and joint ventures, clarify that

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materiality considerations apply to

all parts of financial statements
including disclosures and provide
additional examples of possible
ways of ordering notes and remove
some unhelpful examples of
significant accounting policies.
This amendment is effective for
annual periods beginning on or
after 1st January 2016 with early
adoption permitted.
IAS 7 provides guidance on line
items to be presented in the
statement of cash flows.
Presentation of Financial statements should Omissions or misstatements are While the definition of material is
Financial Statements disclose all “material” items, i.e. material if individually or similar to that under IFRS, the
– definition of items, the knowledge of which collectively they could influence recent amendments to IAS 1
“material” and might influence the decisions of the economic decisions that users 'Disclosure Initiatives' are yet to be
disclosure of the user of the financial statements. take on the basis of financial incorporated in Ind AS 1. Under Ind
material information statements. AS 1, a specific disclosure required
Recent amendments to IAS 1 by an Ind AS is not provided if the
clarify that an entity should not information is not material except
reduce the understandability of when required by law.
its financial statements by
obscuring material information
with immaterial information or by
aggregating material items that
have different natures or functions.
Where some IFRSs specify
minimum information that is
required to be included in the

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financial statements including the

notes, such a specific disclosure is
not required to be provided if the
information resulting from that
disclosure is not material.
Presentation of Fair presentation requires Fair presentation requires faithful Similar to IFRS.
Financial Statements compliance with the applicable representation of the effects of the
– fair presentation requirements of the Companies transactions, other events and
Act, 2013 and the other regulatory conditions in accordance with the
requirements and the application of definitions of and recognition
the qualitative characteristics of the criteria for assets, liabilities,
Accounting Standards Framework. income and expenses set out in the
Departures from Accounting Framework.
Standards or Companies Act, 2013 In extremely rare circumstances in
are prohibited unless permitted by which management concludes that
other regulatory framework for compliance with requirements of a
example, the Insurance Regulatory Standard or Interpretation is so
and Development Authority. misleading, it may depart from the
Standard or the Interpretation.
Reasons for departure and why
application of the Standard or the
Interpretation would have been
misleading and the financial
impact of applying the standard are
required to be disclosed.
Presentation of There is no guidance in the existing Current, even if the agreement to Similar to IFRS.
Financial Statements standards. Schedule III specifies refinance or reschedule payments
– classification of that financial liabilities where on a long-term basis is completed
financial liabilities the company does not have an after the end of the reporting
under refinancing unconditional right to defer period and before the financial
arrangements settlement of the liability for at statements are authorised for issue.

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 Chapter – 6 Comparative Study of Indian GAAP, IFRS and IND AS

least 12 months after the reporting

date will be classified as current
liabilities.
Presentation of There is no guidance in the existing When an entity breaches a Where there is a breach of a
Financial Statements standards. Schedule III specifies provision of a long-term loan material provision of a long-term
– classification of that financial liabilities where the arrangement on or before the end arrangement on or before the end of
financial liabilities company does not have an of the reporting period with the the reporting period with the effect
upon breach of unconditional right to defer effect that the liability becomes that the liability becomes payable on
covenants settlement of the liability for at payable on demand, it classifies the demand on the reporting date, if the
least 12 months after the reporting liability as current, even if the lender has agreed, after the reporting
date will be classified as current lender agreed, after the reporting period and before the approval of
liabilities. period and before the authorisation the financial statements for issue,
The Guidance Note on Revised of the financial statements for not to demand payment as a
Schedule VI to the Companies Act, issue, not to demand payment as a consequence of the breach, the loan
1956 (Schedule VI has now been consequence of the breach. will not be classified as current.
superseded by Schedule III under However the liability can be
the Companies Act, 2013) issued classified as non-current if the
by the ICAI states that “In the lender has agreed before the end of
Indian context, the criteria of a the reporting period to provide a
loan becoming repayable on grace period of minimum 12
demand on breach of a covenant, is months after the reporting period
generally added in the terms and within which the breach can be
conditions as a matter of abundant rectified and the lender cannot
caution. Also, banks generally do demand immediate repayment.
not demand repayment of loans on
such minor defaults of debt
covenants. Therefore, in such
situations, the companies generally
continue to repay the loan as per its
original terms and conditions.
Hence, considering that the

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practical implications of such

minor breach are negligible in the
Indian scenario, an entity could
continue to classify the loan as
“non-current” as on the Balance
Sheet date since the loan is not
actually demanded by the bank at
any time prior to the date on which
the Financial Statements are
approved.”
Presentation of Schedule III requires an analysis of An analysis of expenses is Entities should present an analysis
Financial Statements expense by nature. Any item of presented using a classification of expenses recognised in profit or
– presentation of income or expenditure which based on either the nature loss using a classification based only
income statement/ exceeds 1% of the revenue of expenses or their function on the nature of expense.
statement of from operations or Rs.1,00,000, whichever provides information
comprehensive whichever is higher, needs to be that is reliable and more relevant.
income disclosed. If presented by function, specific
disclosures by nature are provided
in the notes. When items of income
or expense are material, their
nature and amount are separately
disclosed.
Presentation of Profit or loss attributable to Profit or loss attributable to Similar to IFRS.
Financial Statements minority interests is disclosed as Non-controlling interests and
– presentation of deduction from the profit or loss equity holders of the parent are
profit or loss for the period as an item of income disclosed in the statement of profit
attributable to non- or expense (as per AS 21). or loss and other comprehensive
controlling interests income as allocations of profit or
(minority interests) loss and total comprehensive
income for the period.

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Presentation of Statement of profit and loss is The statement of profit or loss An entity is required to present
Financial Statements the Indian GAAP equivalent of and other comprehensive income all items of income and expense
– statement of profit separate statement of profit or loss includes all items of income and including components of other
or loss and other under IFRS. expense – (i.e. all ‘non-owner’ comprehensive income in a period
comprehensive Some items such as revaluation changes in equity) including in a single statement of profit and
income (statement of surplus which are treated as (a) components of profit or loss loss.
comprehensive ‘other comprehensive income’ and
income) under IFRS/ Ind AS are recognised (b) other comprehensive income
directly in equity under Indian (I.e. items of income and expense
GAAP. that are not recognised in profit or
loss as required or permitted by
other IFRSs). These items may be
presented either:
• In a single statement of profit or
loss and other comprehensive
income (in which there is a sub-
total for profit or loss); or
• In a separate statement of profit
or loss (displaying components
of profit or loss) and a statement
of profit or loss and other
comprehensive income (beginning
with profit or loss and
displaying components of other
comprehensive income).
Presentation of A statement of changes in equity is The statement of changes in Similar to IFRS.
Financial Statements currently not presented. equity includes the following
– statement of Movements in share capital, information:
changes in equity retained earnings and other • Total comprehensive income for
reserves are to be presented in the the period;
notes to accounts. • The effects on each component of

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equity of retrospective application

or retrospective restatement in
accordance with IAS 8; and
• For each component of equity, a
reconciliation between the opening
and closing balances, separately
disclosing each change.
Presentation of Extraordinary items are disclosed Presentation of any items of Similar to IFRS.
Financial Statements separately in the statement of profit income or expense as extraordinary
– extraordinary and loss and are included in the is prohibited.
items determination of net profit or
loss for the period. Items of income
or expense to be disclosed as
extraordinary should be distinct
from the ordinary activities and are
determined by the nature of the
event or transaction in relation to
the business ordinarily carried out
by an entity.
Presentation of A disclosure is made in financial When comparative amounts are Similar to IFRS.
Financial Statements statements that comparative reclassified, nature, amount and
– reclassification amounts have been reclassified to reason for reclassification are
conform to the presentation in the disclosed.
current period without additional
disclosures for the nature, amount
and reason for reclassification.
Presentation of AS 1 does not specifically require Requires disclosure of critical Similar to IFRS.
Financial Statements disclosure of judgements that judgements made by management
– critical judgements management has made in the in applying accounting policies.
summary of significant accounting
policies or other notes.

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Presentation of AS 1 does not specifically require Requires disclosure of key sources Similar to IFRS.
Financial Statements an entity to disclose information of estimation uncertainty at the
– estimation about the assumptions that it makes end of the reporting period, that
uncertainty about the future and other major have a significant risk of causing a
sources of estimation uncertainty at material adjustment to the carrying
the end of the reporting period amounts of assets and liabilities
though other standards may require within the next financial year.
certain disclosures of the same. The nature of the uncertainty and
the carrying amounts of such assets
and liabilities at the end of the
reporting period are required to be
disclosed.
Presentation of AS 1 does not require an entity to Requires disclosure of information Similar to IFRS.
Financial Statements Disclose information that enables about management of capital
– capital users of its financial statements to and compliance with externally
evaluate the entity’s objectives, imposed capital requirements, if
policies and processes of managing any.
capital.
Inventories Primary AS 2 – Valuation of Inventories IAS 2 – Inventories Ind AS 2 – Inventories
Literature
Inventories – scope There is no scope exemption Measurement requirements of IAS Similar to IFRS.
in AS 2 for any inventories 2 do not apply to inventories held
held by commodity traders. by commodity broker-traders who
Further, AS 2 totally excludes measure their inventories at fair
from its scope (and not value less costs to sell and
just measurement requirements) producers of agricultural and forest
producers’ inventories of livestock, products, agricultural produce after
agricultural and forest products, harvest and minerals and mineral
and mineral oils, ores and gases to products to the extent that they are
the extent that they are measured at measured at net realisable value in
net realisable value in accordance accordance with well-established

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with well-established practices practices in those industries.

in those industries. Work in The standard also scopes out
progress arising under construction the biological assets related
contracts, including directly related to agricultural activity and
service contracts and work in agricultural produce at the point of
progress arising in the ordinary harvest Changes in fair value less
course of business of service costs to sell/ changes in net
providers have been scoped out of realisable value are recognised in
AS 2. profit or loss in the period of the
change.
Inventories – Inventories purchased on deferred Difference between the purchase Similar to IFRS.
deferred settlement settlement terms are not explicitly price of inventories for normal
terms dealt with in the accounting credit terms and the amount paid
standard on inventories. for deferred settlement terms is
The cost of inventories generally recognised as interest expense.
will be the purchase price for
deferred credit terms unless the
contract states the interest payable
for deferred terms.
Inventories – cost It is not expressly mandated to use Requires an entity to use the same Similar to IFRS.
formula the same cost formula consistently cost formula for all inventories
for all inventories that have a having a similar nature and use to
similar nature and use to the entity. the entity. For inventories with a
The formula used should reflect the different nature or use, different
fairest possible approximation to cost formulas may be justified.
the cost incurred in bringing the
items of inventory to their present
location and condition.
Inventories – No specific guidance in AS 2 for Write-down of inventory is Similar to IFRS.
reversal of write- reversal of write-down of reversed if circumstances that
down of inventory inventories. previously caused inventories to be

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However, reversals may be written down below cost no longer

permitted as AS 5, Net Profit exist or when there is clear
or Loss for the Period, Prior evidence of an increase in the net
Period Items and Changes in realisable value because of changes
Accounting Policies requires this toin economic circumstances.
be disclosed as a separate line itemThe amount of reversal is limited
in the statement of profit and loss.to the amount of the original write-
down.
Inventories – As per the requirements of No specific classification Similar to IFRS.
classification Schedule III, inventories need to be requirements – classification
classified as: should be appropriate to the entity.
• Raw materials;
• Work-in-progress;
• Finished goods;
• Stock-in-trade (in respect of
goods acquired for trading);
• Stores and spares;
• Loose tools;
• Others.

Statement of Cash AS 3 – Cash Flow Statements IAS 7 – Statement of Cash Flows Ind AS 7 – Statement of Cash
Flows – primary Flows
literature
Statement of Cash Bank overdrafts are considered as Included as cash and cash Similar to IFRS.
Flows – bank financing activities. equivalents if they form an
overdrafts integral part of an entity’s cash
management.
Statement of Cash Cash flows from items disclosed as As presentation of items as Similar to IFRS.

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 Chapter – 6 Comparative Study of Indian GAAP, IFRS and IND AS

Flows – cash flows extraordinary are classified as extraordinary is not permitted, the
from extraordinary arising from operating, investing or cash flow statement does not
items financing activities as appropriate, reflect any items of cash flow as
and separately disclosed. extraordinary.
Statement of Cash For Financial enterprises: Interest May be classified as operating, Similar to Indian GAAP
Flows – interest and paid and interest and dividend investing or financing activities in
dividend received are to be classified as a manner consistent from period to
operating activities. period.
Dividend paid is to be classified as
financing activity.
For other enterprises:
Interest and dividends received
are required to be classified as
investing activities. Interest and
dividends paid are required to be
classified as financing activities.

Statement of Cash No specific guidance. Entities might routinely sell items Similar to IFRS.
Flows – acquisition of property, plant and equipment
and disposal of that they have previously held for
properties held for rental to others. Cash payments/
rental to others receipts in respect of acquisition/
disposal of such assets are
classified as operating activities.

Statement of Cash No specific guidance. Changes in ownership interest in a Similar to IFRS.

Flows – changes in subsidiary without loss of control
ownership interest are treated as financing activities.

Accounting Policies, AS 5 – Net Profit or Loss for IAS 8 – Accounting Policies, Ind AS 8 – Accounting Policies,

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 Chapter – 6 Comparative Study of Indian GAAP, IFRS and IND AS

Changes in the Period, Prior Period Items Changes in Accounting Changes in Accounting Estimates
Accounting and Changes in Accounting Estimates and Errors and Errors
Estimates and Errors Policies
– primary literature Note: An exposure draft of
AS 5 (Revised), Accounting
Policies, Changes in Accounting
Estimates and Errors has been
issued by the ICAI. Pending
finalisation, the discussion
below is based on AS 5 as
notified under the Companies
(Accounting Standards) Rules,
2006.
Accounting Policies, Changes in accounting policies Requires retrospective application Similar to IFRS.
Changes in should be made only if it of changes in accounting policies
Accounting is required by statute, for by adjusting the opening balance
Estimates and Errors compliance with an Accounting of each affected component of
– changes in Standard or for a more appropriate equity for the earliest prior
accounting presentation of the financial period presented and the other
policies statements on a prospective basis comparative amounts for each
(unless transitional provisions, if period presented as if the new
any, of an accounting standard accounting policy had always
require otherwise) together with a been applied, unless transitional
disclosure of the impact of the provisions of an accounting
same, if material. standard require otherwise.
If a change in the accounting
policy has no material effect on the
financial statements for the current
period, but is expected to have a
material effect in the later periods,
the same should be appropriately

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disclosed. However, change in

depreciation method, though
considered a change in accounting
policy, is given retrospective
effect. (See discussion on Property,
Plant and Equipment below).

Accounting Policies, Prior period items are included in Material prior period errors Similar to IFRS.
Changes in determination of net profit or loss are corrected retrospectively by
Accounting of the period in which the error restating the comparative amounts
Estimates and Errors pertaining to a prior period is for prior periods presented in
– errors discovered and are separately which the error occurred or if the
disclosed in the statement of profit error occurred before the earliest
and loss in a manner that the period presented, by restating the
impact on current profit or loss can opening statement of financial
be perceived. position.

Accounting Policies, Not required to be disclosed. Non-application of new accounting Similar to IFRS.
Changes in pronouncements that have been
Accounting issued but are not yet effective as
Estimates and Errors at the end of the reporting period is
– new accounting disclosed. In such a case, known or
pronouncements reasonably estimable information
relevant to assessing the possible
impact that application of the new
accounting pronouncements will
have on the financial statements on
initial application is also disclosed.

Accounting Policies, No specific guidance. Permits considering recent In the absence of an Ind AS that
Changes in pronouncements by other standard specifically applies to a transaction,

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Accounting – setting bodies that use a similar other event or condition, the
Estimates and Errors conceptual framework to IFRS to management, while using judgment
– absence of the extent these pronouncements in developing and applying
standard or do not conflict with IFRS. an accounting policy, should
interpretation that first consider the most recent
specifically applies to pronouncements of the IASB and in
a transaction absence thereof those of the other
standard - setting bodies that use a
similar conceptual framework to
develop accounting standards.

Events after the AS 4 – Contingencies and Events IAS 10 – Events After the Ind AS 10 – Events After the
Reporting Period – Occurring after the Balance Reporting Period Reporting Period
primary literature Sheet Date
Note: An exposure draft of AS 4
(Revised) Events Occurring
After the Balance Sheet Date
has been issued by the ICAI.
Pending finalisation, the
discussion below is based on AS
4 as notified under the
Companies (Accounting
Standards) Rules, 2006.

Events after the Schedule III requires disclosure of Liability for dividends declared to Similar to IFRS.
Reporting Period – proposed dividend in the notes to holders of equity instruments are
dividends accounts. However, as per the recognised in the period when
requirements of AS 4 which declared. It is a non-adjusting
override the provisions of event.
Schedule III, dividends stated to be
in respect of the period covered by

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the financial statements, which

are proposed or declared after
the balance sheet date but
before approval of the financial
statements will have to be recorded
as a provision.
Events after the No specific guidance. When an entity breaches a Where there is a breach of a long-
Reporting Period – provision of a long-term loan term loan arrangement before the
adjusting event arrangement end of the reporting period whereby
on or before the end of the the liability becomes payable on
reporting period with the effect demand on the reporting date, the
that the liability becomes payable agreement by lender before the
on demand, an agreement by the approval of the financial statements
lender after the reporting period for issue not to demand payment as
and before the authorisation of the a consequence of the breach, will be
financial statements for issue not to considered as an adjusting event.
demand payment is not considered
as an adjusting event.
Income Taxes – AS 22 – Accounting for Taxes on IAS 12 – Income Taxes Ind AS 12 – Income Taxes
primary literature Income SIC 25 – Income Taxes – Ind AS 12 – Appendix A – Income
Changes in the Tax Status of an Taxes – Changes in the Tax Status
Entity or its Shareholders of an Entity or its Shareholders

Income Taxes – Deferred taxes are computed for Deferred taxes are computed for Similar to IFRS.
deferred income timing differences in respect of temporary differences between the
taxes recognition of items of profit or carrying amount of an asset or
loss for the purposes of financial liability in the statement of
reporting and for income taxes. financial position and its tax base.

Income Taxes – Deferred taxes are generally Deferred income taxes are Similar to IFRS.
recognition of recognised for all timing recognised for all temporary

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deferred tax assets differences. differences between accounting

and liabilities and tax base of assets and
liabilities except to the extent
which arise from
a) initial recognition of goodwill or
b) asset or liability in a transaction
which
i) is not a business combination;
and
ii) at the time of the transaction,
affects neither the accounting nor
the tax profit.

Income Taxes – No specific guidance in AS 22. Current tax and deferred tax are Similar to IFRS.
recognition of However, an announcement made recognised outside profit or loss if
taxes on items by the ICAI requires any expense the tax relates to items that are
recognised in other charged directly to reserves and/ or recognised in the same or a
comprehensive securities premium account to be different period, outside profit or
income or directly in net of tax benefits expected to arise loss. Therefore, the tax on items
equity from the admissibility of such recognised in other comprehensive
expenses for tax purposes. income or directly in equity, is also
Similarly, any income credited recorded in other comprehensive
directly to a reserve account or a income or in equity, as appropriate.
similar account should be net of its
tax effect.

Income Taxes – Deferred tax asset for unused tax Deferred tax asset is recognised for Similar to IFRS.
recognition of losses and unabsorbed depreciation carry forward unused tax losses
deferred tax assets is recognised only to the extent that and unused tax credits to the extent
for unused tax losses there is virtual certainty supported that it is probable that future
etc. by convincing evidence that taxable profit will be available

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sufficient future taxable income against which the deferred tax

will be available against which asset can be utilised. Where an
such deferred tax assets can be entity has a history of tax losses,
realised. Deferred tax asset for all the entity recognises a deferred tax
other unused credits / timing asset only to the extent that the
differences is recognised only to entity
the extent that there is a reasonable has sufficient taxable temporary
certainty that sufficient future differences or there is convincing
taxable income will be available other evidence that sufficient
against which such deferred tax taxable profit will be available.
assets can be realised.
Income Taxes – No deferred tax liability is Deferred tax liability for all Similar to IFRS.
investments in recognised. Deferred tax expense is taxable temporary differences are
subsidiaries, an aggregation from separate recognised except to the extent:
branches, and financial statements of each group • The parent, the investor, the
associates and entity and no adjustment is made venturer or joint operator is able to
interests in joint on consolidation. control timing of the reversal of the
arrangements temporary difference, and
• It is probable that the temporary
difference will not reverse in the
foreseeable future.
Income Taxes – No specific guidance. If the potential benefit of the Similar to IFRS, except that if the
deferred tax in acquiree’s income tax loss carry carrying amount of goodwill is
respect of business forwards or other deferred tax zero, any remaining deferred tax
combinations assets did not satisfy the criteria in benefits are recognised in
IFRS 3 for separate recognition other comprehensive income and
when the business combination accumulated in equity as capital
was initially accounted but if such reserve or recognised directly in
benefit is subsequently recognised, capital reserve depending on
goodwill is reduced to record pre- whether there exists clear
acquisition deferred tax assets evidence of the underlying reasons

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which are recognised within 12 for classifying the business

months of the acquisition date as a combination as a bargain purchase
result of new information on facts as specified in Ind AS 103 –
and circumstances that existed on Business Combinations.
the acquisition date. If the carrying
amount of goodwill is zero, any
remaining deferred tax benefit is
recognised in profit or loss. All
other deferred tax benefits are
recognised in profit or loss (or if
IAS 12 so requires, outside profit
or loss).

Income Taxes – Deferred tax is not recognised. Deferred tax on unrealised Similar to IFRS.
deferred tax on Deferred tax expense is an intragroup profits is recognised at
unrealised intra- aggregation from separate financial the buyer’s rate.
group profits statements of each group entity
and no adjustment is made on
consolidation.

Income Taxes – Schedule III requires net deferred Always classified as non-current, Similar to IFRS.
classification of tax assets and net deferred tax if current and non-current
deferred tax liabilities to be presented as part of classification is presented.
assets and liabilities non-current assets and non-current
liabilities respectively.
A limited revision to AS 22 has
been proposed by the ICAI to
bring the presentation requirements
specified in AS 22 in line with that
in Schedule III.

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Income Taxes – Certain additional disclosures Additional disclosures required Similar to IFRS.
disclosure like rate reconciliation, tax under IFRS include:
holidays and their expiry and • A reconciliation between the
unrecognized deferred tax liability income tax expense income)
on undistributed earnings of reported and the product of
subsidiaries, branches, associates accounting profit multiplied by the
and joint ventures are not required. applicable tax rate. Either a
numerical reconciliation or tax rate
reconciliation is required to be
presented.
• Details of tax holidays and
expiry.
• Unrecognised deferred tax
liability on undistributed earnings
of subsidiaries, branches,
associates and joint ventures.

Income Taxes – tax No specific guidance. Deferred tax benefit is calculated Similar to IFRS.
benefits related to based on tax deduction for the
share-based share based payment under the
payments applicable tax law (for example
intrinsic value).

Income Taxes –Revaluation is treated as a Measurement of deferred tax Similar to IFRS.

recovery of revaluedpermanent difference under Indian liability or asset arising from
non-depreciable GAAP and, hence, the question of revaluation is based on the tax
assets recognising deferred tax effects of consequences from the sale of
the same does not arise at all. asset rather than through use.
Income Taxes – Not applicable as investment In the case of investment property Similar to Indian GAAP.
recovery of property cannot be measured using measured using fair value model,
investment property the fair value model. for measuring deferred taxes, there

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measured under fair is a rebuttable presumption that the

value model carrying amount will be recovered
through sale.

Deferred taxes – Not applicable as there is no The non-monetary assets and Similar to IFRS.
recognition on concept of functional currency. liabilities of an entity are measured
foreign currency in its functional currency. If the
denominated non- entity's taxable profit or tax loss
monetary assets/ (and, hence, the tax base of its
liabilities when the non-monetary assets and liabilities)
tax reporting is determined in a different
currency is not the currency, changes in the exchange
functional currency rate give rise to temporary
differences that result in a
recognised deferred tax liability or
asset.

Changes in Tax No specific guidance. Current and deferred tax Similar to IFRS.
Status of an Entity or consequences are included in the
its Shareholders profit or loss of the period of
change unless the consequences
relate to transactions or events
recognised outside profit or loss
either in other comprehensive
income or directly in equity in the
same or a different period.

Property, Plant and AS 6 – Depreciation Accounting IAS 16 – Property, Plant and Ind AS 16 – Property, Plant and
Equipment – AS 10 – Accounting for Fixed Equipment Equipment
primary literature Assets IFRIC 1 – Changes in Existing Ind AS 16 – Appendix A –
Note: An exposure draft of AS 10 Decommissioning, Restoration Changes in Existing

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(Revised), Property, Plant and and Similar Liabilities Decommissioning, Restoration

Equipment has been issued by IFRIC 20 – Stripping Costs in and Similar Liabilities
the ICAI. the Production Phase of a Ind AS 16 – Appendix B –
The discussion below is based Surface Mine Stripping Costs in the Production
on AS 10 as notified under Phase of a Surface Mine
the Companies (Accounting
Standards) Rules, 2006.
Property, Plant and There is no exemption in AS 10 for Property under construction or Similar to IFRS.
Equipment – scope property under development for development for future use as
future use as investment property. investment property is excluded
from the scope of IAS 16 and is
within the scope of IAS 40,
Investment Property.
Biological assets that meet the
definition of a bearer plant i.e. a
living plant that is used in the
production or supply of
agricultural produce, is expected to
bear produce for more than one
period and which will not be sold
as agricultural produce are
included in property, plant and
equipment (effective from 1
January 2016 with earlier
application permitted).
Property, plant and Machinery spares are usually Spare parts are recognised in Similar to IFRS.
equipment – major charged to the profit and loss accordance with IAS 16 when they
spare parts statement as and when consumed. meet the definition of property,
However, if such spares can be plant and equipment. Otherwise,
used only in connection with an such items are classified as
item of fixed asset and their use is inventory.

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expected to be irregular, it may be

appropriate to allocate the total
cost on a systematic basis over a
period not exceeding the useful life
of the principal item.

Property, Plant No such specific requirement. The initial estimate of the costs of Similar to IFRS.
and Equipment – dismantling and removing the item
estimated costs of and restoring the site on which it is
dismantling, located is required to be included
removing or in the cost of the respective item of
restoring items of property plant and equipment.
property, plant and
equipment
Property, Plant and Replacement cost of an item of Replacement cost of an item of Similar to IFRS.
Equipment – property, plant and equipment is property, plant and equipment is
replacement costs generally expensed when incurred. capitalised if replacement meets
Only expenditure that increases the the recognition criteria. Carrying
future benefits from the existing amount of items replaced is
asset beyond its previously derecognised.
assessed standard of performance
is capitalized. From financial years
commencing on or after 1 April
2015, Schedule II mandates fixed
assets to be componentised and
therefore, the position will be
similar to that under IFRS.

Property, Plant and Costs of major inspections are Cost of major inspections is Similar to IFRS.
Equipment – cost of generally expensed when incurred. recognised in the carrying amount
major inspections of property, plant and equipment as

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a replacement, if recognition
criteria are satisfied and any
remaining carrying amount of the
cost of previous inspection is
derecognised.

Property, Plant and No specific requirement on If an entity adopts the revaluation Similar to IFRS.
Equipment – frequency of revaluation. model, revaluations are required to
revaluation be made with sufficient regularity
to ensure that the carrying amount
does not differ materially from that
which would be determined using
fair value at the end of the
reporting period.

Property, Plant and AS10 does are not require assets to Property, plant and equipment are Similar to IFRS.
Equipment – be componentised and depreciated componentised and are depreciated
depreciation separately, although it states that separately. There is no concept of
such an approach may improve the minimum statutory depreciation
accounting for an item of fixed under IFRS.
asset.
Schedule II to the Companies Act,
2013 sets out the useful lives based
on the nature of assets and the
useful life should not ordinarily
be different from the life specified
in the Schedule. However, a
different useful life may be used
if such difference is disclosed and a
justification, backed by technical
advice, is provided in this behalf.

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Schedule II also mandates

fixed assets to be componentised
for depreciation purposes
(componentisation is mandatory
in respect of financial years
commencing on or after 1 April
2015).

Property, Plant and No specific requirement. In Compensation from third parties Similar to IFRS.
Equipment – practice, compensation is offset for impairment or loss of items of
compensation for against replaced items of property, property, plant and equipment are
impairment plant and equipment. included in profit or loss when the
compensation becomes receivable.

Property, Plant and The Companies Act, 2013 Transfers from revaluation reserve Similar to IFRS.
Equipment – precludes transfers from the to retained earnings are made
transfers from revaluation reserve to the statement directly and not through profit or
revaluation reserve of profit and loss. loss.

Property, Plant and Estimates of residual value are not Estimates of residual value need to Similar to IFRS.
Equipment – required to be updated. be reviewed at least at each year
residual value end.

Property, Plant and Not specifically stated. Requires annual reassessment of Similar to IFRS.
Equipment – useful life and depreciation
reassessment of method.
useful life and
depreciation method
Property, Plant and Depreciation methods include the A variety of depreciation methods Similar to IFRS.
Equipment – straight-line method, the can be used to allocate based on a
acceptable methods diminishing balance method and systematic basis over its useful

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of depreciation the units of production method. life. These methods include

the straight-line method, the
diminishing balance method and
the units of production method.
Depreciation method that is based
on revenue is not appropriate
(effective for annual reporting
periods beginning on or after 1
January 2016).
Property, Plant and Requires retrospective Changes in depreciation method Similar to IFRS.
Equipment – change re-computation of depreciation are considered as change in
in method of and any excess or deficit on such accounting estimate and applied
depreciation re-computation is required to be prospectively.
adjusted in the period in which
such change is affected.
Such a change is treated as a
change in accounting policy and its
effect is quantified and disclosed.
Property, Plant and Schedule III requires capital No specific guidance Similar to IFRS.
Equipment – advances to be presented separately though usually included in
presentation of under the head ‘Long-term loans capital-work-in-progress.
capital advances and advances’, as part of non-
current assets.
Property, Plant and No specific guidance. Entities might routinely sell items Similar to IFRS.
Equipment – routine of property, plant and equipment
sale of some that they have previously held for
properties rental to others. The proceeds from
the sale of such assets should
be recognised as revenue in
accordance with IAS 18/IFRS 15
(for annual period beginning 1

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January 2017).
Changes in Existing No specific guidance. Provisions for decommissioning, Similar to IFRS.
Decommissioning, restoration and similar liabilities
Restoration and that have previously been
Similar Liabilities recognised as part of the cost of
an item of property, plant and
equipment are adjusted for changes
in the amount or timing of future
costs and for changes in market-
based discount rates.
Stripping Costs in No specific guidance IFRIC 21 applies to waste removal Similar to IFRS.
the Production phase costs that are incurred in surface
of a surface mine mining activity during the
production phase of the
mine (‘production stripping costs’).
It addresses recognition of
production stripping costs as an
asset and measurement (initial and
subsequent) of that stripping
activity asset.

Leases – primary AS 19 – Leases IAS 17 – Leases Ind AS 17 – Leases

literature IFRIC 4 – Determining Whether Ind AS 17– Appendix A –
an Arrangement Contains a Operating Leases Incentives
Lease Ind AS 17 – Appendix B –
SIC 15 – Operating Leases – Evaluating the Substance of
Incentives Transactions Involving the Legal
SIC 27 – Evaluating the Form of a Lease Ind AS 17 –
Substance of Transactions Appendix C – Determining
Involving the Legal Form of a Whether an Arrangement
Lease Contains a Lease

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Leases – interest in Leasehold land is recorded and Recognised as operating lease Similar to IFRS except that a
leasehold land classified as fixed assets. or finance lease as per definition property interest in an operating
and classification criteria. An lease cannot be accounted for as
important consideration in such investment property as the fair value
determination is that land has model is not permissible by
an indefinite economic life. Ind AS 40.
A property interest in an operating
lease may be classified as
investment property in which case
it should be accounted for as a
finance lease and the fair value
model should be applied for the
asset recognised.
Leases – operating Lease payments under an operating Similar to Indian GAAP. Ind AS 17 contains a carve out for
lease rentals – lease should be recognised as an escalation of operating lease rentals
recognition expense in the statement of that are in line with the expected
profit and loss on a straight-line general inflation. Since these are
basis over the lease term unless essentially to compensate the lessor
another systematic basis is more for expected inflationary cost
representative of the time pattern increases, these should not be
of the user’s benefit. Lease income straight-lined by the lessor as well
from operating leases should be as the lessee.
recognised in the statement of
profit and loss on a straight-line
basis over the lease term, unless
another systematic basis is more
representative of the time pattern in
which benefit derived from the use
of the leased asset is diminished.
Leases – initial direct Initial direct costs are either For finance leases other than those Similar to IFRS.
costs of lessors for recognised immediately in the involving manufacturer or dealer

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assets under a statement of profit and loss or lessors, initial direct costs are
finance lease allocated against the finance included in the measurement of the
income over the lease term. finance lease receivable and reduce
Initial lease costs incurred by the amount of income recognised
manufacturer or dealer lessors are over the lease term. Initial lease
recognised as expense at the costs incurred by manufacturer or
inception of the lease. dealer lessors are recognised as
expense when selling profit is
recognised, which is normally at
the commencement of the lease
term.
Initial direct costs incurred by
Leases – initial direct Initial direct costs incurred by Similar to IFRS.
costs of lessors forlessors are either deferred and lessors are added to the carrying
assets allocated to income over the lease
under amount of the leased asset and
operating leases term in proportion to the recognised as an expense over the
recognition of lease income, or are lease term on the same basis as
recognised as an expense in the lease income.
statement of profit and loss in the
period in which they are incurred.
Determining whether No specific guidance. Payments under such arrangements Similar to IFRS.
an are recognised in accordance with
arrangement the nature of expense incurred.
contains a lease Arrangements that do not take the
legal form of a lease but fulfilment
of which is dependent on the use of
specific assets and which convey
the right to use the assets are
accounted for as lease.
Operating Leases – No specific guidance. Lease incentives (such as rent-free Similar to IFRS.
incentives period) for operating leases are
recognised by both the lessor and

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the lessee as a reduction of rental

income and expense, respectively,
over the lease term.
These are recognised on a straight-
line basis unless another systematic
basis is more representative of the
time pattern over which the benefit
of the leased asset is diminished
for the lessor/time pattern of the
lessee’s benefit from the use of the
leased asset (for the lessee).
Evaluating the No specific guidance. If a series of transactions involves Similar to IFRS.
Substance of the legal form of a lease and the
Transactions economic effect can only be
Involving the Legal understood with reference to
Form of a Lease the series as a whole, then the
series is accounted for as a single
transaction.
Employee Benefits – AS 15 (Revised 2005) – Employee IAS 19 – Employee Benefits Ind AS 19 – Employee Benefits
primary literature Benefits (2011) Ind AS 19 – Appendix B – The
IFRIC 14 – The Limit on a Limit on a Defined Benefit Asset,
Defined Benefit Asset, Minimum Minimum Funding Requirements
Funding Requirements and their and their Interaction
Interaction
Employee benefits – The distinction between short-term The distinction between short-term Similar to IFRS.
short-term and other and other long-term employee and other long-term employee
long-term employee benefits depends on whether they benefits depends on whether those
benefits fall wholly due within 12 months benefits are expected to be settled
after the end of the period in which wholly before twelve months after
the employees render the related the end of the annual reporting
service. period. Short-term employee

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There is an inconsistency in the benefits are recognised as an

definition of short-term employee expense in the period in which the
benefits and the current/non- employee renders the related
current classification in Schedule service. Unpaid short-term benefit
III. While the definition of short- liability is measured at an
term employee benefits as per AS undiscounted amount.
15 refers to benefits “which fall
due wholly within 12 months after
the end of the period in which the
employees render the related
service”, as per Schedule III
requirements, for classification as
current liabilities, the benefits
should be “due to be settled within
12 months after the reporting date”.
However, the Guidance Note to the
Revised Schedule VI to the
Companies Act, 1956 (Schedule VI
has been superseded by
Schedule III under the Companies
Act, 2013), issued by ICAI, has
clarified that while AS 15 governs
the measurement requirements,
Schedule VI (now Schedule III)
governs the presentation
requirements. Therefore, each
company will need to apply
these criteria to its facts and
circumstances and decide an
appropriate classification of its
employee benefit obligations.

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Employee benefits – Similar to IFRS, except that Detailed actuarial valuation to Similar to IFRS.
actuarial valuation detailed actuarial valuation to determine the present value of
determine present value of the the net defined benefit liability
benefit obligation is carried out at (asset) is performed with sufficient
least once every three years and regularity so that the amounts
fair value of plan assets are recognised in the financial
determined at each balance sheet statements do not differ materially
date. from the amounts that would have
been determined at the end of the
reporting period. IAS 19 does not
specify sufficient regularity.
Employee benefits – All actuarial gains and losses Actuarial gains and losses Similar to IFRS.
actuarial gains and should be recognised immediately representing changes in the
losses in the statement of profit and loss. present value of the defined
benefit obligation resulting from
experience adjustment and
effects of changes in actuarial
assumptions are recognised in
other comprehensive income and
not reclassified to profit or loss in a
subsequent period.
Employee benefits – Market yields at the balance sheet Post-employment benefit Post-employment benefit
discount rate date on government bonds are used obligations (both funded and obligations (both funded and
as discount rates. The currency and unfunded) are discounted using a unfunded) should be discounted
term of the government bonds discount rate determined by using a discount rate determined by
should be consistent with reference to market yields at the reference to market yields at the
the currency and estimated term of end of the reporting period on high end of the reporting period on
the post-employment benefit quality corporate bonds. In government bonds. However,
obligations. countries where there is no deep subsidiaries, associates, joint
market in such bonds, the market ventures and branches domiciled
yields on government bonds outside India should use a rate

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denominated in that currency determined by reference to market

should be used. yields on high quality corporate
bonds at the end of the reporting
period. In case, such subsidiaries,
associates, joint ventures and
branches are domiciled in countries
where there is no deep market in
such bonds, the market yields (at the
end of the reporting period) on
government bonds of that country
should be used. The currency and
term of the government bonds or
corporate bonds should be
consistent with the currency and
estimated term of the post-
employment benefit obligations.

Employee benefits – The changes in defined benefit The change in the defined benefit Similar to IFRS.
defined benefit plans liability (surplus) has the following liability (asset) has the following
components: components:
a) Service cost – recognised in a) Service cost – recognised in
profit or loss; profit or loss;
b) Interest cost – recognised in b) Net interest cost (i.e. time
profit or loss; value) on the net defined benefit
c) The expected return on any plan deficit / (asset) – recognised in
assets – recognised in profit or profit or loss;
loss; c) Re-measurement including
d) Net actuarial gains and losses – i) Changes in fair value of plan
recognised in profit or loss. assets that arise from factors other
than time value and
ii) Actuarial gains and losses on

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obligations – recognised in other

comprehensive income.
Employee benefits – Termination benefits are A termination benefit liability is Similar to IFRS.
termination benefits recognised as a liability and an recognised at the earlier of the
expense when, and only when: following dates:
• The enterprise has a present • When the entity can no longer
obligation as a result of a past withdraw the offer of those
event; benefits – additional guidance is
• It is probable that an outflow of provided on when this occurs in
resources embodying economic relation to an employee's decision
benefits will be required to settle to accept an offer of benefits on
the obligation; and termination and as a result of an
• A reliable estimate can be made entity's decision to terminate an
of the amount of the obligation. employee's employment;
• When the entity recognises costs
for a restructuring under IAS 37
Provisions, Contingent Liabilities
and Contingent Assets which
involves the payment of
termination benefits.
Employee benefits – Past service cost is recognised as Past service cost (includes Similar to IFRS.
past service cost and under: curtailments) is recognised as an
curtailments • As an expense on a straight-line expense at the earlier of the
basis over the average period until following dates:
the benefits become vested. • When the plan amendment or
• If benefits already vested, curtailment occurs; and
recognised as an expense • When the entity recognises
immediately. related restructuring costs or
Entities recognise a curtailment termination benefits.
when it occurs. However when a
curtailment is linked with a

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restructuring, it is accounted for at

the same time as the related
restructuring.
Employee benefits – The expected and actual return on In determining the return on plan Similar to IFRS.
actuarial plan assets is arrived at after assets, an entity deducts the costs
assumptions – deducting expected administrative of managing the plan assets and
administration costs costs, other than those included in any tax payable by the plan itself,
the actuarial assumptions used to other than tax included in the
measure the defined benefit actuarial assumptions used to
obligation. But AS 15 does not measure the defined benefit
specify which costs should be obligation.
included in those actuarial Other administration costs are not
assumptions. deducted from the return on plan
assets.
Employee benefits – No specific guidance. Provides guidance on accounting Similar to IFRS.
contributions from for contributions from employees
employees or third or third parties to defined benefit
parties to defined plans, which are linked to service
benefit plans both dependent and independent of
the number of years of service.
The Limit on a No specific guidance. Addresses when refunds or Similar to IFRS.
Defined Benefit reductions in future contributions
Asset, Minimum are regarded as available for
Funding recognition of an asset; how
Requirements and minimum funding requirements
their Interaction may affect the availability of
reductions in future contributions
and when minimum funding
requirement may give rise to a
liability. It also deals with
prepayments of a minimum

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funding requirement.
Government Grants AS 12 – Accounting for IAS 20 – Accounting for Ind AS 20 – Accounting for
– primary literature Government Grants Government Grants and Government Grants and
Disclosure of Government Disclosure of Government
Assistance Assistance
SIC 10 – Government Ind AS 20 – Appendix A –
Assistance-No Specific Relation Government Assistance – No
to Operating Activities Specific Relation to Operating
Activities
Government Grants Does not deal with disclosure of Deals with both government grants Similar to IFRS.
–government government assistance other than and disclosure of government
assistance in the form of government grants. assistance.
Government Grants No specific guidance. Forgivable loans are treated as Similar to IFRS.
– forgivable loans government grants when there is a
reasonable assurance that the entity
will meet the terms for forgiveness
of the loan.
Government Grants No specific guidance. Benefit of government loans with Similar to IFRS.
– government loans below market rate of interest
with below market should be accounted for as
rate of interest government grant-measured as the
difference between the initial
carrying amount of the loan
determined in accordance with
IFRS 9 and the proceeds received.

Government Grants Two broad approaches may be Government grants are recognised Similar to IFRS. However, grants
– recognition followed – the capital approach or as income to match them with related to assets, including non-
the income approach. expenses in respect of the related monetary grants at fair value, should
Government grants in the nature of costs for which they are intended be presented in the balance sheet
promoters’ contribution i.e. they to compensate on a systematic only by setting up the grant as

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are given with reference to the total basis. deferred income.

investment in an undertaking or by Government grants are not directly
way of contribution towards its credited to shareholders’ interests.
total capital outlay and no Government grants related to
repayment is ordinarily expected, assets are presented in the
are credited directly to statement of financial position
shareholders’ funds. Grants related either by setting up the grant as
to revenue are recognised in the deferred income or by deducting
statement of profit and loss on a the grant in arriving at the carrying
systematic and rational basis over amount of the asset.
the periods necessary to match
them with the related costs.
Grants relating to non-depreciable
assets are credited to capital
reserve.
If such grants require fulfilment of
some obligation, such grants
should be credited to income over
the period over which the cost of
meeting the obligation is charged
to income. Grants related to
depreciable assets are either treated
as deferred income and transferred
to the statement of profit and loss
in proportion to depreciation, or
deducted from the cost of the asset.

Government Grants If the asset is given by the The asset and the grant may be The asset and the grant should be
– non-monetary Government at a discounted price, accounted at fair value. accounted at fair value.
government grants the asset and the grant is accounted Alternatively, these can be
at the discounted purchase price. recorded at nominal amount.

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Non-monetary grants free of cost

are accounted for a nominal values.

Government Grants Recognised either by increasing the Recognised either by increasing Recognised by reducing the deferred
– repayment of carrying amount of the asset or the carrying amount of the asset or income balance by the amount
grants relating to reducing the deferred income or reducing the deferred income by repayable.
fixed assets capital reserve, as appropriate, by the amount repayable. Cumulative Prohibited to be classified as an
the amount repayable. If the depreciation that would have been extraordinary item.
carrying amount of the asset is recognised in profit or loss to date
increased, depreciation on the in the absence of grant should be
revised carrying amount is recognised immediately in profit or
provided prospectively over the loss. Prohibited to be classified as
residual useful life of the asset. an extraordinary item.
Classified as an extraordinary item.

Foreign Exchange – AS 11 – The Effects of Changes IAS 21 – The Effects of Changes Ind AS 21 – The Effects of
primary literature in Foreign Exchange Rates in Foreign Exchange Rates Changes in Foreign Exchange
Rates
Effects of Changes Foreign currency is a currency Functional currency is the Similar to IFRS.
in Foreign Exchange other than the reporting currency currency of the primary economic
Rates – functional which is the currency in which environment in which the entity
and presentation financial statements are presented. operates. Foreign currency is a
currency There is no concept of functional currency other than the functional
currency. currency.
Presentation currency is the
currency in which the financial
statements are presented.
Effects of Changes Similar to IFRS except that there is Exchange differences arising on Similar to IFRS. However, an entity
in Foreign Exchange a limited period irrevocable option translation or settlement of foreign may continue the policy adopted for

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Rates – exchange for corporate entities to capitalise currency monetary items are exchange differences arising from
differences exchange differences on long-term recognised in profit or loss in the translation of long-term foreign
foreign currency monetary items period in which they arise. currency monetary items recognised
incurred for acquisition of Exchange differences on monetary in the financial statements for the
depreciable capital assets and to items, that in substance, form part period ending immediately before
amortize exchange differences on of net investment in a foreign the beginning of the first Ind AS
other long-term foreign currency operation, are recognised in profit financial reporting period as per
monetary items over the life of or loss in the period in which they previous GAAP.
such items but not beyond the arise in the separate financial
stipulated date. statements and in other
Exchange differences on monetary comprehensive income in the
items that in substance, form part consolidated financial statements
of net investment in a non-integral and reclassified from equity to
foreign operation, are recognised in profit or loss on disposal of the net
‘Foreign Currency Translation investment.
Reserve’ both in the separate and
consolidated financial statements
and recognised as income or
expense at the time of disposal of
that operation.
Effects of Changes in Translation of financial statements Assets and liabilities should be Similar to IFRS.
Foreign Exchange of a foreign operation to the translated from functional currency
Rates – translation reporting currency of the parent/ to presentation currency at the
in the consolidated investor depends on the closing rate at the date of the
financial statements classification of that operation as statement of financial position;
integral or non-integral. In the case income and expenses at
of an integral foreign operation, actual/average rates for the period;
monetary assets are translated at exchange differences are
closing rate. Non-monetary items recognised in other comprehensive
are translated at historical rate if income and accumulated in a
they are valued at cost. Non- separate component of equity.

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monetary items which are carried These are reclassified from

at fair value or other similar equity to profit or loss (as a
valuation are reported using the reclassification adjustment) when
exchange rates that existed when the gain or loss on disposal is
the values were determined. recognised.
Income and expense items are Treatment of disposal depends on
translated at historical/average rate. whether control is lost or not.
Exchange differences are taken to Thus, if control is lost, the
the statement of profit and loss. exchange difference attributable
For non-integral foreign to the parent is reclassified to
operations, closing rate method profit or loss from foreign
should be followed (i.e. all assets currency translation reserve in
and liabilities are to be translated at other comprehensive income.
closing rate while profit and loss
account items are translated at
actual/average rates).
The resulting exchange difference
is taken to reserve and is recycled
to profit and loss on the disposal of
the non-integral foreign operation.
Treatment for disposal does not
depend on whether control over a
foreign subsidiary is lost or not.
Even if control is lost, only
proportionate amount of the
reserve is recycled to statement of
profit and loss.

Effects of Changes in AS 11 is applicable to exchange Foreign currency derivatives that Similar to IFRS.
Foreign Exchange differences on all forward are not within the scope of
Rates – scoping for exchange contracts including those IAS 39 (e.g. some foreign currency

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derivatives entered into to hedge the foreign derivatives that are embedded in
currency risk of existing assets other contracts) are within the
and liabilities and is not applicable scope of IAS 21. In addition,
to the exchange difference arising IAS 21 applies when an entity
on forward exchange contracts translates amounts relating to
entered into to hedge the derivatives from its functional
foreign currency risks of future currency to its presentation
transactions in respect of which currency.
firm commitments are made or
which are highly probable forecast
transactions.
Effects of Changes in • Forward exchange contracts not Accounted for as a derivative. Similar to IFRS.
Foreign Exchange intended for trading or speculation
Rates – forward purposes:
exchange contracts i) Any premium or discount arising
at the inception of a forward
exchange contract is amortized as
expense or income over the life of
the contract.
ii) Exchange differences on such a
contract are recognised in the
statement of profit and loss in the
reporting period in which the
exchange rates change. Exchange
difference on a forward exchange
contract is the difference between
(a) The foreign currency amount of
the contract translated at the
exchange rate at the reporting date,
or the settlement date
where the transaction is settled

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during the reporting period, and

(b) The same foreign currency
amount translated at the latter of
the date of inception of the forward
exchange contract and the last
reporting date.
• Forward exchange contract
intended for trading or speculation
purposes:
The premium or discount on the
contract is ignored and at each
balance sheet date, the value of the
contract is marked to its current
market value and the gain or loss
on the contract is recognised.
Effects of Changes in Change in reporting currency is not Change in functional currency is Similar to IFRS. Additionally, the
Foreign Exchange dealt with in AS 11, though reason applied prospectively. The fact of date of change in functional
Rates – change in for change is required to be change in functional currency and currency is also required to be
functional currency disclosed. the reason for the change in disclosed.
functional currency should be
disclosed.
Borrowing Costs – AS 16 – Borrowing Costs IAS 23 – Borrowing Costs Ind AS 23 – Borrowing Costs
primary literature
Borrowing Costs – No such scope exception similar to Borrowing costs need not be Similar to IFRS.
scope IFRS/Ind AS is available. capitalised in respect of
i) Qualifying assets measured at
fair value (e.g. biological assets)
ii) Inventories that are
manufactured, or otherwise
produced, in large quantities on a
repetitive basis (even if they are

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otherwise qualifying assets). This

is an option.
Borrowing Costs – No reference to effective interest Description of specific components Similar to IFRS.
components of rate. are linked to effective interest rate.
borrowing costs

Related Party AS 18 – Related Party IAS 24 – Related Party Ind AS 24 – Related Party
Disclosures - Disclosures Disclosures Disclosures
primary literature
Related Party Parties are considered to be related A related party is a person or entity Similar to IFRS.
Disclosures – if at any time during the reporting that is related to the entity that is
definition of related period one party has the ability to preparing its financial statements
party control the other party or exercise (reporting entity):
significant influence over the other a) A person or a close member of
party in making financial and/or that person’s family is related to a
operating decisions. reporting entity if that person:
i) has control or joint control of the
reporting entity;
ii) has significant influence over
the reporting entity; or
iii) is a member of the key
management personnel of the
reporting entity or of a parent of
the reporting entity.
b) An entity is related to a
reporting
entity if any of the following
conditions apply:
i) The entity and the reporting
entity are members of the same
group (which means that each

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parent, subsidiary and fellow

subsidiary is related to the others).
ii) One entity is an associate or
joint venture of the other entity (or
an associate or joint venture of a
member of a group of which the
other entity is a member).
iii) Both entities are joint ventures
of the same third party.
iv) One entity is a joint venture of
a third entity and the other entity is
an associate of the third entity.
v) The entity is a postemployment
benefit plan for the benefit of
employees of either the reporting
entity or an entity related to the
reporting entity. If the reporting
entity is itself such a plan, the
sponsoring employers are also
related to the reporting entity.
vi) The entity is controlled or
jointly controlled by a person
identified in a).
vii) A person identified in a) i) has
significant influence over the entity
or is a member of the key
management personnel of the
entity (or of a parent of the entity).
viii) The entity, or any member of
a group of which it is a
part, provides key management

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personnel services to the reporting

entity or to the parent of the
reporting entity (this is effective
for annual periods beginning on or
after 1 July 2014).
Related Party – No definition of close member of Close members of the family of a Similar to IFRS with the inclusion
definition of close the family. Instead the term person are those family members of father, mother, brother and sister
member of the family “relative” has been defined in who may be expected to influence, in the definition of close members
relation to an individual as the or be influenced by, that person in of the family.
spouse, son, daughter, brother, their dealings with the entity and
sister, father, mother who may be include:
expected to influence, or be a) that person’s children and
influenced by, that individual in spouse or domestic partner;
his/her dealings with the reporting b) children of that person’s spouse
enterprise. or domestic partner; and
c) dependents of that person or that
person’s spouse or domestic
partner.
Related Party Post-employment benefit plans are Related party includes post- Similar to IFRS.
Disclosures – post- not included as related parties. employment benefit plans for the
employment benefit benefit of employees of the
plans reporting entity or any entity that is
related to the reporting entity.
Related Party Disclosure requirements do not Some minimum disclosures should Disclosures which conflict with
Disclosures – apply if providing such disclosures be made by government-related confidentiality requirements of
exemptions would conflict with an enterprise’s entities. statute / regulations are not required
duties of confidentiality as to be made.
specifically required in terms of
a statute or by any regulator or
similar competent authority.
Also, no disclosure is required

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in the financial statements of

a state-controlled enterprise as
regards related party relationships
with other state-controlled
enterprises and transactions with
such enterprises.
Related Party If an entity has related party If an entity has related party Similar to IFRS.
Disclosures – items to transactions during the period transactions during the period
be disclosed covered by the financial covered by the financial
statements, the enterprise should statements, the amount of such
disclose the volume of transactions transactions and the amount of
either as an amount or as an outstanding balances including
appropriate proportion and commitments need to be disclosed.
amounts or appropriate proportions
of outstanding items.
Related Party Compensation of key management Compensation of key management Similar to IFRS.
Disclosures – key personnel is disclosed in total personnel is disclosed in total and
management as an aggregate of all items of separately for
personnel compensation except when a a) short-term employee benefits;
separate disclosure is necessary for b) postemployment benefits;
the understanding of the effects of c) other long-term benefits;
related party transactions on the d) termination benefits; and
financial statements. e) share-based payments.
Investments in AS 23 – Accounting for IAS 28 (Revised 2011) – Ind AS 28 – Investments in
Associates and Joint Investments in Associates Investments in Associates and Associates and Joint Ventures
Ventures – primary in Consolidated Financial Joint Ventures
literature Statements
Investments in Significant influence is the power Significant influence is the power Similar to IFRS.
Associates and to participate in the financial and/ to participate in the financial and
Joint Ventures – or operating policy decisions of the operating policy decisions of the
significant influence investee but not control over those investee but is not control or joint

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policies. control over those policies.

Investments in Potential voting rights are not The existence and effect of Similar to IFRS.
Associates and considered in assessing significant potential voting rights that
Joint Ventures – influence. are currently exercisable or
potential voting convertible, including potential
rights voting rights held by another
entity, are considered when
assessing significant influence.
Investments in As per AS 23, equity method is Even if consolidated financial Similar to IFRS.
Associates and applicable only when the entity statements are not prepared
Joint Ventures – has subsidiaries and prepares (e.g. because the investor has no
equity method consolidated financial statements. subsidiaries) equity accounting is
However, as per Companies Act, used. IFRS 5 is applied to an
2013, consolidated financial
investment, or a portion of an
statements should be prepared, investment in an associate that
even if an entity has only meets the criteria to be classified as
associates and/or joint ventures but
held for sale.
has no subsidiaries. For financial
year ending 31 March 2015, if a
company does not have any
subsidiaries, but only has
associates and/or joint ventures,
then the company would not have
to prepare consolidated financial
statements in respect of such
associates and/ or joint ventures.
(Refer the topic ‘Consolidated
Financial Statements - scope’).
Investments in Currently there is no exemption for Investments by venture capital Similar to IFRS.
Associates and Joint investments made by venture organisations, mutual funds, unit

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Ventures – scope capital organisations, mutual funds, trusts and similar entities including
unit trusts and similar entities from investment-linked insurance funds
applying the equity method. are exempted from applying equity
method, if an election is made to
measure such investments at
FVTPL in accordance with IFRS 9
or IAS 39 where the entity is yet to
apply IFRS 9. If this election
is made, certain disclosure
requirements have to be complied
with.
IAS 28 provides exemptions from
applying the equity method similar
to exemptions provided in IFRS 10
– Consolidated Financial
Statements (Refer the topic
'Consolidated Financial Statements
- scope')
Investments in Loss in excess of the carrying Losses recognised in excess of the Similar to IFRS.
Associates and Joint amount of investment is not interest in the investment are not
Ventures – share of recognised, unless the investor has recognised.
losses incurred obligations or made The ‘interest’ is the carrying
payments on behalf of the associate amount of investment determined
to satisfy obligations of the using the equity method together
associate that the investor has with any long-term interest that, in
guaranteed or to which the investor substance, form part of the entity’s
is otherwise committed. net investment in the associate.
Losses recognised using the equity
method in excess of the entity’s
investment in ordinary shares are
applied to the other components of

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the entity’s interest in an associate

in the reverse order of their
seniority (i.e. priority in
liquidation).
After the entity’s interest is
reduced to zero, additional losses
are provided for, and a liability is
recognised, only to the extent that
the entity has incurred legal or
constructive obligations or made
payments on behalf of the
associate.

Investments in Unrealised profits and losses Investor’s share in the gains or Similar to IFRS.
Associates and Joint resulting from transactions losses resulting from upstream and
Ventures – between the investor (and its downstream transactions involving
transactions between consolidated subsidiaries) are assets that do not constitute a
investor and the eliminated to the extent of the ‘business’ as defined in IFRS 3
associate investor’s interest in the associate. between the investor (including its
Unrealised losses should not be consolidated subsidiaries) and its
eliminated if and to the extent the associate are eliminated. When
cost of the transferred asset cannot downstream transactions provide
be recovered. evidence of impairment, the losses
are recognised in full. When
upstream transactions provide
evidence of impairment, the
investor should recognise its share
of loss. Gain or loss resulting
from a downstream transaction
involving assets that constitute a
‘business’ as defined in IFRS 3

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between the investor (including its

consolidated subsidiaries) and its
associate is recognised in full in
the investor’s financial statements.
Investments in No specific guidance. When an investor discontinues the Similar to IFRS.
Associates use of the equity method (for
and Joint Ventures example, as a result of a change
– disposals in ownership), the investment
retained is re-measured to its fair
value, with the gain or loss
recognised in profit or loss.
Thereafter, IFRS 9 or IAS 39 is
applied to the remaining holding
unless the investment becomes a
subsidiary in which case the
investment is accounted for in
accordance with IFRS 3.
Investments in Goodwill arising on the acquisition Goodwill (i.e. excess of the cost of Similar to IFRS.
Associates and Joint of an associate by an investor the investment over the investor’s
Ventures – goodwill should be included in the carrying share of the net fair value of the
amount of investment in the associate’s identifiable assets and
associate but should be disclosed liabilities) is included in the
separately. carrying amount of the investment.
Investments in Capital reserve arising on the Any excess of the investor’s share Any excess of the investor’s share
Associates and Joint acquisition of an associate by an of net fair value of the associate’s of the net fair value of the
Ventures – capital investor should be included in the identifiable assets and liabilities associate’s identifiable assets and
reserve/negative carrying amount of investment in over the cost of investments is liabilities over the cost of the
goodwill the associate but should be included as income in the investment is recognised directly in
disclosed separately. determination of the investor’s equity as capital reserve in the
share of associate’s profit or loss in period in which the investment is
the period in which the investment acquired.

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is acquired.
Investments If not practicable to use uniform
in Uniform accounting policies Uniform accounting policies to be
Associates and Joint accounting polices while applying should be followed while applying followed unless impracticable to do
Ventures – uniform the equity method, that fact should the equity method. No exception is so.
accounting policies be disclosed together with a brief provided.
description of the differences
between the accounting policies.
Investments in The maximum difference between The difference between the Similar to IFRS.
Associates and Joint the reporting date of the associate reporting date of the associate and
Ventures – reporting and that of the parent is not that of the investor should be no
date specified. more than three months.

Investments in At cost less impairment loss, if Either at cost or as an investment Similar to IFRS, except that equity
Associates and Joint any, as per AS 13 – Accounting for in accordance with IFRS 9 or IAS method is not permitted in the
Ventures – separate Investments. 39 (if the entity is yet to apply separate financial statements.
financial statements IFRS 9) or using the equity method
of the investor as described in IAS 28,
Investments in Associates and
Joint Ventures.
(The option to use the equity
method will be applicable for
annual periods beginning on or
after 1 January 2016.)
Reporting in There is no equivalent standard. IAS 29 – Financial Reporting in Ind AS 29 – Financial Reporting
Hyperinflationary Hyperinflationary Economies in Hyperinflationary Economies
Economies – primary IFRIC 7 – Applying the Ind AS 29 – Appendix A –
literature Restatement Approach under Applying the Restatement
IAS 29 Approach under Ind AS 29
Financial Reporting There is no equivalent standard. Generally an economy is Similar to IFRS.
in Hyperinflationary hyperinflationary when the
Economies – cumulative inflation rate over 3

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hyperinflationary years is approaching or exceeds

100%.
Financial Reporting There is no equivalent standard. Financial statements should be Similar to IFRS.
in Hyperinflationary stated in terms of the measuring
Economies – basic unit current at the end of the
principle reporting period.
Comparative figures for prior
period(s) should be restated into
the same current measuring unit.
Financial Reporting There is no equivalent standard. The following disclosures are Similar to IFRS. However there is
in Hyperinflationary required: an additional disclosure required
Economies – - the fact that the financial regarding duration of the
disclosure statements and the corresponding hyperinflationary situation existing
figures for previous periods have in the economy.
been restated for the changes in the
general purchasing power of the
functional currency and, as a
result, are stated in terms of the
measuring unit current at the end
of the reporting period;
- whether the financial statements
are based on a historical cost
approach or a current cost
approach; and
- the identity and level of the price
index at the end of the reporting
period and the movement in the
index during the current and the
previous reporting period.
Financial Reporting There is no equivalent standard. Restatements are made by applying Similar to IFRS.
in Hyperinflationary a general price index. Items such

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Economies – as monetary items that are already

restatements stated at the measuring unit at the
end of the reporting period are not
restated. Other items are restated
based on the change in the general
price index between the date those
items were acquired or incurred
and the end of the reporting period.
A gain or loss on the net monetary
position is included in net income.
It should be disclosed separately.
Applying the There is no equivalent standard. When the economy of an entity’s Similar to IFRS.
Restatement functional currency becomes
approach under IAS hyperinflationary, IAS 29 is
29 applied as if the economy was
always hyperinflationary.
Earnings Per Share – AS 20 – Earnings Per Share IAS 33 – Earnings Per Share Ind AS 33 – Earnings Per Share
primary literature
Earnings Per Share – Applicability of the standard is not IAS 33 is applicable to the Ind AS 33 is applicable to
scope linked to the listing status of an separate and consolidated financial companies that have issued ordinary
entity. statements of an entity/group with shares to which Ind ASs notified
a parent: under the Companies Act apply.
• Whose ordinary shares or
potential ordinary shares are traded
in a public market (a domestic or
foreign stock exchange or an over-
the-counter market, including local
and regional markets); or
• That files, or is in the process of
filing, its financial statements with
a securities commission or other

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 Chapter – 6 Comparative Study of Indian GAAP, IFRS and IND AS

regulatory organisation for the

purpose of issuing ordinary shares
in a public market.
Earnings Per Share – AS 20 requires disclosure of basic When an entity presents both EPS is required to be presented in
disclosure in and diluted EPS information both separate and consolidated financial both, consolidated as well as
separate financial in the separate and consolidated statements, EPS is required to be separate financial statements.
statements financial statements of the parent. presented only in the consolidated
financial statements. An entity may
disclose EPS in its separate
financial statements voluntarily.

Earnings Per Share – No separate disclosure for EPS The statement of comprehensive Similar to IFRS.
disclosure of EPS from continuing and discontinuing income will present basic and
from continuing and operations. diluted earnings per share from
discontinued continuing operations and if
operations applicable, basic and diluted
earnings per share from
discontinued operations. EPS from
discontinued operations may
alternatively be disclosed in the
notes.
Earnings Per Share – Certain additional disclosures Disclosure is required Similar to IFRS.
additional required under IFRS not required. for instruments (including
disclosures contingently issuable shares)
that could potentially dilute basic
earnings per share in the future,
but were not included in the
calculation of diluted earnings per
share because they are anti-dilutive
for the periods presented.
Earnings Per Share – EPS with and without Since IAS 1 prohibits the Similar to IFRS.

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extraordinary items extraordinary items is to

be disclosure of items as
presented. extraordinary, no separate
consideration is given to such
items while calculating EPS.
Earnings Per Share – No specific requirement as in Ordinary shares to be issued upon Similar to IFRS.
mandatorily IFRS. conversion of a mandatorily
convertible convertible instrument are included
instrument in the calculation of basic EPS
from the date the contract is
entered into.
Earnings Per Share – No specific guidance. Ordinary shares that are issuable Similar to IFRS.
shares issuable after solely after a passage of time are
a passage of time not treated as contingently issuable
shares because passage of time is a
certainty.
Earnings Per Share – No guidance on contingently Outstanding ordinary shares that Similar to IFRS.
contingently returnable shares. are contingently returnable are not
returnable treated as outstanding and are
shares ignored in the calculation of basic
EPS until the shares are no longer
subject to recall.
Earnings Per Share – No specific guidance. No specific guidance. Where any item of income or
items of income or expense which is otherwise required
expense debited or to be recognised in profit or loss in
credited to securities accordance with Indian Accounting
premium account/ Standards is debited or credited to
other reserves securities premium account/ other
reserves, profit or loss from
continuing operations should be
adjusted by the amount in respect
thereof for the purpose of

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calculating basic earnings per share.

Interim Financial AS 25 – Interim Financial IAS 34 – Interim Financial Ind AS 34 – Interim Financial
Reporting – primary Reporting Reporting Reporting
literature IFRIC 10 – Interim Financial Ind AS 34 – Appendix A – Interim
Reporting and Impairment Financial Reporting and
Impairment
Interim A statute governing an enterprise
Financial No specific guidance when a Similar to IFRS.
Reporting or a regulator may require an statute requires an enterprise to
– statute requiring enterprise to prepare and present prepare and present certain
an enterprise to certain information at an interim information at an interim date in a
prepare and present date which may be different in specific format.
certain information form and/or content as required by
at an interim date AS 25 for e.g. Clause 41 of the
Listing Agreement requires
companies to publish quarterly
financial information in a specific
format. In such a case, the
recognition and measurement
principles as laid down in AS 25
are applied in respect of such
information, unless otherwise
specified in the statute or by the
regulator.
Interim Reporting There is no corresponding Where an entity has recognised an Similar to IFRS.
and Impairment pronouncement to IFRIC 10. impairment loss in an interim
However, AS 28 does permit the period in respect of goodwill, that
reversal of goodwill in certain impairment loss is not reversed in
circumstances. This would be subsequent interim financial
equally applicable to the interim statements nor in annual financial
financial statements. Reversal of statements.
impairment of investments is

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 Chapter – 6 Comparative Study of Indian GAAP, IFRS and IND AS

permitted in AS 13 and hence the

same is equally applicable for
interim financial statements.
Impairment of Assets AS 28 – Impairment of Assets IAS 36 – Impairment of Assets Ind AS 36 – Impairment of Assets
– primary literature AS 26 – Intangible Assets

Impairment of Assets AS 28 requires goodwill to be Allocated to the lowest level at Similar to IFRS.
– goodwill tested for impairment using the which goodwill is internally
Allocated to cash “bottom-up/top-down” approach monitored by management which
generating units that under which the goodwill is, in should not be larger than an
are expected to effect, tested for impairment by operating segment before
benefit from the allocating its carrying amount to aggregation of segments as defined
synergies of business each cash-generating unit or in IFRS 8.
combination. smallest group of cash-generating
units to which a portion of that
carrying amount can be allocated
on a reasonable and consistent
basis.
Impairment of Assets Goodwill and other intangibles are Goodwill, intangible assets not yet Similar to IFRS.
– annual impairment tested for impairment only when available for use and indefinite life
test for goodwill and there is an indication that they may intangible assets are required to be
intangibles be impaired. tested for impairment at least on an
AS 26, Intangible Assets requires annual basis or earlier if there is an
intangible assets that are not impairment indication.
available for use and intangible
assets that are amortised over a
period exceeding ten years to be
assessed for impairment at least at
each financial year end even if
there is no indication that the asset
is impaired.

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 Chapter – 6 Comparative Study of Indian GAAP, IFRS and IND AS

Impairment of Assets Impairment loss for goodwill is Impairment loss recognised for Similar to IFRS.
– reversal of reversed if the impairment loss was goodwill is prohibited from
impairment loss caused by a specific external event reversal in a subsequent period.
for goodwill of an exceptional nature that is not Goodwill impaired in an interim
expected to recur and subsequent period is not subsequently reversed
external events have occurred that in subsequent interim or annual
reverse the effect of that event. financial statements.

Provisions, AS 29 – Provisions, Contingent IAS 37 – Provisions, Contingent Ind AS 37 – Provisions,

Contingent Assets Liabilities and Contingent Assets Liabilities and Contingent Assets Contingent Liabilities and
and Contingent Contingent Assets
Liabilities – primary IFRIC 5 – Rights to Interests Ind AS 37 – Appendix A – Rights
literature arising from Decommissioning, to Interests arising from
Restoration and Environmental Decommissioning, Restoration
Rehabilitation Funds and Environmental Rehabilitation
Funds
IFRIC 6 – Liabilities arising Ind AS 37 – Appendix B –
from Participating in a Specific Liabilities arising from
Market – Waste Electrical and Participating in a Specific Market
Electronic Equipment – Waste Electrical and Electronic
Equipment
IFRIC 21 – Levies Ind AS 37 – Appendix C – Levies

Provisions, Provisions are not recognised A provision is recognised only Similar to IFRS.
Contingent based on constructive obligations when a past event has created a
Liabilities and though some provisions may be legal or constructive obligation, an
Contingent Assets – needed in respect of obligations outflow of resources is probable,
recognition of arising from normal practice, and the amount of the obligation
provisions custom and a desire to maintain can be estimated reliably.
good business relations or to act in A constructive obligation is an
an equitable manner. obligation that derives from an

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entity's actions where, by an

established pattern of past practice,
published policies or a sufficiently
specific current statement, the
entity has indicated to other parties
that it will accept certain
responsibilities; and as a result, the
entity has created a valid
expectation on the part of those
other parties that it will discharge
those responsibilities.
Provisions, Discounting of liabilities is not When the effect of time value of Similar to IFRS.
Contingent permitted and provisions are money is material, the amount of
Liabilities and carried at their full values. provision is the present value of
Contingent Assets – the expenditure expected to be
discounting required to settle the obligation.
The discount rate is a pre-tax rate
that reflects the current market
assessment of the time value of
money and risks specific to the
liability.
Provisions, Contingent assets are neither Contingent assets are not Similar to IFRS.
Contingent recognised nor disclosed in the recognised but disclosed in the
Liabilities financial statements. They are
and financial statements when an
Contingent Assets – usually disclosed as part of the inflow of economic benefits is
contingent assets report of the approving authority probable.
(e.g. Board of Directors report).
Provisions, Requires recognition based on IAS 37 requires provisions on the Similar to IFRS.
Contingent general recognition criteria for basis of constructive obligations.
Liabilities and provisions i.e. when the entity has A constructive obligation to
Contingent Assets – a present obligation as a result of restructure arises only when an

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 Chapter – 6 Comparative Study of Indian GAAP, IFRS and IND AS

restructuring cost past event and the liability is entity has a detailed formal plan
considered probable and can be for the restructuring and has raised
reliably estimated. a valid expectation in those
affected that it will carry out the
restructuring by starting to
implement that plan or announcing
its main features to those affected
by it.
Intangible Assets – AS 26 – Intangible Assets IAS 38 – Intangible Assets Ind AS 38 – Intangible Assets
primary literature SIC 32 – Intangible Assets – Web Ind AS 38 – Appendix A –
Site Costs Intangible Assets – Web Site Costs
Intangible Assets – Measured only at cost. Intangible assets can be measured Similar to IFRS.
measurement at either cost or revalued amounts.

Intangible Assets – The useful life may not be Useful life may be finite or Similar to IFRS.
useful life indefinite. There is a rebuttable indefinite.
presumption that the useful life of
an intangible asset will not exceed
ten years from the date when the
asset is available for use.
Intangible Assets – Goodwill arising on amalgamation Not amortised but subject to Similar to IFRS.
goodwill in the nature of purchase is annual impairment test or more
amortised over a period not frequently whenever there is an
exceeding five years (as per AS impairment indication.
14).
Intangible Assets – Payment for the delivery of goods Recognition of a prepayment asset Similar to IFRS.
prepayments for or rendering of services made in for advertising or promotional
advertising and advance of the delivery of goods or expenditure would be permitted
promotional the rendering of services are only up to the point at which the
activities considered as prepayment assets. entity has the right to access the
goods or up to the receipt of

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services. Mail order catalogues

specifically identified as a form
of advertising and promotional
activity to be expensed.
Intangible Assets – AS 26 is silent on revenue based An amendment to IAS 38 which Similar to IFRS. However, a carve-
revenue based amortisation of intangible assets.
will be applicable prospectively for out has been made in Ind AS 101
amortisation model Schedule II to the Companies Act,
annual periods beginning on or and Ind AS 38, which will allow
2013 requires that the provisions of
after 1 January 2016, introduces a entities to continue using the
the accounting standards for therebuttable presumption that accounting policy adopted for
time being in force should applyrevenue is not an appropriate basis amortisation of intangible assets
except in the case of intangiblefor amortisation of an intangible arising from service concession
assets (toll roads) created under
asset. arrangements related to toll roads
“Build, operate and transfer" orThis presumption can be rebutted recognised in the financial
any other form of public privateonly in two limited circumstances: statements for the period ending
partnership route in case of road
a) The intangible asset is expressed immediately before the beginning of
projects. A revenue based
as a measure of revenue; and b) the first Ind AS reporting period.
amortisation method has been Revenue and consumption of the
prescribed for the same. Where aintangible asset are highly
company arrives at the
correlated.
amortisation amount in respect of
the said intangible assets in
accordance with any method as per
the applicable accounting
standards, it should disclose the
same.
Investment Property There is no equivalent standard IAS 40 – Investment Property Ind AS 40 – Investment Property
– primary literature on investment property. At
present, covered by AS 13 –
Accounting for Investments.

Investment Property AS 13 defines investment property Investment property is land or Similar to IFRS.

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– definition and as an investment in land or building (or part thereof) or both

scope buildings that are not intended toheld (whether by owner or by a
be occupied substantially for use lessee under a finance lease) to
by, or in the operations of, the earn rentals or for capital
investing enterprise. appreciation or both. IAS 40 does
not apply to owner-occupied
property or property that is being
constructed or developed on behalf
of third parties or property held for
sale in the ordinary course of
business, or property that is leased
to another entity under a finance
lease.
Investment Property Classified as long-term Investment property is measured Investment properties can
– measurement investments and measured at cost initially at cost. Transaction costs subsequently be measured using the
less impairment. are included in the initial cost or the fair value model, with
As per Schedule III to the measurement. changes in fair value recognised in
Companies Act, 2013, they profit or loss.
are classified as non-current Investment properties are measured
investments. using the cost model. Fair value
model is not permitted. Detailed
disclosures pertaining to fair value
have to be given.
Agriculture – There is no equivalent standard. IAS 41 – Agriculture Ind AS 41 – Agriculture
primary literature
Agriculture – scope There is no equivalent standard. Applies to biological assets with Similar to IFRS.
the exception of bearer plants that
are used in the production
or supply of agricultural produce
and which will not be sold
as agriculture produce and

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government grants related to these

biological assets. It does not apply
to land related to agricultural
activity, intangible assets related
to agricultural activity, and
government grants related to bearer
plants. However, it does apply to
produce growing on bearer plants.
Agriculture – There is no equivalent standard. All biological assets are measured Similar to IFRS.
measurement at fair value less costs to sell,
unless fair value cannot be reliably
measured.
Any change in the fair value of
biological assets during a period is
reported in profit or loss.
Exception to fair value model for
biological assets: if there is no
active market at the time of
recognition in the financial
statements, and no other reliable
measurement method, then the cost
model is used for the specific
biological asset only. The
biological asset is measured at
depreciated cost less any
accumulated impairment losses.
Fair value measurement stops at
harvest. IAS 2 applies after
harvest. Agricultural produce is
measured at fair value less
estimated costs to sell at the point

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of harvest. Because harvested

produce is a marketable
commodity, there is no
'measurement reliability' exception
for produce.

First Time Adoption There is no equivalent standard IFRS 1 – First Time Adoption Ind AS 101 – First Time Adoption
– Primary Literature under Indian GAAP. of International Financial of Indian Accounting Standards
A first time preparer will have to Reporting Standards
comply with the measurement
and disclosure requirements of
all the Indian standards that are
applicable to the enterprise.
First Time Adoption Not applicable. The date of transition is the Similar to IFRS.
– date of transition beginning of the earliest period for The date of transition is given in the
which an entity presents full MCA Notification for different
comparative information under classes of companies.
IFRS in its first IFRS financial
statements. Entities are required to
present at least one year
comparatives.
Share-based There is no equivalent standard. IFRS 2 – Share-based Payment Ind AS 102 – Share-based Payment
Payment – primary However, the ICAI has issued a (covers share-based payments both (covers share-based payments both
literature Guidance Note on Accounting for for employees and non-employees for employees and non-employees
Employee Share-based Payments. and transactions involving receipt and transactions involving receipt of
This guidance note deals only with of goods and services) goods and services)
employee share-based payments.
The SEBI has also issued the SEBI
(Share Based Employee Benefits)
Regulations, 2014 which requires
that the Guidance Note on

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Accounting for Employee Share-

based Payments or Accounting
Standards as may be prescribed by
the ICAI, including the disclosure
requirements prescribed therein,
should be followed while
accounting for share-based
schemes.
Share-based Similar to IFRS. Recognise as an expense over the Similar to IFRS.
Payment – vesting period.
recognition Goods and services in a share-
based payment transaction are
recognised when goods are
received or as services are
rendered. A corresponding increase
in equity is recognised if goods and
services were received in an
equity-settled share-based payment
transaction or a liability if these
were received in a cash-settled
share-based payment transaction.
Share-based The guidance note permits the use For equity settled share-based Similar to IFRS.
Payment – of either the intrinsic value method transactions with non-employees,
measurement or the fair value method for goods and services received and
determining the costs of benefits the corresponding increase in
arising from employee share-based equity is measured at the fair value
compensation plans. The guidance of the goods and services received.
note recommends the use of the If the fair value of the goods and
fair value method. services cannot be estimated
Under the intrinsic value method, reliably, then the value is measured
the cost is the difference between with reference to the fair value of

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the market price of the underlying the equity instruments granted,

share on the grant date and the measured at the date the entity
exercise price of the option. The obtains the goods or the
fair value method is based on the counterparty renders the service. In
fair value of the option at the date case of equity settled transactions
of grant. The fair value is estimated with employees and others
using an option-pricing model (for providing similar services, grant
example, the Black-Scholes or a date fair value of the equity
binomial model) that takes into instrument should be used.
account as of the grant date the Different valuation techniques may
exercise price and expected life of be applied.
the option, the current price in the
market of the underlying stock and
its expected volatility, expected
dividends on the stock, and the
risk-free interest rate for the
expected term of the option. Where
an enterprise uses the intrinsic
value method, it should also
disclose the impact on the net
results and EPS – both basic and
diluted – for the accounting period,
had the fair value method been
used.
Business AS 14 – Accounting for IFRS 3 (2008) –
Business Ind AS 103 – Business
Combinations – Amalgamations Combinations Combinations
primary literature Ind AS 103 – Business
Combinations – Appendix C –
Business combinations of entities
under common control
Business There is no comprehensive Applies to a transaction or other Similar to IFRS except that Ind AS

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Combinations standard dealing with all

event in which an acquirer obtains 103 contains guidance on common
– scope business combinations. Guidance control of one or more businesses. control transactions.
for amalgamations is contained in IFRS 3 does not apply to: i) The
AS 14. AS 21 deals with formation of a joint arrangement in
investments in subsidiaries and ASthe financial statements of the joint
10 deals with a demerged unit arrangement itself
acquired in a slump sale. ii) Combinations of entities or
business under common control
iii) Acquisition of an asset or group
of assets that do not constitute a
business.
Business The effective date as per scheme of The date on which the acquirer Similar to IFRS.
Combinations – amalgamation will be the date of obtains control of the acquired
acquisition date filing of Court order sanctioning entity is the acquisition date.
the scheme with statutory
authorities.
Insurance Contracts No equivalent standard. IFRS 4 – Insurance Contracts. Ind AS 104 – Insurance Contracts
– The IASB is developing a
primary literature comprehensive IFRS for
insurance contracts to replace
IFRS 4 – Insurance Contracts.
Insurance Contracts No equivalent standard. Applicable to insurance and Similar to IFRS.
– general reinsurance contracts and to
discretionary participation features
in insurance contracts. The insurer
is required at the end of each
reporting period to make a liability
adequacy test to assess whether its
recognised insurance liabilities are
adequate. If test shows carrying
amount of its liabilities are

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inadequate, the deficiency is

recognised in profit or loss.
Reinsurance assets are tested for
impairment. Insurance liabilities
may not be offset against related
reinsurance assets.
Non-current Assets AS 24 – Discontinuing IFRS 5 – Non-current Assets Ind AS 105 – Non-current Assets
Held for Sale and Operations Held for Sale and Discontinued Held for Sale and Discontinued
Discontinued AS 10 – Accounting for Fixed Operations Operations
Operations Assets IFRIC 17 – Distributions of Non- Ind AS 10 – Appendix A –
– primary literature cash Assets to Owners Distributions of Non-cash Assets
to Owners
Non-current Assets There is no standard dealing with Non-current assets to be disposed Similar to IFRS.
Held for Sale and non-current assets held for sale of are classified as held for sale
Discontinued though AS 10 deals with assets when the asset is available for
Operations – held for disposal. Items of fixed immediate sale and the sale is
recognition, assets that have been retired from highly probable.
measurement and active use and are held for disposal Depreciation ceases on the date
presentation are stated at the lower of their net when the assets (individually or as
book value and net realisable value part of a disposal group) are
and are shown separately in the classified as held for sale. Non-
financial statements. Any expected current assets classified as held for
loss is recognised immediately in sale are measured at the lower of
the statement of profit and loss. its carrying value and fair value
less costs to sell. Non-current
assets classified as held for sale,
and the assets and liabilities in a
disposal group classified as held
for sale, are presented separately in
the statement of financial position.
Discontinued Under AS 24, the profit and loss The statement of comprehensive Similar to IFRS.

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Operations before tax is presented as a single income is effectively divided

– presentation section which includes continuing into two sections – continuing
and discontinuing operation. The operations and discontinued
presentation provides separate operations, with the entity
disclosure for continuing operation presenting as a single amount in
before tax, income tax related to the statement of comprehensive
continuing operations, profit or income, the sum of the post- tax
loss from continuing operations profit or loss from discontinued
after tax. A similar disclosure is operations for the period and the
made for discontinuing operations. post-tax gain or loss arising on the
The requirement under Schedule disposal of discontinued operations
III to the Companies Act, 2013 (or on the reclassification of
is different, with the statement the assets and liabilities of
of profit and loss being effectively discontinued operations as held for
divided into two sections – sale). Detailed disclosure of
continuing operations and revenue, expenses, pre-tax profit or
discontinuing operations. The loss and related income taxes is
following details are required to be required either in the notes or in
presented on the face of the the statement of comprehensive
statement of profit and loss as per income in a section distinct from
Schedule III for discontinuing continuing operations.
operations:
• Profit/(loss) from discontinuing
operations
• Tax expense of discontinuing
operations
• Profit/(loss) from discontinuing
operations (after tax)

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Exploration for and No equivalent standard. IFRS 6 – Exploration for and Ind AS 106 – Exploration for and
Evaluation of However there is a Guidance Evaluation of Mineral Resources Evaluation of Mineral Resources
Mineral Resources – Note on Accounting for Oil and
primary literature Gas Producing Activities
(Revised 2013).
Exploration for and As per the guidance note, there are Exploration and evaluation assets Similar to IFRS.
Evaluation of two alternative methods of are measured at cost or revaluation
Mineral Resources – accounting for acquisition, less accumulated amortisation and
general, impairment exploration and development costs, impairment loss. An entity
and disclosures viz. the Successful Efforts Method determines the policy specifying
or the Full Cost Method. The which expenditure is recognised as
guidance note recommends the exploration and evaluation assets.
Successful Efforts Method, though IAS 36 – Impairment of Assets is
full cost method is also permitted. applicable. However an entity
AS 28, Impairment of Assets is should determine an accounting
applicable irrespective of the policy for allocating exploration
method of accounting used. and evaluation assets to cash-
generating units or groups of cash-
generating units for the purpose of
assessing such assets for
impairment. Each cash-generating
unit or group of units to which an
exploration and evaluation asset is
allocated should not be larger than
an operating segment determined
in accordance with IFRS 8 –
Operating Segments.
The standard requires disclosure of

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information that identifies and

explains the amounts recognised in
the financial statements arising
from the exploration for and
evaluation of mineral resources.
Financial AS 32 – Financial Instruments: IFRS 7 – Financial Instruments: Ind AS 107 – Financial
Instruments: Disclosures Instruments: Disclosures
Disclosures –
primary literature
Financial Currently there are no detailed Requires disclosure of information Similar to IFRS.
Instruments: disclosure requirements for about the significance of financial
Disclosures – some financial instruments. However, instruments on financial
improved disclosures the ICAI has issued an information and performance.
Announcement in December 2005 These include: Disclosure relating
requiring the following disclosures to financial assets and financial
to be made in respect of derivative liabilities by category; special
instruments in the financial disclosures when the fair value
statements: option is used. Fair value
• Category-wise quantitative data disclosures must be made
about derivative instruments that separately for each class of
are outstanding at the balance sheet financial assets and financial
date; liabilities in way that permits it to
• The purpose, viz., hedging or be compared with its carrying
speculation, for which such amount. Requires enhanced
derivative instruments have been disclosures when an asset is
acquired; and transferred but not derecognised
• The foreign currency exposures and requires some disclosures for
that are not hedged by a derivative assets that are derecognised but the
instrument or otherwise. entity continues to have a
Requires disclosure of information continuing exposure to the assets
about the nature and extent of risks after the derecognition.

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arising from financial instruments: Requires disclosures on offsetting

• Qualitative disclosures about of financial assets and liabilities to
exposures to each type of risk and evaluate the effect or potential
how those risks are managed; and effect of netting arrangements on
• Quantitative disclosures about the entity’s financial position.
exposures to each type of risk,
separately for credit risk, liquidity
risk and market risk (including
sensitivity analysis). Requires
disclosures relating to performance
in the period, including
information about recognised
income, expenses, gains and losses,
interest income and expenses, fee
income and impairment losses.
Requires disclosures on
reclassifications, allowance of
credit losses, defaults and breaches,
pledges of assets, collaterals and
information on hedge accounting,
including risk management
strategy.
Segments – primary AS 17 – Segment Reporting IFRS 8 – Operating Segments Ind AS 108 – Operating
literature Segments
Operating Segments– Applicability of the standard is not IFRS 8 is applicable to the separate Ind AS 108 is applicable to
scope linked to the listing status of an and consolidated financial companies to which Ind ASs
entity. statements of an entity/group notified under the Companies Act
with a parent: apply.
• Whose debt or equity instruments
are traded in a public market (a
domestic or foreign stock exchange

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or an over-the-counter market,
including local and regional
markets); or
• That files, or is in the process of
filing, its financial statements with
a securities commission or other
regulatory organisation for the
purpose of issuing any class of
instruments in a public market.
Operating Segments AS 17 requires an enterprise to Operating segments are identified Similar to IFRS.
– determination of identify two sets of segments based on the financial information
segments (business and geographical), using that is regularly reviewed by the
a risks and rewards approach, with chief operating decision maker in
the enterprise’s system of internal deciding how to allocate resources
financial reporting to key and in assessing performance.
management personnel serving
only as the starting point for the
identification of such segments.
Operating Segments Segment information is prepared in Segment profit or loss is reported Similar to IFRS.
– measurement conformity with the accounting on the same measurement basis as
policies adopted for preparing and that used by the chief operating
presenting the financial statements decision maker. There is no
of the enterprise as a whole. definition of segment revenue,
Segment revenue, segment segment expense, segment result,
expense, segment result, segment and segment asset or segment
asset and segment liability have liability nor does it require
been defined. segment information to be
A reconciliation is presented prepared in conformity with the
between the information disclosed accounting policies adopted for the
for reportable segments and the entity’s financial statement.
aggregated information in the

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enterprise’s financial statements.

Financial AS 13 – Accounting for IFRS 9 (2014) – Financial Ind AS 109 – Financial
Instruments – Investments Instruments Instruments
primary literature AS 30 – Financial Instruments:
Recognition and Measurement.
Financial There is no definition of financial An entity should recognise a Similar to IFRS.
Instruments – instrument. financial asset or a financial
general recognition liability in its statement of
principle financial position when, and only
when, the entity becomes party to
the contractual provisions of the
instrument. A financial instrument
is a contract that gives rise to a
financial asset of one entity and a
financial liability or equity
instrument of another entity.
Financial No specific guidance. All financial instruments are Similar to IFRS.
Instruments – initial initially measured at fair value plus
measurement or minus, in the case of a financial
asset or financial liability not at
fair value through profit or loss,
transaction costs that are directly
attributable to the acquisition or
issue of the financial asset or
financial liability.
Trade receivables that do not have
a significant financing component
should initially be measured at
transaction price as defined in
IFRS 15.

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Separate and AS 21 – Consolidated Financial IAS 27 – Separate Financial Ind AS 27 – Separate Financial
Consolidated Statements Statements Statements
Financial IFRS 10 – Consolidated Ind AS 110 – Consolidated
Statements – Financial Statements Financial Statements
primary literature IFRS 12 – Disclosure of Interests Ind AS 112 – Disclosure of
in Other Entities Interests in Other Entities
Consolidated AS 21 does not specify entities that A parent is required to prepare Similar to IFRS.
Financial are required to present consolidated consolidated financial statements
Statements – scope financial statements. The in which they consolidate their
accounting standard is required to investments in subsidiaries in
be followed if consolidated accordance with IFRS 10. A
financial statements are presented. subsidiary is an entity that is
The Companies Act 2013 requires controlled by another entity
a company having one or more (known as the parent). A parent
subsidiaries, to prepare a need not prepare consolidated
consolidated financial statement of financial statements if it meets all
the company and of all the the following conditions:
subsidiaries in the same form and a) it is a wholly-owned subsidiary
manner as that of its own. The term or a partially-owned subsidiary and
‘subsidiary’ includes an associate all its other owners have not
company and joint venture. For objected to the entity not
financial year ending 31 March presenting consolidated financial
2015, if a company does not have statements;
any subsidiaries, but only has b) Its debt or equity instruments
associates and/or joint ventures, are
then the company would not have not traded in a public market
to prepare consolidated financial c) It did not file, nor is it in the
statements in respect of such process of filing, its financial
associates and/or joint ventures. statements for the purpose of
Preparation of consolidated issuing any class of instruments in

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financial statements will not be a public market; and

applicable to an intermediate d) Its ultimate or any intermediate
wholly owned subsidiary, except if parent produces consolidated
its immediate parent is a company financial statements that are
incorporated outside India. available for public use and
Further if a company has comply with IFRSs. The Standard
subsidiary or subsidiaries contains an exemption for an entity
incorporated outside India only, it that meets the definition of
need not present consolidated investment entity to measure all its
financial statements for the subsidiaries at fair value through
financial year beginning on or after profit and loss except that a
1 April 2014. Equity listed subsidiary that provides services
companies are required to present that relate to the investment
consolidated financial statements entity’s investment activities
in addition to separate financial should be consolidated.
statements of the parent in terms of
the Listing Agreement with the
Stock Exchanges and the SEBI
Guidelines.
Interests in Joint AS 27 – Financial Reporting of IFRS 11 – Joint Arrangements Ind AS 111 – Joint Arrangements
Arrangements – Interests in Joint Ventures IAS 28 – Investments in Ind AS 28 – Investments in
primary literature Associates and Joint Ventures Associates and Joint Ventures

Interests in Joint Joint control is the contractually Joint control is the contractually Similar to IFRS.
Arrangements – joint agreed sharing of control over an agreed sharing of control of an
control economic activity. arrangement, which exists only
when decisions about the relevant
activities require the unanimous
consent of the parties sharing
control.
Interests in Joint There is no exemption for The scope exemption applicable Similar to IFRS.

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Arrangements – investments made by venture for investments in associates under

scope capital organisations, mutual funds, IAS 28 is equally applicable for a
unit trusts and similar entities from venturer’s interest in a joint
applying the proportionate venture. (Refer the topic
consolidation method. 'Investments in Associates and
Joint Ventures – scope').
Investments in Joint The difference between the The difference between the Similar to IFRS.
Arrangements – reporting date of the jointly reporting date of the joint venture
reporting date controlled entity and that of the and that of the venturer should be
venturer should be no more than no more than three months.
six months.
Fair value – primary No equivalent standard IFRS 13 – Fair value Ind AS 113 – Fair value
literature Measurements measurements
Fair value – scope No equivalent standard. Applies when another IFRS Similar to IFRS.
requires or permits fair value
measurements or disclosures about
fair value measurements (and
measurements such as fair value
less cost to sell).
Fair value – No equivalent standard. Fair value is defined as the price Similar to IFRS.
definition Fair value is defined in the context that would be received to sell an
of each accounting standard, asset or paid to transfer a liability
wherever applicable. in an orderly transaction between
market participants at the
measurement date.
Fair value – No equivalent standard. Requires with some exceptions, Similar to IFRS.
classification and classification of these
disclosure measurements into a ‘fair value
hierarchy’ based on the nature of
inputs:
Level 1 – quoted prices in active

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markets for identical assets and

liabilities that the entity can access
at the measurement date;
Level 2 – inputs other than quoted
market prices included within
Level 1 that are observable for the
asset or liability, either directly or
indirectly;
Level 3 – unobservable inputs for
the asset or liability. Requires
various disclosures depending on
the nature of the fair value
measurement (e.g. whether it is
recognised in the financial
statements or merely disclosed)
and the level in which it is
classified.
Primary literature Guidance Note on Accounting IFRS 14 – Regulatory Deferral Ind AS – 114 Regulatory Deferral
for Rate Regulated Activities Accounts (effective for annual Accounts
(revised)* (effective for periods beginning on or after 1
accounting periods beginning on January 2016. Earlier
or after 1 April 2015) application is permitted)
Regulatory Deferral The Guidance Note should be IFRS 14 – Regulatory Deferral Similar to IFRS. However, a
Accounts - scope, applied by an entity to its operating Accounts is designed as a limited clarification is provided in Ind AS
recognition and activities (all or only a portion) that scope Standard to provide an 114 that the Guidance Note on
presentation meet the following criteria: interim, short-term solution for Accounting for Rate Regulated
• The regulator establishes the rate-regulated entities which are Activities issued by ICAI would be
price the entity must charge its first-time adopters of IFRS to considered as previous GAAP.
customers for the goods or services continue to account, with some A clarification is included in Ind AS
the entity provides and that price limited changes, for 'regulatory 114 that an entity subject to rate
binds the customers; and deferral account balances' in regulation coming into existence

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• The price established by accordance with its previous after Ind AS coming into force or an
regulation is designed to recover GAAP, both on initial adoption of entity whose activities become
the specific costs the entity incurs IFRS and in subsequent financial subject to rate regulation subsequent
in providing the regulated goods or statements, until such time as the to preparation and presentation of
services and to earn a specified IASB completes its comprehensive first Ind AS financial statements
return (which could be a minimum project on rate regulated activities. should be permitted to apply the
or range and need not be a fixed or Regulatory deferral account requirements of previous GAAP in
guaranteed return). balances arise when an entity respect of such rate regulated
A determination should be made at provides goods or services to activities.
the end of each reporting period customers at a price or rate that is
whether the operating activities subject to rate regulation.
during the reporting period meet Entities which are eligible to apply
the criteria specified above. IFRS 14 are not required to do so,
A regulatory asset is recognised and so can choose to apply only
when it is probable that the future the requirements of IFRS 1 – First-
economic benefits associated with time Adoption of International
it will flow to the entity as a result Financial Reporting Standards
of the actual or expected actions of when first applying IFRSs. The
the regulator under the applicable election to adopt IFRS 14 is only
regulatory framework and the available on the initial adoption of
amount can be measured reliably. IFRSs, meaning an entity cannot
A regulatory liability is recognised apply IFRS 14 for the first time in
when: financial statements subsequent
• An entity has a present obligation to those prepared on the initial
as a result of a past adoption of IFRSs. However, an
event; entity that elects to apply IFRS 14
• It is probable that an outflow of in its first IFRS financial
resources embodying economic statements must continue to
benefits will be required to settle apply it in subsequent financial
the obligation; and statements.
• A reliable estimate can be made IFRS 14 provides an exemption

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of the amount of the obligation. On from paragraph 11 of IAS 8 –

initial recognition and at the end of Accounting Policies, Changes in
each subsequent reporting period, Accounting Estimates and Errors,
an entity should measure a which requires an entity to
regulatory asset or regulatory consider the requirements of IFRSs
liability at the best estimate of the dealing with similar matters and
amount expected to be recovered the requirements of the Conceptual
or refunded or adjusted as future Framework when setting its
cash flows under the regulatory accounting policies.
framework, with changes in the The effect of the exemption is that
expectation being recorded as a eligible entities can continue to
change in an accounting estimate. apply the accounting policies used
A regulatory asset or regulatory for regulatory deferral account
liability should not be discounted balances under the basis of
to its present value. accounting used immediately
An entity should present regulatory before adopting IFRS ('previous
assets and regulatory liabilities as GAAP') when applying IFRSs,
current/non-current, as the case subject to the presentation
may be, in the balance sheet, requirements of IFRS 14.
separately from other assets Regulatory deferral account
and liabilities. No offsetting is balances, and movements in them,
permitted and separate line items are presented separately in the
should be presented in the balance statement of financial position and
sheet for the total of all regulatory statement of profit or loss and
assets and the total of all regulatory other comprehensive income, and
liabilities. A separate line item is specific disclosures are required.
also required to be presented under Regulatory deferral account
tax expense for the deferred tax balances are not classified between
expense/saving related to current and non-current, but are
regulatory account balances. separately disclosed using
subtotals.

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Revenue from No comprehensive equivalent IFRS 15- Revenue from Ind AS 115 – Revenue from
Contract with standard. The following deal Contracts with Customers Contracts with Customers
customers – primary with revenue recognition: (effective from Annual period Ind AS 115 – Appendix C –
literature beginning on or after 1 January Service Concession Arrangements
AS 9 – Revenue Recognition 2017 with earlier application Ind AS 115 – Appendix D –
permitted) Service Concession
AS 7 – Construction Contracts Arrangements: Disclosures

Revenue – scope AS 7 deals with construction IFRS 15 applies to contract with a Similar to IFRS.
contracts and AS 9 deals with the customer and establishes principles
recognition of revenue arising in on reporting the nature, amount,
the course of ordinary activities of timing and uncertainty of revenue
the entity – sale of goods, and cash flows arising from a
rendering of services and use by contract with customer. A contract
others of entity resources yielding is an agreement between two
interest, royalties and dividend. or more parties that creates
AS 9 scopes out revenue from enforceable rights and obligations,
lease agreements, insurance and can be either written, oral or
contracts, revenue arising from implied by an entity’s customary
government grants, and other business practices.
similar subsidies.
Revenue – AS 9 requires recognition of The core principle under IFRS 15 Similar to IFRS.
recognition revenue when (i) there is transfer is that an entity should recognise
significant risks and rewards of revenue to depict the transfer of
ownership (ii) no significant promised goods or services to
uncertainty exists regarding the customers in an amount that
amount of consideration and (iii) at reflects the considerations to which
the time of performance, it is not the entity expects to be entitled in
unreasonable to expect ultimate exchange for those goods or
collection. services.
Revenue from sale of goods To achieve that core principles, the

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is recognised when seller has following steps are applied:

transferred the property in goods 1) Identify the contract(s) with a
to the buyer for a consideration – customer.
which in most cases results in 2) Identify the performance
or coincides with transfer of obligations in the contract (account
significant risks and rewards of for a ‘distinct’ good or service).
ownership. 3) Determine the transaction price.
Revenue from service transactions 4) Allocate the transaction price
is usually recognised as the to the performance obligations in
services are performed either the contract.
by the proportionate completion 5) Recognise revenue when
method or by the completed the entity satisfies a performance
service contract method. obligation.
Under AS 7, contract revenue and
contract costs are recognised
by reference to the percentage
of completion method if the
outcome of the contract can be
estimated reliably; else, revenue is
recognised only to the extent of
contract costs incurred of which
recovery is probable.
Revenue – time value Revenue is not adjusted for the Transaction price is adjusted for Similar to IFRS.
of money time value. the time value of money when a
significant financing component
exists.
Revenue – disclosure AS 7 requires disclosure of Cohesive set of disclosure Similar to IFRS.
contract revenue recognised, requirements including both
methods used to recognise revenue, qualitative and quantitative
methods used to determine stage of information about the nature,
completion, aggregate amount of amount, timing and uncertainty of

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cost incurred and recognised revenue and cash flows from

profits, amount of advances contracts with customers.
received and amount of retentions. Specifically, information about:
AS 9 requires disclosure of • Revenue recognised from
circumstances when revenue contracts with customers, including
recognition has been postponed the disaggregation of revenue into
pending resolution of significant appropriate categories
uncertainties. • Contract balances, including the
As per Schedule III, in the case of opening and closing balances of
a company other than a finance receivables, contract assets and
company, revenue from operations contract liabilities;
should disclose separately in the • Performance obligations,
notes to accounts the following: including when the entity
• sale of products typically satisfies its performance
• sale of services obligations and the transaction
• other operating revenues price that is allocated to the
Less: Excise Duty remaining performance obligations
Turnover (Net) In the case of a in a contract;
finance company, revenue from • Significant judgements, and
operations should include revenue changes in judgements, made in
from: applying the requirements to those
• interest; and contracts; and
• other financial services • Assets recognised from the costs
to obtain or fulfil a contract with a
customer.
Service Concession No specific guidance. The ICAI Prescribes accounting by private Similar to IFRS.
Arrangements – has issued an exposure draft of sector operators involved in
scope Guidance Note on Accounting for provision of public sector
Service Concession Arrangements, infrastructure assets and services.
which is similar to IFRIC 12. Under service concession
arrangements, the grantor specifies

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the services to be provided to the

public, controls the infrastructure
and the price to be charged to the
public by the operator.

“I was no longer following a theory, I am interested in developing my own” – Research Scholar’s Comment

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