Ind AS Framework 24052014

CA Manish C. Iyer. +919650035652 [email protected]

Prepared by

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Indian Accounting Standards (Ind ASs)

Presented byCA Manish C. Iyer

FCA, DISA(ICAI), DipIFR(ACCA)Deputy Director, Technical Directorate, Institute of Chartered Accountants of India


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Framework for the Preparation and Presentation of Financial Statements

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Discussion Points• Purpose of the

Framework• Objective of Financial

Statements• Underlying Assumptions• Qualitative

Characteristics of Financial Statements

• True and Fair Concept• Elements of Financial

Statements• Recognition Principles


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Purpose of the Framework• To set out the concepts dealing with

– The preparation and presentation of Financial Statements– The objectives that govern financial reporting– The assumptions involved in financial reports– The qualitative characteristics of financial reports– The definitions and criteria that govern financial reporting

• Framework is not a Standard or an Interpretation• It is the basis of all Standards and Interpretations


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Objective of Financial Statements• To provide information about an entity’s– Financial position– Financial performance– Changes in financial position

• Information being provided to satisfy the needs of investors

• Presumption of satisfaction of other users’ needs


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Objective of Financial Reporting under IFRS

• To provide financial information about the reporting entity

• Useful to existing and potential investors, lenders and other creditors

• For making decisions about providing resources to the entity


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Underlying Assumptions

• Going Concern• Accrual


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Qualitative Characteristics• Relevance

– Understandability• Reliability

– Neutral– Representational Faithfulness– Substance over Form– Prudence– Completeness

• Comparability• Overall Constraints leading to trade-off between qualitative characteristics

– Timeliness– Cost-Benefit


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Qualitative Characteristics under IFRS• Fundamental– Relevance– Faithful Representation

• Enhancing– Comparability– Verifiability– Timeliness– Understandability


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True and Fair Concept• Not defined• Assumed that– Application of the principal qualitative

characteristics; and– Indian Accounting Standardsresults in true and fair financial statements


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Elements of Financial Statements• Assets• Liabilities• Income• Expense• Equity


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Case Studies• Jhingli Ltd. imports a material and keeps it for five years under

controlled conditions prior to manufacturing high quality furniture. In the year ended 31st March, 2013, it imported the material at a cost of Rs. 400 lacs. It contracted to sell the whole amount for Rs. 400 lacs and buy it back in five years time for Rs.561 lacs. X Ltd.’s management contend that there has not been hidden any profits as the sale has been at cost. Whether X Ltd. management’s contention is proper?


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Balance Sheet as per Legal FormEquity and LiabilitiesEquity 0.00 Current LiabilitiesTrade Payables 400.00 Total 400.00 AssetsCash 400.00 Total 400.00

Balance Sheets as per Substance in Ind AS and ASInd AS AS

Equity and Liabilities:Equity (28.00) (32.20)Non-Current LiabilitiesLoan 400.00 400.00 Interest Payable 28.00 32.20 Current LiabilitiesTrade Payables 400.00 400.00 Total 800.00 800.00 Assets:Cash 400.00 400.00 Inventory 400.00 400.00 Total 800.00 800.00

Solution

Calculation of IRR as per Ind ASPeriod 0 1 2 3 4 5 IRRAmount 400 0 0 0 0 -561 7%


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QUESTIONS


THANK YOU

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Ind AS Framework 24052014

Education

Transcript of Ind AS Framework 24052014