Preface I-5
Chapter-heads I-9
1
INTRODUCTION TO INTERNATIONAL FINANCIALREPORTING STANDARDS
1.1 IFRS - The Global Standard 11.1.1 IFRSs in G20 31.1.2 Shortcomings of IFRS Convergence 5
1.2 IFRS At A Glance 61.2.1 Brief discussion on IFRS standards and
interpretations 111.3 IASB Conceptual Framework for Financial Reporting 26
1.3.1 Objectives of financial statements 271.3.2 Qualitative Characteristics 301.3.3 Elements of Financial Statements 341.3.4 Recognition of the elements of financial statements 381.3.5 Measurement bases 411.3.6 Capital Maintenance 42
1.4 IFRS - A set of principle based financial reporting standards 43
2
INTRODUCTION TO INDIAN ACCOUNTING STANDARDS
2.1 Ind-ASs - A Set of IFRS converged financial reportingstandards 47
2.2 Ind-ASs Timeline 53
PAGE
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I-11
2.3 How to apply Ind ASs 59
2.4 Parallel Application of ASs 60
2.5 Major Divergences of Ind-ASs from IFRSs 60
ANNEX 2.1 : Notification, dated 16-2-2015 70
3
FIRST-TIME ADOPTION OF INDIAN ACCOUNTINGSTANDARDS
3.1 Introduction 763.1.1 Scope of Ind AS 101 773.1.2 Meaning of first time adoption 77
3.2 Process of First Time Adoption of Ind ASs 783.3 Preparation of Ind AS opening Balance Sheet 813.4 Estimates 923.5 Presentation and Disclosures 953.6 Interim financial reports 963.7 Exceptions to retrospective application of other Ind ASs 97
3.7.1 Derecognition of financial assets and financialliabilities 98
3.7.2 Hedge accounting 993.7.3 Non-controlling interests 1023.7.4 Classification and measurement of financial assets 1033.7.5 Impairment of financial assets 105
3.7.6 Embedded derivatives 106
3.7.7 Government loans 107
3.8 Optional Exemptions 1113.8.1 Share-based payment transactions 1123.8.2 Insurance contracts 1193.8.3 Deemed cost 1193.8.4 Leases 1283.8.5 Cumulative translation differences 1393.8.6 Long term foreign currency monetary items 1443.8.7 Investments in subsidiaries, joint ventures and
associates 1453.8.8 Assets and liabilities of subsidiaries, associates and
joint ventures 145
PAGE
CONTENTS I-12
3.8.9 Compound financial instruments 147
3.8.10 Designation of previously recognised financialinstruments 149
3.8.11 Fair value measurement of financial assets orfinancial liabilities at initial recognition 159
3.8.12 Decommissioning liabilities included in the costof property, plant and equipment 159
3.8.13 Financial assets or intangible assets accounted forin accordance with Appendix C Service ConcessionArrangements to Ind AS 115 163
3.8.14 Extinguishing financial liabilities with equityinstruments 172
3.8.15 Severe hyperinflation 173
3.8.16 Joint Ventures - Transition from proportionateconsolidation to the equity method 173
3.8.17 Joint operations - Transition from the equitymethod to accounting for assets and liabilities 174
3.8.18 Transition provisions in an entity’s separate financialstatements 177
3.8.19 Stripping cost in the production phase of a surfacemine 177
3.8.20 Designation of contracts to buy or sell a non-financial item 178
3.8.21 Revenue from contracts with customers 178
3.8.22 Non-current assets held for sale and discontinuedoperations 179
3.9 Business Combinations 182
3.9.1 Adjustments for first time adoption for businesscombinations to which Ind AS 103 is not appliedretrospectively 183
3.10 Miscellaneous Issues 189
3.10.1 Ind AS 2 Inventories 190
3.10.2 Ind AS 10 Events after the Reporting Period 192
3.10.3 Ind AS 19 Employee Benefits 194
3.10.4 Ind AS 37 Provisions, Contingent Assets andContingent Liabilities 195
3.10.5 Ind AS 41 Agriculture 198
3.10.6 Ind AS 24 Related Party Transactions 198
3.10.7 Ind AS 12 Income Taxes 198
PAGE
I-13 CONTENTS
3.10.8 Impairment of Assets 199
3.10.9 Statement of Changes in Equity 199
3.10.10 Consolidated Financial Statements 199
3.10.11 Borrowing costs 200
4
PRESENTATION OF FINANCIAL STATEMENTS
4.1 Objective and Scope of Ind AS 1 202
4.2 Various Components of Ind AS based Financial Statements 203
4.3 General Features of financial statements 204
4.4 Structure and Contents of Financial Statements 212
4.5 Presentation of Balance Sheet 213
4.5.1 Disclosure of details about equity share capital andreserves 217
4.5.2 Application of current non-current classification 219
4.5.3 Disclosure of age of various assets and liabilities 220
4.6 Current and Non-current Classifications 220
4.6.1 Current Assets 220
4.6.2 Operating cycle 224
4.6.3 Current Liabilities 236
4.7 Statement of Profit and Loss 242
4.7.1 Presentation of expenses 244
4.7.2 Minimum Information to be presented in theStatement of Income 245
4.7.3 Information to be presented in the Statement ofProfit and Loss or in the notes 246
4.8 Other Comprehensive Income 248
4.8.1 Reclassification adjustment 249
4.9 Statement of Changes in Equity 258
4.10 Statement of Cash Flows 263
4.11 Notes to Accounts 263
4.11.1 Disclosure of accounting policies 264
4.11.2 Sources of Estimation of Uncertainty 266
4.11.3 Capital Disclosures 272
4.11.4 Disclosure Capital Management 273
PAGE
CONTENTS I-14
4.11.5 Puttable financial instruments classified as equity 274
4.11.6 Other disclosures 274
5
STATEMENT OF CASH FLOWS
5.1 Importance of Cash Flow Reporting 276
5.2 Presentation of Statement of Cash Flow 277
5.3 Cash and Cash Equivalents 280
5.3.1 Investments in money market mutual funds 283
5.3.2 Restricted cash 283
5.3.3 Compensating balances 284
5.3.4 Bank Overdraft 284
5.3.5 Cash balance in foreign currency 284
5.3.6 Repatriation restriction 285
5.4 Components of Cash and Cash Equivalents 285
5.5 Cash flows from operating activities 286
5.5.1 Direct method 288
5.5.2 Indirect Method 289
5.5.3 Cash Flows Classification of Interest and Dividend 292
5.5.4 Cash flow classification of taxes on income 293
5.6 Cash Flows from Investment activities 294
5.7 Cash flows from financing activities 300
5.8 Net presentation of cash flows 302
5.9 Foreign currency cash flows 303
5.10 Investments in subsidiaries, associates and joint venture 304
5.10.1 Changes in ownership interests in subsidiaries andother businesses 304
5.11 Consolidated Statement of Cash Flows 316
5.12 Disclosures 337
6
EARNINGS PER SHARE
6.1 Introduction 339
PAGE
I-15 CONTENTS
6.1.1 Difference with AS 20 Earnings Per Share 340
6.1.2 Difference with IAS 33 Earnings Per Share 341
6.1.3 Scope of Ind AS 33 341
6.1.4 Presentation of earnings per share 342
6.2 Measurement of Basic Earning Per Share 342
6.2.1 Earnings available to ordinary holders 343
6.2.2 Computation of weighted average ordinary shares 346
6.3 Diluted Earnings Per Share 350
6.3.1 Earning Adjustment 351
6.3.2 Adjustment to shares 352
6.3.3 Options, Warrants and their equivalents 359
6.3.4 Share based payment 367
6.3.5 Purchased options 369
6.3.6 Written put options 369
6.3.7 Potential ordinary shares of subsidiary, jointventure and associate 370
6.3.8 Contingently issuable shares 372
6.4 Retrospective adjustments 378
6.4.1 Bonus issue 378
6.4.2 Right Issue 379
6.4.3 Share consolidation 380
6.5 Special issues in preference shares 382
6.5.1 Increasing rate preference shares 382
6.5.2 Premium or discount on repurchase of preferenceshares 384
6.5.3 Induced conversion of preference shares 386
6.6 Disclosures 386
7
OPERATING SEGMENTS
7.1 Introduction 3927.2 Applicability of Ind AS 108 3967.3 Meaning of Operating Segment 397
7.3.1 Cost centre as operating segment 398
PAGE
CONTENTS I-16
7.3.2 Chief Operating Decision Maker (CODM) 3997.3.3 Matrix structure 4037.3.4 Meaning of expresison ‘operating results are
regularly reviewed’ 4047.3.5 Availability of discrete financial information 4057.3.6 Interests in Joint Arrangements as operating
segment 4057.3.7 Associate as operating segment 4067.3.8 Discontinued operations as operating segment 406
7.4 Reportable segments 4087.4.1 Aggregation Criteria 4087.4.2 Quantitative thresholds 4087.4.3 External revenue thresholds 4147.4.4 Miscellaneous issues 415
7.5 Disclosures 4157.5.1 General Information 4167.5.2 Information about profit or loss, assets and liabilities 4177.5.3 Measurement bases 4187.5.4 Reconciliations 4217.5.5 Restatement of previous years segment information 421
7.6 Entity-wide disclosures 422
7.7 Corporate Segment Disclosures 424
7.8 First Time Adoption of Ind AS 108 429
8
RELATED PARTY DISCLOSURES
8.1 Introduction 431
8.2 Meaning of related party as per Ind AS 24 432
8.3 Who are not ‘related parties’ ? 444
8.4 Related Party Transactions 445
8.5 Related Party Disclosures 446
8.6 Government related entities 452
ANNEX 8.1 : Related party transactions as per theCompanies Act, 2013 455
PAGE
I-17 CONTENTS
9
CONSOLIDATED FINANCIAL STATEMENTS
9.1 Introduction 461
9.1.1 Objectives of Ind AS 110 461
9.1.2 Scope of Ind AS 110 462
9.1.3 Consolidation requirements under the CompaniesAct, 2013 464
9.2 Meaning of Control 465
9.2.1 Purpose and design of an investee 466
9.2.2 Relevant activities 467
9.2.3 Power over the investee 468
9.2.4 Rights that give an investor power over an investee 471
9.2.5 Substantive rights 473
9.2.6 Protective Rights 475
9.2.7 Franchise agreement 475
9.2.8 Voting rights 476
9.2.9 Power without a majority voting right 476
9.2.10 Potential voting rights 479
9.3 Variable Returns 480
9.4 Link between power and return 481
9.4.1 Scope of decision making authority 482
9.4.2 Rights held by other parties 482
9.4.3 Remuneration 482
9.4.4 Exposure to variability of returns from other interests 483
9.4.5 Relationship with other parties 484
9.4.6 Control of specified assets 485
9.4.7 Continuous assessment 486
9.5 Consolidation 486
9.5.1 Consolidation procedures 486
9.5.2 Uniform accounting policies 506
9.5.3 Measurement 506
9.5.4 Potential voting rights 507
9.5.5 Reporting date 507
PAGE
CONTENTS I-18
9.5.6 Change in non-controlling interests 507
9.5.7 Loss of control 510
9.6 Consolidation of foreign subsidiary 513
9.7 Investment entity 521
9.7.1 Business Purpose 522
9.7.2 Earnings for investments 523
9.7.3 Fair value measurement 524
9.7.4 Typical characteristics 525
9.7.5 Accounting for change in investment entity status 526
ANNEX 9.1 : Consolidation requirements under the CompaniesAct, 2013 527
10
JOINT ARRANGEMENTS
10.1 Introduction 533
10.1.1 Objective and scope of Ind AS 111 534
10.2 Meaning of Joint Arrangement 534
10.2.1 Joint control 535
10.3 Classification of Joint Arrangements 541
10.4 Financial Statements of Joint Operator 548
10.4.1 Application of Ind AS 103 Business combination 550
10.4.2 Accounting for sales or contribution of assets to ajoint operation 552
10.4.3 Accounting for purchases of assets from a jointoperation 552
10.4.4 Accounting parties who are not joint operator 552
10.5 Accounting for Joint Ventures 552
10.5.1 Accounting for interest by other parties who dohave joint control 553
11
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
11.1 Introduction 555
PAGE
I-19 CONTENTS
11.1.1 Requirements of the Companies Act, 2013 556
11.2 Meaning of associate under Ind AS 102 559
11.2.1 Significant influence 559
11.3 Equity method accounting 562
11.3.1 Exclusions from equity method accounting 565
11.3.2 Equity method procedures 566
11.4 Impairment loss 574
11.5 Discontinuing the use of the equity method 576
11.6 Changes on ownership status 585
11.7 Classification as held for sale 585
11.8 Disclosures 586
11.8.1 Disclosures as per the Companies Act, 2013 592
12
DISCLOSURE OF INTEREST IN OTHER ENTITIES
12.1 Introduction 597
12.1.1 Objectives of Ind AS 112 598
12.1.2 Aggregated disclosures 599
12.2 Scope of Ind AS 112 600
12.3 Disclosure of significant judgments and assumptions 601
12.4 Disclosure of investment entity status 601
12.5 Disclosure of interest in subsidiaries 603
12.5.1 Disclosure of different reporting period of thesubsidiary 603
12.5.2 Information about subsidiary and non-controllinginterest 603
12.5.3 Nature and extent of significant restrictions 605
12.5.4 Interests in unconsolidated subsidiaries 606
12.6 Disclosures of Interests in Joint Arrangements andAssociates 608
12.7 Interests in unconsolidated structured entities 611
12.7.1 Nature of interest 616
12.7.2 Nature of risk 616
PAGE
CONTENTS I-20
13
SEPARATE FINANCIAL STATEMENTS
13.1 Introduction 631
13.1.1 Applicability of Ind AS 27 632
13.1.2 Cases of exemption from consolidation 633
13.1.3 Cases of exemption from equity method accounting 633
13.2 Measurement principles 634
13.3 Applicability of Ind AS 27 to investment entities 635
13.4 Investments in subsidiaries, associates or joint venturesclassified as held for sale or disposal group 637
13.5 Accounting for Dividends 639
13.6 Re-organisation of an entity that holds investments insubsidiaries, associates and joint ventures 640
13.7 Disclosures 641
14
INTERIM FINANCIAL REPORTING
14.1 Introduction 644
14.1.1 Objective and scope of Ind AS 34 644
14.2 Interim period and Interim Financial Report 645
14.2.1 Components of Interim Financial Report (IFR) 645
14.2.2 Comparatives of Interim Financial Report 647
14.3 Materiality 650
14.4 Significant events and transactions 650
14.5 Recognition and Measurement 653
14.5.1 Accounting Policies 654
14.5.2 Application of Recognition and Measurementprinciples of IFR 658
14.5.3 Estimates 663
14.5.4 Restatement of previously reported interim periods 664
14.6 Interim Financial Reporting and Impairment 664
PAGE
I-21 CONTENTS
15
FINANCIAL REPORTING IN HYPERINFLATIONARYECONOMIES
15.1 Introduction 667
15.1.1 Scope of Ind AS 29 667
15.1.2 Meaning of Hyperinflationary economy 667
15.2 Restatement of Financial Statements 668
15.3 Economy ceases as hyperinflationary economy 676
15.4 Applying the Restatement Approach under Ind AS 29 676
15.5 Disclosure of Basis of Preparation of Financial Statements 680
15.6 First Time Adoption of Ind AS 29 685
ANNEX 15.1 : Case Analysis : Accounting for Hyperinflation inVenezuela 686
16
ACCOUNTING POLICIES, CHANGES IN ACCOUNTINGESTIMATES AND ERRORS
16.1 Introduction 693
16.2 Accounting Policies 696
16.2.1 Selection of Accounting Policies 697
16.3 Changes in Accounting Policies 698
16.3.1 Applying change in accounting policies 699
16.3.2 Disclosures relating to change in accountingpolicies 704
16.4 Prior Period Errors 706
16.4.1 Disclosures relating to prior period errors 710
16.5 Meaning of impracticability 710
16.6 Change in Accounting Estimates 711
16.6.1 Prospective application of change in accountingestimate 713
16.6.2 Disclosures of Change in Accounting Estimates 714
ANNEX 16.1 : Accounting Policies of selected IFRSs compliantcompany - Lafarge 2013 715
PAGE
CONTENTS I-22
17
EVENTS AFTER THE REPORTING PERIOD
17.1 Objective and Scope of Ind AS 10 745
17.2 Meaning of the term events after the reporting period 745
17.2.1 Adjusting and Non-adjusting Events 747
17.3 Examples of adjusting events 748
17.4 Examples of non-adjusting events 754
17.5 Dividend declared after the reporting period 756
17.6 Restriction on adoption of Going Concern basis 757
17.7 Disclosures 758
17.8 Distribution of Non-cash Assets to Owners 759
17.8.1 Timing of recognition of dividend payable 760
17.8.2 Measurement of dividend in the form of non-cashasset 760
17.8.3 Accounting entries 761
17.8.4 Presentation and Disclosures 763
18
FAIR VALUE MEASUREMENT
18.1 Introduction 766
18.1.1 Objectives and scope of Ind AS 113 767
18.2 Meaning of fair value 768
18.2.1 The asset or liability 768
18.2.2 The Transaction 769
18.2.3 Market participants 774
18.2.4 The price 775
18.3 Application to non-financial assets 775
18.3.1 Valuation premise 776
18.4 General principles of measuring fair value of liabilities 778
18.4.1 Liability or equity instrument is held by otherparties as asset 778
PAGE
I-23 CONTENTS
18.4.2 Liability or equity instrument is not held by otherparties as asset 779
18.4.3 Non-performance risk 77918.4.4 Restriction on transfer 78118.4.5 Fair value of liability with demand feature 78118.4.6 Application of financial assets and financial liabilities
with offsetting positions in market risks or counter-party credit risk 782
18.5 Fair value at Initial Recognition 78418.6 Valuation Techniques 787
18.6.1 Inputs to the valuation techniques 79218.6.2 Input based on bid ask spread 79318.6.3 Fair value hierarchy 79318.6.4 Level 1 Inputs 79518.6.5 Level 2 Inputs 79718.6.6 Level 3 Inputs 79918.6.7 Measuring fair value when the volume or level of
activity for an asset or liability has significantlydecreased 800
18.6.8 Identifying transactions that are not orderly 80118.6.9 Using quoted prices provided by third parties 802
18.7 Application of present value technique 80218.7.1 Risk and uncertainty 80318.7.2 Discount Rate Adjustment Technique 80418.7.3 Expected Present Value Technique 80518.7.4 Applying present value techniques to liabilities and
an entity’s own equity instruments not held by otherparties as assets 807
18.8 Valuation of unquoted Equity Instruments 81018.8.1 Transaction price paid for an identical instrument
of the investee 81318.8.2 Comparable company valuation multiples 81418.8.3 Income approach 82318.8.4 Adjusted net asset method 826
18.9 Disclosures 82618.9.1 Classification of assets and liabilities for fair value
disclosure 83118.9.2 Policies determining the timing of transfers 831
PAGE
CONTENTS I-24
19
REVENUE FROM CONTRACTS WITH CUSTOMERS
19.1 Introduction 834
SECTION I
GENERAL PRINCIPLES OF ACCOUNTINGFOR CONTRACTS WITH CUSTOMERS
19.2 Scope of Ind AS 115 836
19.2.1 Contracts partially within scope of Ind AS 115 837
19.3 Identifying contracts 841
19.3.1 Nature of contract 841
19.3.2 Combination of contracts 842
19.3.3 Contract modification 843
19.4 Collectibility of the consideration 850
19.5 Identifying performance obligations 852
19.5.1 Distinct goods or services 853
19.6 Satisfaction of performance obligation 857
19.6.1 Performance obligation satisfied over time 858
19.6.2 Performance obligation satisfied at a point in time 861
19.6.3 Customer’s acceptance 862
19.6.4 Measuring progress 863
19.7 Transaction price 866
19.7.1 Variable consideration 867
19.7.2 Financing components 870
19.7.3 Non-cash consideration 875
19.7.4 Consideration payable to a customer 877
19.8 Allocation of transaction price 878
19.8.1 Allocation of variable consideration 882
19.9 Contract costs 884
19.9.1 Incremental costs incurred for obtaining a contract 884
19.9.2 Costs to fulfil a contract 885
19.9.3 Amortisation of contract asset 887
19.9.4 Impairment of contract asset 887
PAGE
I-25 CONTENTS
19.10 Presentation 888
19.11 Disclosures 890
19.11.1 Disaggregation of revenue 895
19.11.2 Significant judgments 897
19.11.3 Disclosures assets recognised from costs to obtainor fulfil a contract with customers 898
SECTION II
SPECIAL TRANSACTIONS
19.12 Special issues in revenue recognition 899
19.12.1 Sale with a right of return 900
19.12.2 Warranties 902
19.12.3 Principal versus agent consideration 904
19.12.4 Option for additional goods 904
19.12.5 Unexercised rights 906
19.12.6 Non-refundable upfront fees 906
19.12.7 Licensing 907
19.12.8 Repurchase agreements 908
19.12.9 Consignment arrangements 910
19.12.10 Bill and hold arrangement 911
19.12.11 Construction contracts 912
SECTION III
SERVICE CONCESSION ARRANGEMENTS
19.13 Introduction 920
19.14 Scope of service concession arrangements 922
19.14.1 Control over the price 922
19.14.2 Retention of significant residual interest 923
19.14.3 Meaning of control 923
19.14.4 Features of service concession arrangement 923
19.15 Accounting for service concession arrangement 925
19.16 Disclosures 935
19.17 Requirement of Schedule II of the Companies Act, 2013 935
PAGE
CONTENTS I-26
20
INVENTORIES
20.1 Introduction 94020.1.1 Scope of Ind AS 2 940
20.2 Meaning of Inventories 94220.3 Cost of Inventories 944
20.3.1 Cost of purchases 94520.3.2 Cost of conversion 94920.3.3 Costing main products and by-products 95120.3.4 Other costs 95520.3.5 Cost of agricultural produce harvested from
biological assets 95620.3.6 Acquisition of inventories on defer payment basis 956
20.4 Determination of Net Realisable Value 95820.4.1 Circumstances when inventories are written down
to net realisable value 95820.4.2 Procedures for writing down inventories below
the cost 96020.4.3 Reversal of write down 961
20.5 Recognition of Expense 96120.6 Disclosures 961
20.6.1 Illustrative disclosures 962
21
EMPLOYEE BENEFITS
21.1 Meaning and Scope 96421.2 Various Categories of Employee Benefits 96521.3 Short term employee benefits 971
21.3.1 Short term compensated absences 97121.3.2 Profit Sharing and Bonus Plans 97521.3.3 Disclosures for short term employee benefits 975
21.4 Post-employment Benefits 97621.4.1 Accounting for defined contribution plans 976
PAGE
I-27 CONTENTS
21.5 Accounting for defined benefit plans 97821.5.1 Actuarial Valuation Method 98321.5.2 Planned Assets 98421.5.3 Asset ceiling 98521.5.4 Net interest on the net defined benefit liability (asset) 98521.5.5 Actuarial assumptions 99321.5.6 Past Service Cost 99821.5.7 Reimbursements 100621.5.8 Settlement 100621.5.9 Contribution from employees or third parties 100821.5.10 The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their Interaction 100921.5.11 Presentation 1013
21.6 Other Long Term Employee Benefits 103221.7 Termination Benefits 103621.8 Multi-employer plan, state plan and insurance policy 1039
22
BORROWING COSTS
22.1 Introduction 104422.2 Core principle of Ind AS 23 104522.3 Scope of Ind AS 23 104522.4 Meaning of borrowing cost 1045
22.4.1 Exchange difference treated as finance cost 105022.5 Qualifying Assets 105122.6 Recognition Principles 105222.7 Issues in Capitalisation Borrowing Costs 1053
22.7.1 Linking borrowing costs relating to generalborrowings to qualifying assets 1055
22.7.2 Commencement of Capitalisation 105722.7.3 Suspension of capitalisation of borrowing costs 105822.7.4 Cessation of capitalisation of borrowing costs 105822.7.5 Capitalisation of borrowing costs and Impairment
testing 105922.8 Disclosures 1059
PAGEPAGE
CONTENTS I-28
23
INCOME TAXES
23.1 Introduction 1060
23.2 Scope of Ind AS 12 1061
23.3 Important definitions 1062
23.4 Tax base 1063
23.5 Temporary differences 1066
23.6 Deferred tax assets and deferred tax liabilities 1068
23.7 Deferred tax expense and deferred tax income 1070
23.8 Recognition Principles 1076
23.9 Investment property 1076
23.10 Employee benefit provisions 1078
23.11 Provision for product warranty 1078
23.12 Assets carried at fair value 1080
23.13 Financial Liabilities measured at amortised cost 1084
23.14 Financial asset carried at fair value through othercomprehensive income 1085
23.15 Research costs 1086
23.16 Business Combination 1087
23.17 Reassessment of unrecognised deferred tax asset 1090
23.18 Unused tax losses and tax credits 1090
23.19 Investments in Subsidiaries, Branches, Associates andinterest in Joint Ventures 1091
23.20 Presentation 1092
23.21 Disclosures 1093
23.22 Income Taxes - Changes in the Tax Status of an Enterpriseor its Shareholders 1102
24
PROPERTY, PLANT AND EQUIPMENT
24.1 Introduction 1106
24.1.1 Scope of Ind AS 16 1106
PAGEPAGE
I-29 CONTENTS
24.2 Initial Recognition 1107
24.2.1 Measurement at initial recognition 1108
24.2.2 Meaning of costs 1108
24.2.3 Component-wise recognition of PPE 1109
24.2.4 Cost of self-constructed asset 1115
24.2.5 Interest on defer payment 1118
24.2.6 Inspection costs 1119
24.2.7 Capitalisation of decommissioning expenses 1119
24.2.8 Exchange of assets 1122
24.3 Subsequent Measurement 1122
24.3.1 Subsequent costs 1123
24.3.2 Application of revaluation model 1124
24.4 Depreciation 1126
24.4.1 Commencement and cessation of depreciation 1127
24.4.2 Residual value 1128
24.4.3 Useful life 1128
24.5 Derecognition of PPE 1130
24.5.1 Gain or loss arising from derecognition of PPE 1132
24.6 Compensation for impairment loss 1132
24.7 Restored PPE 1132
24.8 Disclosures 1133
24.9 Stripping Costs in the Production Phase of a Surface Mine 1135
ANNEX 24.1 : Requirements for depreciation charge under theCompanies Act, 2013 1142
ANNEX 24.2 : Text of the Schedule II to the Companies Act, 2013 1148
ANNEX 24.3 : Componentisation of Assets 1156
25
DECOMMISSIONING, RESTORATION AND SIMILARLIABILITIES
25.1 Introduction 1158
25.1.1 Decommissioning and site restoration funds 1159
25.2 Initial recognition of decommissioning and site restorationliability 1160
PAGE
CONTENTS I-30
25.2.1 Issues in Estimation of Decommissioning Costs 1161
25.3 Change in Decommissioning and Site Restoration Liability 1165
25.3.1 Accounting policy under cost model 1166
25.3.2 Accounting Policy under revaluation model 1166
25.4 Rights to Interests arising from Decommissioning, Restora-tion and Environmental Rehabilitation Funds 1174
26
INTANGIBLE ASSETS
26.1 Objective and Scope of Ind AS 38 1180
26.1.1 Intangible assets within the scope of other Ind ASs 1181
26.1.2 Justification of scope exception 1182
26.2 Meaning of Intangible Asset 1182
26.3 Recognition and Initial Measurement 1187
26.3.1 How should the ‘expected future economic benefits’criterion be tested ? 1187
26.4 Separately acquired intangible assets 1189
26.4.1 Cessation of recognition of costs in the carryingamount of an intangible asset 1191
26.4.2 Acquisition of intangible asset on defer paymentbasis 1191
26.5 Acquisition of Intangible Asset as Part of BusinessCombination 1193
26.5.1 Fair value measurement 1193
26.5.2 Subsequent expenditure on an acquired in-processresearch and development project 1195
26.6 Acquisition of intangible assets through Government Grants 1195
26.7 Exchange of Assets 1196
26.8 Internally Generated Goodwill and Other Intangible Assets 1198
26.9 Internally Developed Research and Development Activities 1199
26.9.1 Cost of internally generated intangible assets 1201
26.10 Recognition of an expense 1203
26.11 Measurement after Initial Recognition 1205
26.12 Useful Life 1208
26.12.1 Factors of useful life of an intangible asset 1208
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I-31 CONTENTS
26.12.2 Illustrative assessment of the useful life ofintangible assets 1210
26.13 Amortisation policy for intangibles having finite useful life 1214
26.13.1 Revenue based amortization policy 1216
26.14 Residual value 1219
26.15 Review of amortisation period and amortisation method 1219
26.16 Impairment loss 1220
26.17 Retirement and disposals 1221
26.18 Disclosures 1222
26.19 Nature of website costs 1231
26.19.1 Website costs which are not treated as IntangibleAssets 1231
26.19.2 Test for Intangible Assets 1232
26.19.3 Accounting Treatment 1233
27
INVESTMENT PROPERTY
27.1 Meaning and Scope of Investment Property 1236
27.2 Classification of Investment Property 1238
27.2.1 Partly owner-occupied property 1238
27.2.2 Ancillary services 1239
27.2.3 Property under construction 1240
27.2.4 Investment property leased out to holding orsubsidiary company 1241
27.2.5 Property taken under operating lease 1242
27.3 Measurement of investment property at initial recognition 1243
27.3.1 Initial cost of investment property held underfinance lease 1245
27.3.2 Investment property acquired under exchangetransaction 1246
27.4 Measurement after initial recognition 1247
27.4.1 Cost Model 1248
27.5 Disclosure of Fair value 1251
27.5.1 Inability to measure fair value reliably 1252
PAGE
CONTENTS I-32
27.5.2 Fair value of investment property underconstruction 1254
27.6 Transfers 1255
27.7 Disposals 1257
27.7.1 Impairment loss and compensation from thirdparties 1258
27.8 Disclosures 1258
28
AGRICULTURE
28.1 Introduction 1265
28.1.1 Scope of Ind AS 41 1265
28.2 Meaning of biological asset and agricultural produce 1266
28.3 Bearer Plant 1270
28.3.1 Accounting for bearer plant 1271
28.4 Recognition and measurement 1273
28.4.1 Exception to fair value measurement 1274
28.5 Measurement of fair value of biological assets 1275
28.5.1 Discounted cash flow approach 1278
28.6 Accounting for gain or loss 1281
28.7 Government grants 1282
28.8 Presentation 1282
28.9 Disclosures 1283
28.9.1 Illustrative Disclosures 1285
29
IMPAIRMENT OF ASSETS
29.1 Introduction 1290
29.1.1 Meaning impairment loss 1290
29.1.2 Scope of Ind AS 36 1295
29.2 Identifying an asset that may be impaired 1296
PAGE
I-33 CONTENTS
29.2.1 Testing impairment of certain intangible assets andgoodwill 1301
29.2.2 Impairment Indicators of investments in subsi-diaries, associates and joint ventures 1303
29.3 Measurement of recoverable amount 1305
29.3.1 Value in Use 1306
29.3.2 Fair value less costs of disposal 1316
29.3.3 Committed restructuring costs 1317
29.4 Measurement and recognition of impairment loss 1319
29.5 Cash Generating Unit (CGU) 1326
29.5.1 Various types of cash generating units 1329
29.5.2 Evaluation of independent cash flows in internaltransfers 1330
29.5.3 Allocation of Goodwill to Cash Generating Unit 1332
29.5.4 Testing cash generating with corporate assets forimpairment 1336
29.5.5 Testing cash-generating units with goodwill forimpairment 1337
29.5.6 Impairment loss of cash generating unit 1341
29.6 Reversal of Impairment Loss 1352
29.6.1 Reversal of impairment loss of cash generating unit 1360
29.7 Disclosures 1363
29.7.1 Disclosures of impairment loss and reversal ofimpairment loss by class of assets 1363
29.7.2 Segment-wise disclosure of impairment loss orreversal of impairment loss 1364
29.7.3 Disclosures regarding material impairment lossevents and reversals 1364
29.7.4 Disclosure of unallocated goodwill 1365
29.7.5 Disclosures in respect of CGUs having significantamount of goodwill or intangible assets havingindefinite useful lives 1365
29.7.6 Disclosures in respect of CGUs having insignificantamount of goodwill or intangible assets havingindefinite useful lives 1369
PAGE
CONTENTS I-34
30
LEASES
30.1 Introduction 1374
30.1.1 Applicability 1375
30.2 Terms Defined 1376
30.3 Lease Classification 1379
30.3.1 Meaning of Lease terms 1379
30.3.2 Finance Lease Situations 1387
30.3.3 Lease classification of land and building 1390
30.4 Accounting for finance lease 1391
30.4.1 Finance Lease Accounting in the Books of Lessee 1391
30.4.2 Accounting for Finance Lease in the books of lessor 1399
30.4.3 Accounting for finance lease in the books ofmanufacturer or dealer lessor 1401
30.5 Accounting for Operating Lease 1403
30.5.1 Accounting for operating lease by the lessee 1408
30.6 Sale and Leaseback 1412
30.6.1 Treatment of sale and leaseback transaction ofoperating lease type? 1414
30.7 Illustrative Disclosures 1415
30.8 Operating lease Incentives 1417
30.9 Evaluating the Substance of Transactions Involving theLegal Form of a Lease 1418
31
DETERMINING WHETHER AN ARRANGEMENT CON-TAINS A LEASE
31.1 Introduction 1421
31.2 Evaluation of the Arrangement 1422
31.2.1 Specific asset test 1422
31.2.2 Right to use the asset 1424
31.3 Reassessment of the Arrangement 1426
PAGE
I-35 CONTENTS
31.4 Split Accounting 1427
31.5 Service Concession Arrangement and Arrangement treatedas Lease 1428
31.6 A UK Case Study 1431
32
EXPLORATION FOR AND EVALUATION OF MINERALRESOURCES
32.1 Introduction 1441
32.1.1 Successful Efforts Method and Full Cost Method 1442
32.1.2 Exploration and evaluation expenses and assets 1443
32.1.3 Objectives and scope of Ind AS 106 1444
32.2 Measurement 1445
32.3 Impairment 1447
32.4 Disclosures 1447
32.4.1 Corporate Accounting Practices 1448
33
GOVERNMENTS GRANTS AND ASSISTANCE
33.1 Introduction 1454
33.1.1 Scope of Ind AS 20 1455
33.2 Meaning of Government grants 1456
33.2.1 Distinction between Government grants andgovernment assistance 1458
33.3 Recognition principle 1458
33.3.1 Capital and income approaches 1458
33.3.2 Recognition of grants in the Statement of Profitand Loss 1459
33.4 Grants as compensation for income or losses 1460
33.4.1 Presentation of grants related to income 1466
33.5 Grants related to assets 1467
33.5.1 Presentation of deferred grant 1469
PAGE
CONTENTS I-36
33.6 Government Grants — No Specific Relation to OperatingActivities 1470
33.7 Accounting for forgivable loan 1470
33.8 Below market interest rate loan 1471
33.9 Repayment of Government Grants 1473
33.10 Government Assistance 1474
33.11 Disclosures 1477
34
REGULATORY DEFERRAL ACCOUNTS
34.1 Introduction 1478
34.1.1 Indian situation 1479
34.2 Guidance Note of Accounting for Rate Regulated Activities 1480
34.3 First Time Adoption of Ind ASs by rate regulated entities 1489
34.4 Regulatory deferral account balances 1490
34.4.1 Definitions 1491
34.4.2 Temporary exemption from applying Paragraph 11of Ind AS 8 1491
34.4.3 Continuation of existing accounting policies 1492
34.4.4 Changes in accounting policies 1493
34.5 Application of other standards 1494
34.6 Presentation of regulatory deferral account balances 1498
34.7 Disclosures 1502
34.7.1 Corporate accounting practices 1503
35
FOREIGN CURRENCY TRANSLATION
35.1 Scope of Ind AS 21 1511
35.2 Identification of functional currency 1513
35.3 Net investments in foreign operations 1515
35.4 Monetary and non-monetary items 1516
35.5 Reporting foreign currency transactions 1516
PAGE
I-37 CONTENTS
35.5.1 Settlement of monetary items within the reportingperiod 1517
35.5.2 Translation of monetary items on the reporting date 1521
35.5.3 Non-monetary items 1528
35.5.4 Net investment in foreign operations which aremonetary items 1531
35.5.5 Books and records maintained in a currency otherthan functional currency 1532
35.5.6 Accounting for change in functional currency 1532
35.5.7 Long term foreign currency monetary items 1533
35.6 Use of a presentation currency other than the functionalcurrency 1533
35.6.1 Functional currency as currency of hyper-inflationary economies 1541
35.6.2 Disposal or partial disposal of a foreign operation 1542
35.7 Tax effects of all exchange differences 1543
35.8 Disclosures 1543
36
NON-CURRENT ASSETS HELD FOR SALE AND DISCON-TINUED OPERATIONS
36.1 Introduction 1548
36.2 Objectives and scope 1550
36.2.1 Scope of Ind AS 105 1551
36.3 Definitions 1552
36.3.1 Disposal Group 1553
36.3.2 Discontinued operations 1553
36.4 Classification 1554
36.4.1 Firm purchase commitment 1556
36.4.2 Extension of the timeframe to complete sale 1557
36.4.3 Events after the reporting period 1559
36.4.4 Assets acquired with intention of disposal 1559
36.4.5 Piecemeal disposal 1560
36.4.6 Non-current Assets or disposal group held fordistribution 1560
PAGE
CONTENTS I-38
36.5 Non-current Assets which are to be Abandoned 1561
36.6 Measurement of Non-current Assets or Disposal Group heldfor Sale 1562
36.7 Changes in Plan of Sale 1568
36.8 Presentation and disclosure 1569
36.8.1 Presentation of Discontinued Operations 1569
36.8.2 Presentation of Non-current Assets or disposalgroup held for Sale 1571
36.8.3 Additional Disclosures 1572
36.8.4 Corporate Disclosures 1572
36.9 Critics of IFRS 5 1577
37
SHARE-BASED PAYMENT
37.1 Introduction 1581
37.2 Share Based Payment Transactions 1582
37.2.1 Conflict Between IFRS 2 and IAS 32 1584
37.2.2 Fair value measurement 1584
37.2.3 Share based payment arising out of Ind AS 103Business Combinations 1585
37.3 Recognition of share-based payment 1586
37.3.1 Grant date 1587
37.4 Measurement of equity settled share-based transactions 1588
37.4.1 Unidentifiable goods and services 1590
37.5 Equity settled share-based payment transaction at fair valueof equity 1591
37.5.1 Vesting conditions 1592
37.5.2 Measurement fair value of equity instrumentsgranted 1598
37.5.3 Valuation technique 1604
37.6 Modifications, cancellation and settlement 1613
37.6.1 Cancellation and settlement 1617
37.7 Cash settled share-based payment transaction 1619
37.8 Share based payment transactions with cash alternatives 1621
PAGE
I-39 CONTENTS
37.9 Share-based payment transactions among group entities 1624
37.9.1 Share-based payment arrangements involving anentity’s own equity instruments 1626
37.9.2 Share-based payment arrangements involvingequity instruments of the parent 1627
37.9.3 Share-based payment arrangements involvingcash-settled payments to employees 1628
37.9.4 Transfer of employees between group entities 1629
37.10 Disclosures 1629
38
PROVISIONS, CONTINGENT LIABILITIES AND CONTIN-GENT ASSETS
38.1 Objective and Scope of Ind AS 37 1641
38.2 Recognition of provision 1642
38.3 Measurement of provision 1648
38.3.1 Discounting of provision 1659
38.4 Onerous Contracts 1660
38.5 Restructuring 1661
38.6 Contingent Liabilities 1664
38.7 Contingent Assets 1664
38.8 Disclosures 1665
38.9 Liabilities arising from participating in a specific market –Waste Electrical and Electronic Equipment 1677
38.10 Levies 1678
39
FINANCIAL INSTRUMENTS : PRESENTATION
39.1 Basic principles and scope 1683
39.2 Meaning of Financial Instruments 1684
39.2.1 Financial Asset 1685
39.2.2 Financial Liability 1686
39.2.3 Equity Instruments 1694
PAGE
CONTENTS I-40
39.3 Contract to be settled using entity’s own equity instruments 1697
39.3.1 Settlement Options 1705
39.4 Contractual obligation to pay cash or other financial asset 1705
39.5 Non-financial contracts 1707
39.6 Contingent Settlement provisions 1711
39.7 Deemed Equity 1712
39.7.1 Puttable Instruments classified as Equity 1712
39.7.2 Instruments containing obligation to pro ratadistribution in liquidation 1714
39.8 Preference shares 1718
39.9 Compound Financial Instruments 1720
39.9.1 Induced early conversion 1724
39.10 Derivative Instruments 1725
39.10.1 Purchased and Written Option to buy or sell ownequity shares 1728
39.10.2 Forward or futures contract to buy or sell ownequity 1738
39.11 Treasury shares 1742
39.12 Transaction costs of an equity issue 1743
39.13 Interest, dividend, gain and loss 1743
39.14 Offsetting Financial Assets and Liabilities 1744
39.14.1 Legally enforceable right to offset 1744
39.14.2 Settlement on net basis 1745
39.14.3 Simultaneous settlement 1746
39.14.4 Cases of inappropriate offsetting 1747
39.14.5 Master netting arrangement 1747
39.14.6 Synthetic instrument 1748
39.15 Compulsorily convertible debentures 1748
39.16 Treatment in Consolidated Financial Statements 1749
39.17 Illustrative Disclosures of Equity 1750
PAGE
I-41 CONTENTS
40
FINANCIAL INSTRUMENTS
SECTION I
SCOPE AND IMPORTANT TERMS
40.1 Background of IFRS 9 1760
40.2 Objective and Scope 1761
40.2.1 Applicability of Ind AS 109 to non-financial contracts 1764
40.2.2 Financial Guarantee 1766
40.3 Important definitions 1767
40.3.1 Amortised Cost 1767
40.3.2 Derivatives 1775
SECTION II
RECOGNITION, CLASSIFICATIONAND MEASUREMENT
40.4 Recognition of financial assets and financial liabilities 1782
40.5 Classification of financial assets 1784
40.5.1 Classification of financial assets at amortised cost 1785
40.5.2 Financial asset as at fair value through profit orloss 1786
40.5.3 Classifying financial assets at fair value throughother comprehensive income 1789
40.6 Business model 1790
40.6.1 Holding assets in order to collect cash flows 1794
40.6.2 Nature of contractual cash flows 1796
40.7 Classification of financial liabilities 1806
40.7.1 Liabilities designated as at fair value throughprofit or loss 1807
40.8 Measurement of financial assets and financial liabilities 1812
40.8.1 Initial measurement 1812
40.8.2 Subsequent measurement of financial assets 1815
40.8.3 Investment in unquoted equity shares 1821
PAGE
CONTENTS I-42
40.8.4 Subsequent measurement of financial liabilities 1821
40.9 Loan to Employees 1824
40.10 Foreign Currency Loan 1831
SECTION III
TRADE DATE AND SETTLEMENT DATE ACCOUNTING
40.11 Regular way purchase or sale 1835
40.12 Trade date and Settlement Date Accounting 1838
SECTION IV
DERECOGNITION
40.13 Derecognition of Financial Assets 1844
40.13.1 Derecognition by transfer 1845
40.13.2 Evaluation of transfer of risks and rewards ofownership 1846
40.13.3 Transfer of control 1847
40.13.4 Transfers that qualify derecognition 1849
40.14 Continuing involvement in the transferred assets 1859
40.15 Accounting for non-cash collateral 1866
40.16 Derecognition of financial liability 1867
40.17 Gains or losses on financial asset or financial liability 1869
SECTION V
RECLASSIFICATION
40.18 Reclassification 1871
SECTION VI
EMBEDDED DERIVATIVES
40.19 Meaning of embedded derivative 1878
40.20 Separation of Embedded Derivative from Host Contract 1879
40.20.1 Not Closely related economic characteristics andrisks 1880
40.20.2 Cases in which economic characteristics and risksare closely related 1883
PAGE
I-43 CONTENTS
40.20.3 Separation of non-option based embeddedderivatives 1885
40.20.4 Separation of option-based embedded derivatives 1888
40.20.5 Reassessment of embedded derivative 1889
40.21 Callable bonds 1890
SECTION VII
IMPAIRMENT OF FINANCIAL ASSETS
40.22 Applicability of impairment analysis 190140.23 Expected credit loss and loss allowance models 1902
40.23.1 Recognition of expected credit loss 190340.23.2 Purchased or originated credit impaired financial
assets 190340.23.3 Trade receivables, contract assets and lease
receivables 190340.24 Determining significant increase in credit risk 1904
40.24.1 Indicators of change in credit risk 1906
40.24.2 Collective and individual assessment 190840.24.3 Timing of recognizing life time expected credit
losses 191140.25 Measurement of expected credit losses 1913
40.25.1 Time value of money 1915
40.25.2 Collateral 1918
40.26 Modified assets 1919
40.27 Write off 1920
SECTION VIII
HEDGE ACCOUNTING
40.28 Objective of hedge accounting 1921
40.29 Designating Hedged Items 1922
40.29.1 Risk component 1926
40.29.2 Components of a nominal amount 1928
40.30 Hedging instruments 1931
40.30.1 Designating hedging instruments 1932
40.31 Qualifying hedging Criteria 1933
PAGE
CONTENTS I-44
40.31.1 Economic relationship between hedged item andhedging instrument 1934
40.31.2 Hedging effectiveness 1935
40.31.3 Hedging ratio 1935
40.31.4 Measurement of hedge ineffectiveness 1937
40.32 Accounting for qualifying hedging relationships 1938
40.32.1 Accounting for Fair Value Hedge 1940
40.32.2 Accounting for cash flow hedge 1941
40.32.3 Hedges of net investment in foreign operations 1944
40.32.4 Accounting for time value of option 1945
40.32.5 Accounting for the forward element 1946
40.32.6 Hedges of a group of items 1948
40.32.7 Option to designate a credit exposure 1949
40.33 Discontinuation of hedge accounting 1949
40.34 Rebalancing 1950
SECTION IX
EXTINGUISHING OF FINANCIAL LIABILITIESWITH EQUITY INSTRUMENT
40.35 Debt for equity swap 1951
40.35.1 Accounting of debt for equity swap 1952
41
FINANCIAL INSTRUMENTS : DISCLOSURES
41.1 Introduction 1956
41.1.1 Scope of Ind AS 107 1956
41.2 General Principles of Ind AS 107 Disclosures 1958
41.2.1 Summary of disclosure requirements 1961
41.3 Disclosure of significant accounting policies 1962
41.4 Disclosures of carrying amounts of financial assets andfinancial liabilities 1966
41.5 Credit risk disclosures of financial assets designated asat fair value through profit or loss 1967
41.6 Financial liabilities designated at fair value through profitor loss 1968
PAGE
I-45 CONTENTS
41.7 Disclosures regarding financial assets measured at fairvalue through other comprehensive income 1970
41.8 Reclassification disclosures 1971
41.9 Offsetting of financial assets and financial liabilities 1972
41.10 Collaterals 1977
41.11 Impairment allowance 1978
41.12 Compound financial instruments with multiple embeddedderivatives 1978
41.13 Defaults and Breaches 1978
41.14 Disclosures of profit and loss items 1978
41.15 Transfer of financial assets 1980
41.16 Hedge accounting disclosures 1985
41.17 Option to designate a credit exposure as measured at fairvalue through profit or loss 1990
41.18 Fair value disclosures 1991
41.19 Risk disclosures 1992
41.19.1 Credit risk disclosures 1994
41.19.2 Liquidity risk disclosures 1999
41.19.3 Market risk disclosures 2000
41.20 Illustrative Corporate Disclosures 2000
42
BUSINESS COMBINATIONS
42.1 Introduction 2043
42.1.1 Objective and scope of Ind AS 103 2044
42.2 Meaning of Business 2046
42.3 Business Combinations 2050
42.3.1 Parties in a business combination 2050
42.3.2 Structure of business combinations 2050
42.3.3 Acquisition method of accounting 2051
42.4 Identifying the acquirer 2052
42.4.1 Reverse acquisition 2054
42.4.2 Date of acquisition 2055
42.5 Recognition assets acquired and liabilities assumed 2056
PAGE
CONTENTS I-46
42.5.1 Identification of assets and liabilities 2059
42.5.2 Pre-existing relationships and future services 2061
42.5.3 Reacquired right 2064
42.5.4 Income taxes 2065
42.5.5 Employee benefits 2065
42.5.6 Indemnification assets 2065
42.5.7 Assets held for sale 2067
42.5.8 Acquiree’s previous goodwill 2067
42.5.9 Contingent liabilities 2067
42.6 Intangible Assets 2069
42.6.1 Recognition of intangible assets 2073
42.6.2 Intangible asset arising out of operating lease 2076
42.7 Share-based Payment Awards 2077
42.7.1 Equity-settled share-based payment transactionsof the acquirer 2082
42.8 Measurement principles 2082
42.8.1 Measurement of Goodwill 2083
42.8.2 Bargain purchase 2085
42.9 Purchase consideration 2088
42.9.1 Measurement period 2092
42.10 Contingent consideration 2095
42.10.1 Arrangements for contingent payments toemployees or selling shareholders 2102
42.11 Business combination in stages 2110
42.12 Business combination without the transfer of consideration 2112
42.13 Business combination by exchange of equity interest 2114
42.13.1 Special considerations in applying the acquisitionmethod to combinations of mutual entities 2114
42.14 Classification of assets acquired and liabilities assumed 2115
42.15 Expenses of Business Combination 2116
42.16 Accounting for Reverse Acquisition 2116
42.17 Disclosures 2119
42.18 Business Combinations of Entities under common control 2124
42.18.1 Pooling of Interest Method 2126
PAGE
I-47 CONTENTS
43
INSURANCE CONTRACTS
43.1 Introduction 2135
43.1.1 Scope of Ind AS 104 2136
43.2 Meaning of Insurance contracts 2138
43.2.1 Features of insurance contract 2139
43.2.2 Fixed-fee service contracts 2140
43.2.3 Distinction between insurance risk and other risks 2140
43.2.4 Consequences if a contract is not classified asan insurance contract 2147
43.2.5 Classification of insurance contracts in India 2148
43.3 Significant insurance risk 2149
43.3.1 Quantification of significant insurance risk 2152
43.4 Embedded Derivatives 2157
43.5 Unbundling of Deposits 2159
43.6 Temporary Exemptions from Other Ind ASs 2163
43.7 Liability Adequacy Test 2163
43.8 Change in accounting policies 2170
43.9 Insurance contracts acquired in a business acquisition orportfolio transfer 2175
43.10 Deferred Acquisition Costs 2176
43.10.1 Accounting treatment for deferred acquisition cost 2177
43.11 Discretionary Participation Features 2182
43.12 Discretionary participation features in financial instruments 2183
43.13 Disclosures 2186
SUBJECT INDEX 2189
PAGE
CONTENTS I-48
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