VIRTUAL COACHING CLASSES

ORGANISED BY BOS, ICAI

FINAL LEVEL
PAPER 1: PRESENTATION OF FINANCIAL
STATEMENTS

Faculty: CA Amit Jain

What is Ind AS ?

 Ind AS are set of accounting standards notified by Ministry of Corporate Affairs (MCA), converged
with International Financial Reporting Standards (IFRS), these accounting standards are formulated
by Accounting Standard Board (ASB) of Institute of Chartered Accountants of India (ICAI).

 Convergence means alignment of the standards of different standard setters with a certain rate of
compromise, by adopting the requirements of the standards either fully or partially.

 Indian Accounting Standards are almost similar to IFRS but with few carve outs so as to make them
suitable for Indian Environment.

 Ind AS are named and numbered in the same way as the corresponding International Financial
Reporting Standards (IFRS).
1. Preparation & presentation of financial statements

2. Components of financial statements

3. Requirements under Schedule III and Guidance note

4. Key disclosures

5. Key principles

6. Key Ind AS Schedule III vs IGAAP Schedule III

7. Carve out

ASB, THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA 3

Preparation & presentation of financial statements

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Preparation & presentation of financial statements

Objective :
 To prescribe basis for preparation of financial statements
 To ensure comparability with different entities

Schedule III Ind AS 1 Guidance note

– – –
Companies Act, Presentation of Issued by ICAI on Ind AS schedule III
2013 Financial statements of Companies Act, 2013
(General instructions)

MCA on April 06, 2016, amended Schedule III:

The amendment divides Schedule III into two parts i.e. Division I and II (also applicable for consolidated financial statements)
 Division I for AS compliant companies
 Division II for Ind AS compliant companies

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Preparation & presentation of financial statements

Section Descriptions
• Section 129  Company to prepare financial statements in accordance with AS notified under section 133
and as per Schedule III.
• Section 133  Central Government may prescribe the accounting standards as recommended by the
Institute of Chartered Accountants of India.

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Components of financial
statements

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Components of financial statements

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1
Balance sheet as at the beginning of
the earliest comparative period - Balance sheet
Restated

5 2
Significant accounting policies Components of Financial Statement of profit or loss and
and other explanatory notes other comprehensive income
Statements

4 3

Statement of cash flows Statement of changes in equity

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Illustrative disclosures in Ind AS Financial Statements

Financial statements Notes to the Financial statements

 Balance sheet  Significant accounting policies
 Statement of profit and loss  Critical estimates and judgements
 Statement of changes in equity
 Statement of cash flows

Notes to the balance sheet Notes to the statement of

 Property, plant and equipment profit and loss
 Investment properties
 Intangible assets  Revenue from operations
 Financial assets  (a) Other income
 Deferred tax assets (b) Other gains/(losses)
 Other non-current assets  (a) Cost of materials consumed
 Inventories  (b) Changes in inventories of WIP, stock-in-trade and finished
 Other current assets goods
 Equity share capital and other equity  Employee benefit expense
 Financial liabilities  Depreciation and amortisation
 Provisions  Other expenses
 Deferred tax liabilities  Finance costs
 Current tax liabilities  Income tax expense
 Other current liabilities

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Illustrative disclosures in Ind AS Financial Statements

Financial instruments and risk management Group information, acquisitions and disposals

 Fair value measurements  Segment information

 Financial risk management  Business combinations
 Capital management  Discontinued operation
 Related party transactions

First-time adoption of Ind AS Other information

 Contingent assets / liabilities

 Exemptions and exceptions availed
 Commitments
 Reconciliation of equity and total  Events occurring after the reporting period
comprehensive income  Share-based payments
 Notes to first-time adoption  Earnings per share
 Offsetting financial assets and liabilities
 Additional information required by Schedule III

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Key features of Financial Statements

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Key features of Financial Statements
Fair
Presentation
and
Compliance
Comparative with Ind AS
Going
Information
Concern
on

Frequency of Accrual Basis

Reporting of Accounting

Materiality
Consistency and
Aggregation

Offsetting

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1. Fair presentation and compliance with Ind AS

 Cannot rectify inappropriate

 An explicit and unreserved
accounting policies by
statement of compliance disclosure

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 2. Going Concern

► Ind AS 1 states that it is management’s responsibility to:

Assess the entity’s ability to Prepare financial statements

continue as a going concern on a going concern basis

Disclose material uncertainties

which may affect the going
concern concept.

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3. Accrual basis of accounting

► An entity shall prepare its financial statements, except for cash flow information, using the
accrual basis of accounting.
► When the accrual basis of accounting is used, an entity recognises items as assets, liabilities,
equity, income and expenses (the elements of financial statements) when they satisfy the
definitions and recognition criteria for those elements in the Framework.

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4. Materiality and aggregation

► An entity shall present separately each material class of similar items. An entity shall present
separately items of a dissimilar nature or function unless they are immaterial except when
required by law.
► If a line item is not individually material, it is aggregated with other items. An item that is not
sufficiently material to warrant separate presentation may warrant separate presentation in the
notes.
► An entity need not provide a specific disclosure required by an Ind AS if the information is not
material except when required by law.

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 5. Offsetting

► Ind AS 1 requires that an entity should not offset assets and liabilities or income and expenses, UNLESS required or
permitted by an Ind AS.
► Following are some of the examples :
# Particulars Remarks
1 Offsetting of deferred tax assets and liabilities  Allowed as per the principles of Ind AS 12.
2 Measuring inventories net of obsolescence  This is not offsetting.
allowances  This is the measurement principle governed by
Ind AS 2
3 Measuring trade receivables net of doubtful debts  This is not offsetting.
allowances  This is the measurement principle governed by
Ind AS 109.
4 Revenue net of any trade discounts and volume  Allowed as per the measurement principles of
rebates. Ind AS 115.

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 6. Consistency of presentation

1. An entity shall retain the presentation and classification of items in the financial statements from one period to the next
unless:
2. The consistency of presentation can be changed in the following scenario :
 Due to the significant change in the nature of the entity’s operations or a review of its financial statements, it is apparent that
another presentation or classification would be more appropriate having regard to the criteria for the selection and
application of accounting policies in Ind AS 8; or
 an Ind AS requires a change in presentation.

Example :
 A significant acquisition or disposal, or a review of the presentation of the financial statements, might suggest that the financial
statements need to be presented differently.
 An entity changes the presentation of its financial statements only if the changed presentation provides information that is reliable
and more relevant to users of the financial statements and the revised structure is likely to continue, so that comparability is not
impaired.
 When making such changes in presentation, an entity reclassifies its comparative information.

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7. Frequency of reporting

 Present a complete set of financial statements (including comparative information) at least

annually.
 If period is longer or shorter than one year, disclose, in addition to the period covered by the
financial statements:
 the reason for using a longer or shorter period, and
 the fact that amounts presented in the financial statements are not entirely comparable

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8. Comparative information

• Numerical comparative information

For all previous periods • Narrative comparative information

• Reclassify comparative amounts unless impracticable

Reclassification • Disclose nature, amount and reason for reclassification

• Reason for not classifying

If impracticable to reclassify • Nature of adjustments that would have been made if
amounts had been reclassified

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 9. Change in accounting policy, retrospective restatement or reclassification

Requirement for a third balance sheet

► Ind AS 1 requires an entity to include a balance sheet as at the beginning of the preceding period if the
reporting entity has:
 Retrospectively applied an accounting policy,
 Retrospectively restated items in the financial statements,
 Reclassified items in the financial statements,

► An additional balance sheet is required as at the beginning of the preceding period only if the change has a
material effect on that additional statement.

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Format of balance sheet and
statement of profit & loss

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Balance sheet – Assets – Schedule III
Particulars Note no. Current year Previous year
ASSETS
(1) Non-current assets
(a) Property, Plant and Equipment
(b) Capital work-in-progress
(c) Investment Property
(d) Goodwill
(e) Other Intangible assets
(f) Intangible assets under development
(g) Biological Assets other than bearer plants
(h) Financial Assets
(i) Investments
(ii) Trade receivable
(ii)
(iii)
Loans
Others(to be specified)
New nomenclature /
(i) Deferred tax assets (net)
(j) Other non-current assets
concepts
(2) Current assets
(a) Inventories
(b) Financial Assets
(i) Investments
(ii) Trade receivables
(iii) Cash and cash equivalents
(iv) Bank balances other than (iii) above
(v) Loans
(vi) Others (to be specified)
(c) Current Tax Assets (Net)
(d) Other current assets
TOTAL

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Balance sheet – Assets – Schedule III
Particulars Note no. Current year Previous year
EQUITY AND LIABILITIES
Equity
(a) Equity Share capital
(b) Other Equity
Liabilities
(1) Non-current liabilities
(a) Financial Liabilities New nomenclature /
(i) Borrowings
(ii) Trade payable concepts
(ii) Other financial liabilities (other than those specified in item (b), to be specified)
(b) Provisions
(c) Deferred tax liabilities (Net)
(d) Other non-current liabilities
(3) Current liabilities
(a) Financial Liabilities
(i) Borrowings
(ii) Trade payables
(A) Total outstanding dues of MSMEs
(B) Total outstanding dues of creditors other than MSMEs
(iii) Other financial liabilities
(b) Other current liabilities
(c) Provisions
(d) Current Tax Liabilities (Net)
TOTAL

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 Statement of profit and loss – Schedule III
Particulars Note no. Current year Previous year

I. Revenue from operations

Other income
Total revenue
II. Expenses:
Cost of materials consumed
Purchases of stock-in-trade Classification based
Changes in inventories of finished goods, stock-in-trade and work-in-progress
Employee benefits expense on nature of
Finance costs expenses
Depreciation and amortisation expense
Other expenses
Total expenses
III Profit before exceptional items and tax (I – II)
IV Exceptional items
V Profit before tax (III - IV)
VI Tax expense:
1. Current tax
2. Deferred tax

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 Statement of profit and loss – Schedule III
Particulars Note no. Current year Previous year

VII. Profit/ (loss) for the period from continuing operations (V - VI)

VIII. Profit/ (loss) from discontinued operations

IX. Tax expense of discontinued operations

X. Profit/ (loss) from discontinued operations (after tax) (VIII - IX)

XI. Profit/ (loss) for the period (VII + X)

XII. Other Comprehensive Income

A (i) Items that will not be reclassified to profit or loss
Separate section in statement of
(ii) Income tax relating to items that will not be reclassified to profit or loss
B (i) Items that will be reclassified to profit or loss
profit and loss
(ii) Income tax relating to items that will be reclassified to profit or loss

XIII. Total Comprehensive Income for the period (XI + XII)

XIV. Earnings per equity share (for continuing operation):

(1) Basic
(2) Diluted

XV. Earnings per equity share (for discontinued operation):

(1) Basic
(2) Diluted

XVI. Earnings per equity share(for discontinued & continuing operations):

(1) Basic
(2) Diluted

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 Other Comprehensive Income
Other comprehensive income
 Other comprehensive income comprises items of income and expense that are not recognised in profit or loss as required or
permitted by other Ind AS.
 Certain examples of items in Other Comprehensive Income.
OCI Items
To be reclassified to Profit or loss in subsequent periods Not to be reclassified to Profit or loss in subsequent periods

1. Gain or loss on hedge of a net investment 1. Re-measurement gains/ (losses) on defined benefit plans
2. Net movement on cash flow hedges 2. Revaluation of PPE and Intangibles
3. Net (loss)/gain on FVTOCI debt securities 3. Net (loss)/gain on FVTOCI equity Securities
4. Exchange differences on translation of foreign operations 4. Capital reserve (common control transaction)
5. Share of profit or loss in Associates and Joint ventures 5. Share of profit or loss in Associates and Joint ventures

 Current tax and deferred tax relating to the items recognised in OCI shall be recognised in OCI only.

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Requirements under Schedule III and Ind AS 1

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 Key considerations for preparation of financial statements
 Comparative information :
 Financial Statements shall contain the corresponding amounts (comparatives) for the immediately preceding reporting
period for all items shown in the Financial Statements including notes to the financial statements.

 Specific disclosures required by any Act :

 Where any Act or Regulation requires specific disclosures to be made in the standalone financial statements of a company,
the said disclosures shall be made in addition to those required under this Schedule.

 Materiality :
 Financial Statements shall disclose all ‘material’ items, i.e., the items if they could, individually or collectively, influence the
economic decisions that users make on the basis of the financial statements. Materiality depends on the size or nature
of the item or a combination of both, to be judged in the particular circumstances.

 Additional disclosure requirement :

 The disclosure requirements specified in this Schedule are in addition to and not in substitution of the disclosure
requirements specified in the Indian Accounting Standards.

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 Key considerations for preparation of financial statements

 Rounding off :

Turnover Rounding off

(i) Less than INR 100 Cr  To the nearest hundreds, thousands, lakhs or millions, or decimals thereof.
(ii) INR 100 Cr or more  To the nearest, lakhs, millions or crores, or decimals thereof.

Once a unit of measurement is used, it should be used uniformly in the Financial Statements.
 Specific disclosures to be made as per the requirement of any Act / Regulation.
 Cross-referencing to related information in notes to accounts.

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 Current and non-current assets

 An entity shall classify an asset as current when:

a) it expects to realise the asset, or intends to sell or consume it, in its normal operating cycle;
b) it holds the asset primarily for the purpose of trading;
c) it expects to realise the asset within twelve months after the reporting period; or
d) the asset is cash or a cash equivalent (as defined in Ind AS 7) unless the asset is restricted from being exchanged or
used to settle a liability for at least twelve months after the reporting period
An entity shall classify all other assets as non-current
Operating cycle

 The operating cycle of an entity is the time between the acquisition of assets for processing and their realisation in cash
or cash equivalents.
 Time between the acquisition of assets for processing and their realisation in cash or cash equivalents. When the
entity’s normal operating cycle is not clearly identifiable, it is assumed to be 12 months.
 Current assets include assets (such as inventories and trade receivables) that are sold, consumed or realised as part of
the normal operating cycle even when they are not expected to be realised within twelve months after the reporting
period.

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Current and non-current assets

 An entity shall classify a liability as current when:

a) it expects to settle the liability in its normal operating cycle;
b) it holds the liability primarily for the purpose of trading;
c) the liability is due to be settled within twelve months after the reporting period; or
d) it does not have an unconditional right to defer settlement of the liability for at least twelve months after the
reporting period.

An entity shall classify all other liabilities as non-current

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 Property, Plant and Equipment, Goodwill and Other Intangible Assets
Disclosure of Property Plant and Equipment, Goodwill and other intangible assets
Particulars Freehold Land Leasehold land Building Plant and Total Software Goodwill
equipment
Cost
At 1 April 2018 - - - - - - -
Additions during the year - - - - - - -
Disposals during the year - - - - - - -
At 31 March 2019 - - - - - - -
Additions during the year - - - - - - -
Disposals during the year - - - - - - -
At 31 March 2020 - - - - - - -
Depreciation
At 1 April 2018 - - - - - - -
Charge for the year - - - - - - -
Disposals during the year - - - - - - -
At 31 March 2019 - - - - - - -
Charge for the year - - - - - - -
Disposals during the year - - - - - - -
At 31 March 20 - - - - - - -
Net book value
At 1 April 2018 - - - - - - -
At 31 March 2019 - - - - - - -
At 31 March 2020 - - - - - - -

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Property, Plant and Equipment, Goodwill and Other Intangible Assets
 Reconciliation : Company can disclose the information regarding gross block of assets, accumulated depreciation and provision for
impairment under previous GAAP, as an additional information by way of a note forming part of the financial statements

 Land and building are presented as two separate classes of property, plant and equipment.

 Assets under lease shall be separately specified under each class of assets.

 Word “Property, Plant and Equipment” to be used instead of “Tangible Assets”.

 As per schedule III, Goodwill to be shown separately on the face of balance sheet and should not be treated as a part of intangible assets.

 As per Ind AS 101, Entity can elect to measure items of PPE / intangibles at the date of transition to Ind AS at:
 Fair value / revaluation as deemed cost or
 Previous GAAP carrying value as deemed cost
The deemed cost considered on the date of transition shall become the new ‘gross block’.

 Present value of Decommissioning cost will be part of respective asset, i.e. for assets for which there is asset retirement obligation.

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Leases
Leases
Inventories
Inventories
 Inventories shall be classified as:
Particulars Amount
Raw material XXXX
Work in progress XXXX
Finished goods XXXX
Stock-in-trade (in respect of goods acquired for trading) XXXX
Stores and spares XXXX
Other (specify nature) XXXX

Total XXXX

 Goods in transit shall be disclosed under relevant sub-head.

 Mode of valuation of each inventory shall be disclosed separately.

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Financial Assets
Investments
 Non current and current investments shall be Classification as:

Particulars Amount
Investment in equity shares (Quoted / unquoted) -

Investment in preference shares (Quoted / unquoted) -

Investment in government securities (Quoted / unquoted) -

Investment in mutual fund (Quoted / unquoted) -

Investment in debentures/bonds (Quoted / unquoted) -

Other investments (specify nature) (Quoted / unquoted) -

Total -

 Under each classification detail is to be given of bodies corporates that are: Investment in subsidiaries, associates, joint ventures and
structured entities.
 The following needs to be disclosed in case of Investments:
(a) Aggregate amount of quoted investments
(b) Aggregate amount of unquoted investments
(c) Aggregate amount of impairment in value of investments

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 Financial Assets
Trade Receivables
 Non-current/current trade Receivables, shall be sub-classified as:
Particulars Amount
Secured, considered good XXXX
Unsecured, considered good XXXX
Which have significant increase in credit risk

Credit impaired XXXX

Subtotal XXXX
Less: Allowance for bad and doubtful debts XXXX
Total XXXX
 Debt due by director or other officer to be disclosed separately.
 Ind AS Schedule III does not require presentation of trade receivables outstanding for a period exceeding six months from the date
they are due for payment.
 The amount of credit loss that is expected on that trade receivable will be disclosed as ‘doubtful’. Remaining amount shall be
disclosed as ‘good’.

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Financial Assets

Loans
 Non-current/current loans, shall be sub-classified as:
Particulars Amount
Security deposits XXXX

Loan to related parties XXXX

Other loans (specify nature) XXXX

Total XXXX

 Above shall be classified as secured, unsecured and doubtful.

 The amount of credit loss that is expected on that loan will be disclosed as ‘doubtful’.

Other financial assets

 Bank deposits with more than 12 months maturity should be classified under ‘Other Financial Assets’. The maturity should be
construed as remaining maturity of more than 12 months.

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 Financial Assets
Cash and cash equivalents
 Cash and cash equivalents will be sub-classified as:

Particulars Amount

Balance with banks

- in current accounts XXXX
- In EEFC accounts (Exchange earners foreign currency) XXXX
Deposit with original maturity of less than 3 months XXXX
Cash on hand XXXX
Total XXXX

 Following to be disclosed separately:

 Earmarked balance with bank
 Balance with bank held as margin money
 Repatriation restriction on cash and bank balance
 Bank balances other than cash and cash equivalents shall be disclosed separately on the face of the Balance Sheet.

 Bank overdraft will be included in borrowings. However, for cash flow purpose, same will form the part of cash and cash equivalents.

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Other Assets
Other assets (non financial)
 Other assets Non-current/current shall be sub-classified as:
Particulars Amount
Capital advances XXXX
Advances to related parties XXXX

Prepayments XXXX

Other advances (specify nature) XXXX

Total XXXX

 Capital advances will always be classified ‘non-current assets’.

 Advances (other than financial asset) are required to be classified under ‘other non-current/current assets’ which were previously being
classified under ‘Long term/Short term loans and advance’.
Tax related assets and liabilities
 Year wise assessment for tax assets or liabilities.

 If tax paid exceeds the amount of tax due for those periods, then such excess tax shall be recognised as an asset.

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 Equity - Statement of changes in equity
Unlike Indian GAAP, Ind AS 1 requires the presentation of Statement of changes in equity. The statement comprises of the following sections:
a. Equity share capital
Balance at the beginning of the reporting Changes in equity share capital during the Balance at the end of the reporting period
period year

b. Other equity
Format of other equity is as given below:
Particulars Share Equity Reserve and Surplus Debt Equity Effective Revaluation Forex Gain / Loss on Other Total
application component of instruments Instruments portion Surplus foreign items of
Capital Securities Other Retained
money compound through through of Cash operation OCI
Reserve Premium Reserves Earnings
pending financial OCI OCI Flow
Reserve
allotment instruments Hedges

Opening Balance

Profit / loss for the year

OCI
Total OCI
Adjustments :-
Transfer to retained
earnings
Others
Closing Balance

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Equity - Statement of changes in equity
 Equity Share Capital: For each class of equity share capital:
(a) Number and amount of shares authorised;
(b) Number of shares issued, subscribed and fully paid, and subscribed but not fully paid;
(c) Par value per share;
(d) Reconciliation of the number of shares outstanding at the beginning and at the end of the period;
(e) Rights, preferences and restrictions attaching to each class of shares including restrictions on the distribution of dividends and the
repayment of capital;
(f) Shares in respect of each class in the company held by its holding company or its ultimate holding company including shares held by
subsidiaries or associates of the holding company or the ultimate holding company in aggregate;
(g) Shares in the company held by each shareholder holding more than 5% shares specifying the number of shares held;
(h) Shares reserved for issue under options and contracts or commitments for the sale of shares or disinvestment, including the terms and
amounts;
(i) calls unpaid
(j) forfeited shares

 ‘Other Reserves’ shall be classified in the notes as-

(a) Capital Redemption Reserve;
(b) Debenture Redemption Reserve;
(c) Share Options Outstanding Account; and
(d) Others – Specify the nature and purpose of each reserve
 Debit balance of statement of profit and loss shall be shown as a negative figure under the head ‘retained earnings’.

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 Financial Liabilities
Borrowings
1. Non-current and current borrowing will be classified as:
Particulars Amount
Bonds and debentures XXXX
Term loan from banks and others XXXX
Deferred payment liabilities XXXX
Loan from related parties XXXX
Liability component of a compound financial instruments XXXX
Other loans (specify nature) XXXX
Total XXXX

 In case of long term borrowing terms of repayment of term loans and other loans shall be disclosed.
 Borrowings shall also include ‘Liability component of compound financial instruments’.
 Preference shares shall be classified as ‘Equity’ or ‘Liability’.
 Deferred payment liability includes for which payment is to be made on deferred credit terms. E.g. deferred payment for acquisition of Property, Plant
and Equipment, etc.
 Ind AS require an entity to disclose only those breaches made during the reporting period, which permitted the lender to demand accelerated repayment and,
were not remedied on or before the end of the reporting period.

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Financial Liabilities

Trade payables
 Non-current and current trade payables will be classified as:
Particulars Amount
1) Trade payable due to MSMED XXXX

2) Trade payable due to other than MSMED

- Due to related parties XXXX

- Due to others XXXX

Total XXXX

 Trade payables of non-current in nature are required to be disclosed separately on the face of the balance sheet under
head ‘Non-current liabilities’, sub head ‘Financial liabilities’.
 The Micro, Small and Medium Enterprises Development (MSMED) disclosure to be provided.

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 Financial Liabilities

Other financial liability

 Other financial liability Non-current and current will be classified as:
Particulars Amount
Current maturity of long term debt (Only current financial liability) XXXX
Interest accrued XXXX

Unpaid dividends XXXX

Unpaid matured deposits and interest accrued thereon XXXX
Unpaid matured debentures and interest accrued thereon XXXX
Others (specify nature) XXXX
Total XXXX

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 Provisions
Provisions
 Provisions non-current and current will be classified as:
Particulars Amount
Provision for employee benefits:
Provision for gratuity XXXX
Provision for compensated absence XXXX
Provision for cash settled share based payments XXXX
Other provisions:
Provision for warranty XXXX
Provision for decommissioning XXXX
Provision for litigations XXXX
Total XXXX

 Unconditional right to defer – compensated absence:

In case of accumulated leave outstanding, when employees has right to avail the leave at any time during the year the same needs to be
classified as “current” even though the same is measured as ‘other long-term employee benefit’ as per Ind AS-19 Employee Benefits.

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Deferred tax assets/liabilities
Deferred tax assets/liabilities
 Other liabilities non-current and current will be classified as:

Particulars Amount
Deferred tax assets relates to the following:
Provision for employee benefits XXXX
Carry forward tax loss and Unabsorbed depreciation XXXX
Provision for decommissioning XXXX
MAT Credit entitlement XXXX

Deferred tax liability relates to the following:

Property, plant and equipment XXXX
Fair valuation of mutual fund XXXX

Total deferred tax assets/(liabilities) (Net) XXXX

 MAT credit entitlement to be grouped with Deferred tax asset (net).

 Effective tax reconciliation need to be prepared.

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 Other liabilities
Other liabilities (non financial)
 Other liabilities non-current and current will be classified as:
Particulars Amount
Deferred revenue XXXX
Prepaid expenses XXXX
Deferred asset (discounted portion of security deposit paid) XXXX
Others (specify nature) XXXX
Total XXXX

 Others may include liabilities in the nature of statutory dues such as Withholding taxes, Service Tax, VAT, Excise Duty,
Goods and Services Tax (GST), etc.

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Revenue
Revenue from operations
 Revenue from operations will be classified as:
Particulars Amount
Sale of products XXXX
Sale of services XXXX
Other operating revenues XXXX
- Rental income XXXX
Total XXXX

 The term “other operating revenue” is not defined. This would include either its principal or ancillary revenue generating
activities, but which is not revenue arising from sale of products or rendering of services.
 Excise duty will be part of sale of products.

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Other income

Other income
 Other income will be classified as:
Particulars Amount
Interest income XXXX

Dividend income XXXX

Other non-operating income (net of expenses directly attributable to such income) XXXX

Total XXXX

 ‘Interest Income’ for financial assets measured at amortized cost and for financial assets measured at FVOCI, calculated
using effective interest method, should be presented in separate line items under Other Income’.

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Employee benefit expenses
Employee benefit expenses
 Employee benefit expenses will be classified as:
Particulars Amount
Salaries and wages XXXX
Contribution to provident and other funds XXXX
Share based payments to employees XXXX
Staff welfare expenses XXXX
Total XXXX

 Where a separate fund is maintained for Gratuity payouts, contribution to Gratuity fund should be disclosed under the sub-
head Contribution to provident and other funds.

 Penalties paid to the statutory authorities are not in the nature of ‘contribution’ and should not be part of ‘Contribution to
provident and other funds’.

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Finance costs
Finance costs
 Finance costs will be classified as:
Particulars Amount
Interest -

Dividend on redeemable preference shares -

Exchange differences regarded as an adjustment to borrowing cost -

Other borrowing cost (specific nature) -

Total -

 Interest on financial liabilities measured at amortized cost need to be calculated as per the effective interest method.
 Other includes unwinding of the discount on financial liabilities and provisions (provision for decommissioning liability).
 Finance charges on finance leases that are in the nature of interest expense.
 Net interest on net defined benefit liability which reflects the change in net defined benefit liability that arises from the passage of time.
 Dividend on preferences shares, whether redeemable or convertible, is of the nature of interest expense, only where there is no discretion of
the issuer over the payment of such dividends.

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 Other disclosures
Earning per shares
 Unlike Indian GAAP, Schedule III requires separate disclosure of the earning per share for continuing and
discontinuing operations.
Disclosure on account of materiality
 Any item of expenditure which exceed 1% of revenue from operation or Rs.1,000,000 to be disclosed by
notes.
Classification of financial assets and liabilities
 As per Ind AS 109 every financial asset will be classified and disclosed as 1) Amortised cost, 2) FVTPL or
3) FVTOCI.
 As per Ind AS 109 every financial liability will be classified and disclosed as 1. amortised cost, or 2. FVTPL

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 Other disclosures not required under Ind AS Schedule III

Unlike Non-Ind AS Schedule III, Ind AS Schedule III does not require following disclosures:
 Value of imports calculated on C.I.F basis by the company during the financial year in respect of:
I. Raw materials;
II. Components and spare parts;
III. Capital goods;

 Expenditure in foreign currency during the financial year on account of royalty, know-how, professional and
consultation fees, interest, and other matters;

 Total value if all imported raw materials, spare parts and components consumed during the financial year and the
total value of all indigenous raw materials, spare parts and components similarly consumed and the percentage of
the each of the total consumption.

 There is no concept of Prior period items and any retrospective application of accounting policy. Requires
restatement of comparative period.

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Key considerations for preparation of consolidated financial statements

► Split between ‘non-controlling interests’ and ‘owners’

► profit or loss
► other comprehensive income
► total comprehensive income
► statement of changes in equity

► Presentation of ‘non-controlling interests’ within equity in balance sheet

► separate from equity of ‘owners of the parent’

► Additional information

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Additional information - CFS
Share in total comprehensive
Net assets Share in profit or loss Share in OCI
income
Name of the entity of the group % of % of % of % of consolidated
consolidated INR consolidated INR consolidated INR total comprehensive INR
net assets profit or loss OCI income
Parent
Subsidiaries
(Indian and foreign subsidiary to be specified
separately)
NCI in all subsidiaries
Associates
(Indian and foreign associate to be specified
separately)
Joint ventures (JV)
(Indian and foreign JV to be specified
separately)

► All subsidiaries, associates and joint ventures (whether Indian or foreign) will be covered under consolidated financial statements.
► Disclosure shall be made for the subsidiaries or associates or joint ventures which have not been consolidated in the consolidated financial
statements along with the reasons.

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Breach of a material provision of long-term loan arrangement
Particulars
Case Classification
Borrower’ action Lender’s action
I Breach on or before balance sheet date  Lender demanded payment on or before balance sheet  Current
date
II  Lender demanded payment after balance sheet date  Current
but before approval of financial statements
III  Lender agreed not to demand payment on or before  Non-current
balance sheet date
IV  Lender agreed not to demand payment after balance  Non-current
sheet date but before approval of financial statements
V Breach on or before balance sheet date  Lender agreed to provide a grace period of atleast 12  Non-current
months from reporting date
VI Breach on or before balance sheet date  Lender agreed to provide a grace period of less than  Current
12 months from reporting date
VII Breach after balance sheet date but -  Non-current
before approval of financial statements
 Key Difference b/w –
Ind AS III vs Indian GAAP Schedule III

ASB, THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA 60

Key Ind AS Schedule III vs IGAAP Schedule III

Area Ind AS Schedule III IGAAP Schedule III

BS order  Order for Balance sheet is Assets to liability from  Order for Balance sheet is liability to Assets from Top to
Top to Bottom. Bottom.

Additional items  Items like financial assets, financial liabilities,  No such items exists in schedule III.
in BS investment property etc.

Cash and bank  Cash and cash equivalent and other bank balances  Cash and bank balances will be shown as a single line
to be shown as a separate heading in BS. item in BS.

OCI  Other comprehensive income to be shown as a  No such requirement.

part profit and loss.

SOCIE  Statement of changes in Equity as a separate  No such separate statement.

component of  Form a part of Reserve and surplus.
financial statement.

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Difference between Indian GAAP and Ind AS

ASB, THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA 62

GAAP Differences
Particulars Ind AS Indian GAAP
 Explicit  An enterprise shall make an explicit statement in the financial  No such requirement
Statement of statements of compliance with all the Indian Accounting Standards. exists.
Compliance
 Current and  Ind AS 1 requires presentation and provides criteria for classification  No such requirement
Non-current of Current / Non- Current assets / liabilities exists under AS.
Classification  However, Schedule III
provides the guidance on
 Inclusion of  As per Ind AS 1, an entity shall include certain comparative
the same.
Comparative information for understanding the current period’s financial
Information statements.
 Comparative  Ind AS 1 requires presentation of balance sheet as at the beginning of
Balance Sheets the earliest period when an entity applies an accounting policy
retrospectively or makes a retrospective restatement of items in the
financial statements, or when it reclassifies items in its financial
statements.
 Extraordinary  Ind AS 1 prohibits presentation of any item as ‘Extraordinary Item’ in  Presentation of
Items the statement of profit and loss or in the notes. Extraordinary Item is
allowed under Indian
GAAP.
GAAP Differences
Particulars Ind AS Indian GAAP
 Classification of  Ind AS 1 clarifies that long term loan arrangement need not be classified as  No such
Long -term Loan current on account of breach of a material provision, for which the lender requirement exists.
Arrangement has agreed to waive before the approval of financial statements for issue.
 Disclosure of  In respect of reclassification of items, Ind AS 1 requires disclosure of
Reclassified nature, amount and reason for reclassification in the notes to financial
Items statements.
 Statement of  Ind AS 1 requires the financial statements to include a Statement of
Changes in Changes in Equity to be shown as a separate statement, which, inter alia,
Equity includes reconciliation between opening and closing balance for each
component of equity.
 Statement of  Ind AS 1 requires that an entity shall present a single statement of profit
Other and loss, with profit or loss and other comprehensive income presented in
Comprehensive two sections. The sections shall be presented together, with the profit or
Income loss section presented first followed directly by the other comprehensive
income section.
 Classification of  Ind AS 1 requires classification of expenses to be presented based on  Same under Indian
Expenses nature of expenses. GAAP.
 Carve Out

ASB, THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA 65

Carve out

As per IFRS
 IAS 1 requires that in case of a loan liability, if any condition of the loan agreement which was
classified as non -current is breached on the reporting date, such loan liability should be
classified as current, even if the breach is rectified after the balance sheet date.

As per Ind AS
 Ind AS 1 clarifies that where there is a breach of a material provision of a long-term loan
arrangement on or before the end of the reporting period with the effect that the liability
becomes payable on demand on the reporting date, the entity does not classify the liability as
current, if the lender agreed, after the reporting period and before the approval of the financial
statements for issue, not to demand payment as a consequence of the breach
Case Studies

ASB, THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA 67

Reclassification

Facts
 A Ltd. has a loan with a 7-year term which was originally due for repayment in 2021.
 The loan is carried at amortised costs, including fees of INR 5 lacs, which is amortised to
statement of profit and loss over the period of time using the effective rate method.

Question
 If due to certain circumstances, the loan is reclassified to current, what would be the impact of
that classification on the un-amortised portion of fees?

Response
► Also to be reclassified
 Thank you

ASB, THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA 69