ind as implementation

IN

Dated

ND

d: 1th June

AS

2016

Mob

S IM

CA. ASbile 9990999281‐

MPL

SHWANI RASTOG‐ ashwani.rastogi

EM

GI [email protected]

MENNTATTIOON

MCACompstateof thwith

A notifipanies haments as eir financthe comp

cation daving a ne on 31st Mcial statemaratives fo

Mob

dated 1et worth oMarch, 20ments for or the per

CA. ASbile 9990999281‐

16.02.20of Rs. 500014) are reaccountiniods endin

SHWANI RASTOG‐ ashwani.rastogi

015

0 crores orequired tong periodsng 31st M


r more (aso comply ws beginninarch, 201

s per the with Ind Ang on or a16, or ther

standalonAS in the pafter 1st Areafter.

ne financipreparatioApril, 201

ial on 6,

MobCA. AS

bile 9990999281‐SHWANI RASTOG‐ ashwani.rastogi


CA. ASHWANI RASTOGI Mobile 9990999281‐ [email protected]

Deliverables in Ind AS regime

As part of Ind AS transition process, companies covered in first phase will have to prepare:

Opening Ind AS Balance sheet as at 1 April 2015. Equity reconciliation on 1 April 2015 & 31 Mar 2016. Income Reconciliation for the year ending 31 Mar 2016 Ind AS financial statements as at and for the year ending 31 Mar 2016 for

comparatives. Ind AS Financial statements as at and for year ending 31 Mar 2017.

Fobes news:- Indian corporates are gearing up to understand and implement the new accounting framework called Indian Accounting Standards (Ind AS). The Ind AS is almost the same as the International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS), which is followed by more than 100 countries. Ind AS will replace the current accounting standards followed by companies in India. The ministry of corporate affairs (MCA), government of India, notified these on February 16, 2015, and recommended its application in a phased manner from April 1, 2016. Effectively, the quarterly results for June 30, 2016, would be the first such reporting period for listed companies above the threshold. Needless to say, the impact of any fundamental change to an accounting framework has a much wider ramification on the company. Any transaction, from a routine sales transaction to corporate restructuring, needs to be told in an accounting language. So when that changes, the impact is pervasive. Analysts and the Street who are rating companies and industries based on their performance and ratio analysis will be able to see a major shift in the ratios when debt and the capital (equity) are stated as per their substance and not form. For example, a preference share which is compulsorily redeemable will now have to be classified as a debt rather than equity as it represents an obligation on the issuer of the financial instrument to repay the money.

Read more: http://forbesindia.com/blog/business-strategy/ind-as-is-here-but-are-we-ready/#ixzz4AnBo8elY


Carve Outs Use of carrying cost of Property, Plant and Equipment on the date of transition of First-time Adoption of Ind AS is permitted. (Ind AS 101). i.e. W.D.V. as on 31.3.16 can be use as carrying cost for ppe Bargain purchase gain arising on a business combination to be treated as Capital Reserve under Ind AS. (Ind AS 103) Fair value model for investment property not permitted. (Ind AS 40)

Uniform accounting policies may not be used by investor of an associate in case it is impracticable. (Ind AS 28) Classification of Foreign Currency Convertible Bonds (Ind AS 32, Financial Instruments: Presentation) Permission to continue with the accounting policy adopted for amortization of intangible assets arising from service concession arrangements related to toll roads (Ind AS 101 and Ind AS 38)

Classification of a loan liability in case of breach of a loan condition (Ind AS 1)

Carve-out regarding recognition of lease rentals (Ind AS 17, Leases)

Permission to continue the accounting policy adopted for accounting for exchange differences

arising from translation of long-term foreign currency monetary items (Ind AS 101 and Ind AS 21)


IND Notified by MCA,

Recently IND AS 115 replaced by IND AS 11 & 18

Framework Framework for the Preparation and Presentation of Financial Statements in accordance with Indian Accounting Standards

Ind AS 101 First-time Adoption of Indian Accounting Standards Ind AS 102 Share based Payment Ind AS 103 Business Combinations Ind AS 104 Insurance Contracts Ind AS 105 Non-current Assets Held for Sale and Discontinued

Operations Ind AS 106 Exploration for and Evaluation of Mineral Resources Ind AS 107 Financial Instruments: Disclosures Ind AS 108 Operating Segments Ind AS 109 Financial Instruments Ind AS 110 Consolidated Financial Statements Ind AS 111 Joint Arrangements Ind AS 112 Disclosure of Interests in Other Entities Ind AS 113 Fair Value Measurement Ind AS 114 Regulatory Deferral Accounts Ind AS 1 Presentation of Financial Statements Ind AS 2 Inventories Ind AS 7 Statement of Cash Flows Ind AS 8 Accounting Policies, Changes in Accounting Estimates

and Errors Ind AS 10 Events after the Reporting Period Ind AS 11 Construction Contracts Ind AS 12 Income Taxes


Ind AS 16 Property, Plant and Equipment Ind AS 17 Leases Ind AS 18 Revenue Ind AS 19 Employee Benefits Ind AS 20 Accounting for Government Grants and Disclosure of

Government Assistance Ind AS 21 The Effects of Changes in Foreign Exchange Rates Ind AS 23 Borrowing Costs Ind AS 24 Related Party Disclosures Ind AS 27 Consolidated and Separate Financial Statements Ind AS 28 Investments in Associates Ind AS 29 Financial Reporting in Hyperinflationary Economies Ind AS 32 Financial Instruments: Presentation Ind AS 33 Earnings per Share Ind AS 34 Interim Financial Reporting Ind AS 36 Impairment of Assets Ind AS 37 Provisions, Contingent Liabilities and Contingent

Assets Ind AS 38 Intangible Assets Ind AS 40 Investment Property


KEY IND AS STANDARDS WITH AN IMPACT

Ind AS 1 : Presentation of Financial Statements

Ind AS 10 : Events after Reporting Period

Ind AS12 : Income Taxes

Ind AS 18 : Revenue

Ind AS 19 : Employee Benefits

Ind AS 28 : Investment in Associates and Joint Ventures

Ind AS 37 : Provisions, Contingent Liabilities and Contingent Assets

Ind AS 38 : Intangible Assets

Ind AS 101 : First-time Adoption of Indian Accounting Standards

Ind AS 102 : Share-based Payment

Ind AS 108 : Operating Segments

Ind AS 109 : Financial Instruments


Ind AS 1 : Presentation of Financial Statements

New Components of Financial Statements -Statement of Changes in Equity for the year. -‘Other Comprehensive Income’ section in the Statement of Profit and Loss for the year. Distinction between Financial and Non-Financial assets/liabilities Illustrative examples of financial and non-financial assets/liabilities : Identified non-financial assets •Advances for raw material •Capital advances etc.

•Identified financial assets •Investments •Trade receivables

•Identified financial liabilities •Security Deposits •Trade payables etc.

•Identified non-financial liabilities •Statutory dues •Advances from customers

Other Changes –The standard requires few other disclosures like capital management, sources of estimation uncertainty etc. in the financial statements of the Company.


OTHER COMPREHENSIVE INCOME (OCI)

•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. •OCI balance is presented in the ‘Other Equity’section of the Balance Sheet separately from retained earnings.

Components of Other Comprehensive Income of an organization can be classified as:-

Items that cannot be reclassified to Profit or Loss: -Re-measurements of defined benefit plans

Items that can be reclassified to Profit or Loss: -Gains and losses on financial assets other than equity instruments measured at fair value through other comprehensive income

Ind AS mandates ‘Single Statement’ approach which means that the Statement of Profit and Loss and Other Comprehensive Income are to be presented in a single statement with two sections.


Ind AS 10 : Events after Reporting Period

IGAAP Ind AS The Company accounted for a provision for proposed final dividend (including dividend distribution tax) relating to a given financial year in that year, even if the approval of that dividend by the shareholders took place after the balance sheet date.

The Company will recognise a liability for final dividend (including dividend distribution tax) in the period when the dividends are approved by the shareholders.

IMPACT B/S �The charge to retained earnings amounting recognised for proposed final dividend and dividend distribution tax under IGAAP is reversed in the opening B/S i.e. as on 1.4.2015. �Significant changes in % ‘Return on Capital Employed’ and ‘Return on Net Worth’ due to increase in capital employed/net worth as at the Balance Sheet date..


Ind AS 12 : Income Taxes

IGAAP Ind AS Deferred taxes are recognised for the tax effect of timing differences between accounting income and taxable income for the year i.e., income statement approach

Deferred taxes are recognised for future tax consequences of temporary differences between the carrying value of assets and liabilities in books and their respective tax base i.e., balance sheet approach.

IMPACT B/S � Increases / Reduction in deferred tax assets with corresponding charge to retained earnings and OCI reserve consequential to Ind AS adjustments. P/L � Recognition of additional deferred tax expense in the profit and loss and a credit in OCI consequential to Ind AS adjustments in JQ’16.


Ind AS 18: Revenue

IGAAP Ind AS Under IGAAP, the Company accounted for revenue net of trade discounts, sales taxes and excise duties. OR some other method

*New Revenue Definition –The Company will recognise revenue at the fair value of consideration received or receivable. Any sales incentive, discounts or rebates in any form, including cash discounts given to customers will be considered as selling price reductions and accounted as reduction from revenue. Under IGAAP, some of these costs were included in ‘advertising and sales promotion’ expenses. *Gross Vs Net Presentation –Excise duty will not be netted from revenue and shown as a part of expenses.

IMPACT P/L � Net revenue to be change, in JQ’16 ‘revenue from operations’ -Increase in revenue due to excise duty grossing up: -Decrease in revenue due to reclassification from advertising and sales promotion: �Increase in ‘cost of material consumed’ due to inclusion of excise duty. �Impact on quarterly published results w.r.t excise duty presentation based on SEBI format for Ind AS compliant companies to be assessed. �No impact on profit. �GST could also have implications once effective.


Ind AS 19 : Employee Benefits

IGAAP Ind AS The Company recognised the investment in the Trust as non-current investment at cost, as it did not qualify as ‘plan asset’ under AS 15 on employee benefits.

Trust qualifies and will be recognised as a ‘plan asset’ under Ind AS 19.

The interest cost on defined benefit liability and expected return on plan assets is recognised as employee benefit expenses.

The Company may adopt an accounting policy choice to recognise the net interest cost on net defined benefit liabilities as finance cost.

Actuarial gains/losses is recognised an 'exceptional item’ in profit and loss.

Remeasurement of the net defined benefit liability/(asset) will be recognised in ‘Other Comprehensive Income’.

IMPACT

B/S

Changes in non-current investment due to reclassification trust as ‘plan asset’, netted off against

the provision for employee benefits.

P/L

�Increase in finance cost in JQ’16 due to reclassification of net interest cost from employee benefit expense. No impact on profit. �No impact taken in profit on account of reclassification of actuarial gain/loss to OCI in JQ’16.


Ind AS 28 : Investments in Associates and Joint Ventures

IGAAP Ind AS The Company used ‘proportionate consolidation’ method to account for some of its joint venture in its consolidated financial statements

The Company will account for its joint venture, using the ‘equity method’ in its consolidated financial statements

IMPACT B/S �No line-by-line proportionate consolidation in the consolidated financial statements. Investment in JV will appear as a single line item at cost plus holding’s share in the profit or loss post acquisition. �No impact on holding’s standalone financial statements. Investment in JV will continue to be accounted at cost less impairment loss.


Ind AS 37 : Provisions, Contingent Liabilities and Contingent Assets

IGAAP Ind AS The Company recognised provisions at an undiscounted value as current IGAAP principles explicitly prohibit discounting.

�The Company will discount provisions to their present value where the effect of time value of money is material. �The increase in the provision due to the passage of time will be recognised as finance cost resulting in higher interest cost.

IMPACT B/S Impact of discounting of long term provisions and other non-current liabilities has been reduced from long term provisions and other non-current liabilities respectively and with a corresponding increase in retained earnings. P/L Increase in finance cost in JQ’16 due to unwinding of discount of the long term provisions and other non-current liabilities.


Ind AS 38: Intangible Assets

IGAAP Ind AS The useful life of an intangible asset cannot be indefinite under IGAAP principles. The Company amortised brand/trademark on a straight line basis at 25% amortisation rate.

The useful of an intangible asset like brand/trademark can be indefinite. Not required to be amortised and only tested for impairment.

The Company amortised goodwill on a straight line basis at 25% amortisation rate.

Goodwill arising on business combination cannot be amortised and is only tested for impairment.

IMPACT B/S No impact on Ind AS opening B/S and JQ’16 P/L. P/L Any brand/trademark having indefinite useful life or goodwill arising from future transactions will not be amortised and only tested for impairment.


Ind AS 101: First-time Adoption of Indian Accounting Standards

The standard setting out how to adopt Ind AS for the first time –first time adoption rules, exemptions and options that may be various carve out.

General Principle

Full retrospective application of Ind AS in preparation of opening Ind AS B/S as at the date of transition i.e., 1.04.2015

The Company may elect to apply the following optional exemptions in preparation of its Ind AS opening Balance Sheet:

�Recognise assets and liabilities as required by Ind AS. �Derecognise assets and liabilities not permitted by Ind AS. �Reclassify assets, liabilities or components of equity in accordance with Ind AS. �Measure all assets and liabilities in accordance with Ind AS. �Consider mandatory and optional exemptions from retrospective application.

MobCA. AS

bile 9990999281‐SHWANI RASTOG‐ ashwani.rastogi



Ind AS 102: Share-based Payment

IGAAP Ind AS The Company accounted for equity settled stock options under the ‘intrinsic value’ method and made fair value disclosures.

The Company will account for equity settled stock options using the ‘fair value’ method. Under this method, compensation cost for the employees’ stock options will be recognized based on the fair value at the date of grant in accordance with the Black Scholes model.

IMPACT B/S The reduction/ changes in employee compensation cost for the unvested options as on the date of transition based on fair value method which has been debited /credited to retained earnings. P/L The reduction in employee compensation cost for JQ’16 based on fair value method debited/ credited to employee benefit expense.


Ind AS 108: Operating Segments

IGAAP Ind AS �RISK AND RETURN APPROACH :Identification of two sets of segments—one based on related products and services, and the other on geographical areas based on the 'risks and returns' approach. �Currently, the segments reported are various business and Indian operation and overseas operation

�MANAGEMENT APPROACH : Identification based on the manner in which the entity’s 'Chief Operating Decision Maker' (CODM) reviews the business components regularly to make decisions about allocating resources to segments and in assessing their performance. �Segments need to be consistent with the internal organization structure and internal reporting used for decision making by CODM.

IMPACT No financial impact on the financial statements as this is a disclosure related standard. The company is assessing and evaluating the impact of the CODM approach as required by this standard on its segments reported currently.


Ind AS 109: Financial instruments

IGAAP Ind AS The Company currently accounts for current investments at lower of cost and fair value.

�The Company will account for its investments (i.e., treasury bills, government securities and mutual funds) at fair value. �The investments will be classified as either Fair Value through the Profit or Loss (FVTPL) or Fair Value through the Other Comprehensive Income (FVOCI) depending on the nature of investment.

IMPACT B/S The impact of fair valuation of the Company’s investments will directly impact retained earnings and OCI reserve. P/L Increase/(decrease) in ‘other income’ and ‘other comprehensive income’ and respectively will change on account of fair valuation gain/(loss) on the Company’s investments for JQ’16.


Thank You CA. Ashwani Rastogi

M.Com., CA, CS. Certification Course on International Taxation, IFRS, BSE (Mumbai)

Sr. Partner, Singh Agarwal & Co., Chartered Accountants A – 112 Jain Park, Uttam Nagar, New Delhi - 110059 M - 9990999281 Email- [email protected] www.cacertification.com Visiting Faculty, ICAI ICWAI, & ICSI New Delhi

Al

(A)

1

2

(B)

1 2 3

Appe

so openin

P

Non-curren(a) Prop(b) Cap(c) Inve(d) Goo(e) Oth(f) Inta

developmen(g) Fina 1)In 2)Tr 3)Lo(h) Def(i) Othe

Current as(a) Inve(b) Fina 1)In 2)Tr 3)Lo 4)C(c) Cur(d) Oth

EQU

Equity (a) Equ(b) Oth

Non-curren

(a) Fina 1)B 2)Tr(b) Prov(c) Defe(d) Oth

Current lia(a) Fina(b) Prov(c) Oth

endix- DRABA

ng BS 1.4.

Particulars

ASSETS

nt assets perty, plantpital work-inestment Proodwill her Intangibangible assent ancial Assenvestment rade Receivoans ferred tax aser non-curr

ssets entories ancial Assenvestment rade Receivoans

Cash and carrent Tax Asher current

UITY AND L

uity Share cher Equity

nt liabilitieancial Liabi

Borrowings rade Payabvision erred tax lia

her non-curabilities ancial Liabivision

her non-curr

Significan

AFT BALANALANCE15 to prep

s

t and Equipn-progress operty

ble assets ts under

ts

vables

ssets (net) rent assets

ets

vables

ash equivalessets (Net) assets

LIABILITIES

capital

es ilities

les

abilities (Nerrent liabilit

ilities

rent liabiliti

nt accounti

NCE SHEETE SHEETpare| Re-c

pment

ents

S

et) ties

ies

ing policies

T AS PER INT AS ATclass India

Note No.

TOTAL

TOTAL s

ND-AS NOTT MARCH

an IGAAP

As a

Ma20

TIFIED BY H 31, 20 | IND ASat 31 arch, 017

0 0

0 0

MCA DIVIS017 S Adjustm

As at 3March2016

SION II

ment | IND1 ,

A

0

0

0

0

D-AS As at 01

April, 2015

0

0

0

0

(A) I. II

(B)CoPuChin-EmFinDeOth

(C)ext

(D)

(E)

(F)

(G)

(F) (I) (II(III (H)

(I)

S

REVENUE Revenue f. Other Inco

Expenses:st of materirchase of S

hanges in inprogress an

mployee bennancial costpreciation aher expense

) Profit befotraordinary

) Exception

Profit befo

Extraordin

) Profit befo

Tax expen Current ta) Deferred tI) MAT cred

) PROFIT A

Earning pe

(I) Basic (II) Dilute

TATEMENT

Partic

E from operatome

: ials consumtock-in-Tra

nventories ond Stock-innefit expensts and amortizes

ore exceptiy items and

nal Items

ore extraor

nary Items

fore tax

nse: ax tax dit

AFTER TAX

er equity sh

ed

Mobile 9

T OF PROF

culars

tions

To

med ade f finished g

n-Trade e

zation expen

Tot

ional and d tax

rdinary item

s

X

hare:

CA. A9990999281

FIT AND LO

otal Revenu

goods, work

nse

tal Expense

ms and tax

ASHWANI RA1‐ ashwani.ra

OSS FOR T

Note

ue

-

es

x

STOGI astogi.ca@gm

THE PERIO

No 3

mail.com

OD ENDED

As at 31 March,

MARCH 3

2017

0

0

0

0

0

1, 2017

As 31 March

at h, 2016

0

0

0

-

0

-

0

ind as implementation

Economy & Finance