1. Transition to Ind As K Chandra Sekhar By, GM & Company Secretary
Ace Designers Limited

2. Topics Objective of the session Ind As road Map & its applicability
Salient features of Ind AS
Summary of Ind AS
Transition to Ind As
Impact of Ind AS transition

3. Objective of the session
To Understand over view of Ind AS
Road map and its applicability to various sectors
Why Ind AS
Salient features of Ind AS
Ind AS transition impact to business decisions
Major changes of Ind AS after transition

4. Roadmap ROADMAP OF IND AS 2007 CONCEPT PAPER – 01/04/2011 2010 MCA RM
01/04/2012
& TASC
2010
SEBI-CFS
2011
35 IND AS
2011
SCH VI

5. Roadmap ROADMAP OF IND AS 2012 TAS -14 2015 RM –IND AS 14/12/10 ICDS?
2016
IND AS 40
2015
IND AS 39
16/19 FEB
ROADMAP OF IND AS
2016
SCH III

6. Ind AS Applicability Applicability FY 2015-16 Phase I FY 2016-17
Phase II FY
All Companies whose Net worth is > Rs. 500 Crores
Holding, Subsidiary, Joint Venture or Associate Companies of above
All Companies whose Net worth is > Rs. 250 Crores
All Listed Companies
Holding, Subsidiary, Joint Venture or Associate Companies of above
Voluntarily

7. Ind AS Applicability (Ctd)
Applicability for NBFC and Banks
Phase I FY
Phase II FY
All Scheduled banks except urban cooperative Banks
NBFC having Net worth of > Rs. 500 crore
Holding, Subsidiary, Joint Venture or Associate of above
NBFC having networth of > Rs. 250 cr < Rs. 500 cr
Holding, Subsidiary, Joint Venture or Associate of above

8. Road Map issued by the MCA vide Press Release (cont)
Companies listed / in the process of listing their securities on the SME exchanges shall not be required to apply Ind AS. They shall continue with the existing Accounting Standards unless they choose voluntarily.
Listed on SME exchanges
Any company can voluntarily apply Ind ASs for accounting periods on or after April 1, 2015 (comparatives for the periods ending March 31, 2015 or as appropriate).
Voluntary
Once a company opts to follow the Ind AS, it will be required to follow for all the subsequent financial statements.
Continuous Basis
Companies other than those covered by the road map shall continue to apply the Accounting Standards under the Companies (Accounting Standards) Rules,
Residual Companies

9. Ind AS Applicability (ctd.)
In case of companies other than those per the Roadmap above, the existing Accounting Standards shall apply.
Once Ind AS is applicable as per the Roadmap, such companies shall follow Ind AS only for all subsequent periods; no roll back permitted
Ind AS will be applicable to both Standalone and Consolidated Financial Statements
Principles for Calculation of Net Worth to be in accordance with Standalone Financial Statements of the company as on the preceding f.y.
Net worth defined per the Companies Act, 2013 and excludes revaluation reserves
Net worth is calculated based on stand alone fs
Overseas SA, J.V and other similar entities of an Indian parent Company may prepare its Standalone FS in accordance with the requirements of the specific jurisdiction.
However, such Indian parent Company shall prepare its CFS in accordance with the Ind AS either voluntarily or mandatorily if it meets the specific criteria

10. Ind AS Applicability (ctd.)
Indian Company which is a Subsidiary, Associate, J.V and other similar entities of a foreign company shall prepare its FS in accordance with the Ind AS either voluntarily or mandatorily if it meets the specific criteria
If due to subsequent amendments in the law, a particular Ind AS is found to be not in conformity with such law, the provisions of the law shall prevail and the Financial Statements shall be prepared in conformity with such law

11. Salient Features of
IFRS-converged Ind AS

12. Salient Features of IFRS-converged Ind AS
Principle-based Standards
Applicable on separate as well as consolidated financial statements.
More importance to concept of ‘substance over form’, i.e., economic reality of a transaction.
Rely more on fair valuation approach, and measurements based on time value of money.
Require more disclosures of all the relevant information and assumptions used.
Require higher degree of judgment and estimates.

13. AS -1 DISCLOSURE OF APs Fundamental Accounting Assumptions
Going Concern
Consistency
Accrual
Selection of Accounting Policies
Prudence
Substance over form
Materiality
Measuring Principles
Fair Value

14. Underlying Assumptions
Going concern
Accrual basis
Consistency
Under Going concern, it is assumed that the entity will continue in
operation for the foreseeable future and has neither the intention nor the need to liquidate or curtail materially the scale of its operations.
Under Accrual basis, the effects of transactions are recognised on mercantile basis i.e. when they occur (and not as cash or a cash equivalent is received or paid) and they are recorded in the accounting records and reported in the financial statement of the periods to which they relate.
Under Consistency, same accounting policies are followed from one period to another so that comparability of the financial statement can be achieved.

15. Qualitative Characteristics of Financial Statement
Qualitative characteristics are the attributes that make the information provided in financial statement useful to users.
Understandability
Relevance
Reliability
Comparability
Materiality
Faithful Representation
Substance Over Form
Neutrality
Prudence
Completeness

16. Measurement Basis Historical cost Current cost Realisable value
Measurement is the process of determining the monetary amounts at which the elements of financial statement are recognised and carried in the Financial Statement.
Historical cost
Current cost
Realisable value
Present value

17. Measurement Basis Historical cost:
Assets are recorded at the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire them at the time of their acquisition.
Liabilities are recorded at the amount of cash or cash equivalents expected to be paid to satisfy the liability or at the amount of proceeds received in exchange for the obligation, in the normal course of business.
(b) Current cost:
Assets are carried at the amount of cash or cash equivalents that would have to be paid if the same or an equivalent asset were acquired currently.
Liabilities are carried at the undiscounted amount of cash or cash equivalents that would be required to settle the obligation currently.

18. Measurement Basis (c) Realisable (settlement) value:
Assets are carried at the amount of cash or cash equivalents that could currently be obtained by selling the asset in an orderly disposal.
Liabilities are carried at their settlement values, that is, the undiscounted amount of cash or cash equivalents expected to be required to settle the liabilities in the normal course of business.
(d) Present value:
Assets are carried at the present value of the future net cash inflows that the item is expected to generate in the normal course of business.
Liabilities are carried at the present value of the future net cash outflows that are expected to be required to settle the liabilities in the normal course of business.

19. Understanding Ind AS from AS
IND AS ARE BASED MORE ON SUBSTANCE OVER FORM : Sale of Goods on Extended Credit Terms, i.e., goods sold on terms extending more than normal credit period. Financing element inbuilt in price is segregated and considered as ‘interest’ income. Say, goods normally sold at price at Rs. 100 for 3 months credit If sold for Rs. 110 for 15 months credit: Rs. 10 considered as ‘interest’ income

20. Substance over form
Fixed assets or inventories purchased on deferred credit terms having financing element:
Financing element, viz., ‘interest’ to be segregated from the ‘purchase price’
Implications: What would be the original cost of the fixed asset/inventories for tax?

21. Substance over form
Unbundling of multiple elements from the sale price where required:
Sale of Automobile on Extended Warranty
An automobile dealer sells a car for extended warranty of 3 years instead of normal 1 year
Extended warranty element of 2 years required to be separated under Ind AS from the selling price based on Fair Value of warranty.
Revenue from warranty service recognised in the year when the service is rendered, i.e., revenue recognition is deferred.

22. Substance over form
Redeemable preference shares carrying fixed rate of dividend considered a liability under Ind AS
Dividend paid/payable considered as ‘interest’
Charged to statement of profit and loss and not to be considered as an appropriation of profit as at present
Implications:
TDS on interest
MAT implication as Book Profit

23. Substance over form
Certain transfers in substance considered as finance lease under Ind AS
XYZ Ltd has given Machinery on lease for 10 years and at the end of the lease, lessee has option to purchase machinery at agreed price.
XYZ accounted this asset in its books as fixed asset and recognises lease rentals every month treating this as operating lease.
Is treatment is correct?
No, The lessee uses machinery for whole or substantial period of the machinery and hence, it is to be treated as Finance lease at the inception itself.

24. Substance over form
Measurement of interest at Effective Interest Rate rather than the contracted rate to recognise interest income and expense
A company issues bond of Rs. 100 carrying interest rate at 10% to be redeemed at Rs. 110 after five years.
Presently , interest expense recognised at Rs. 10 per year and Rs. 10 premium paid at the time of redemption recognised in the year of redemption (though some companies amortise this Rs. 10 over the five year term on straight line basis)

25. Time value of money as a measurement basis
Under Ind AS, interest rate is recomputed to recognise Rs. 10 premium payable at the end of the term of the bond. Accordingly, interest is recognised every year, at the effective rate of 11.43%
Implications:
TDS
MAT on account of change in Book Profit

26. Greater use of Fair Value (FV) as Measurement Basis
fair value - Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Certain investments (e.g., held for trading in normal course of business) required under Ind AS to be measured at FV and changes in FV, gains and losses, recognised in profit or loss.
Presently, only FV changes resulting in losses recognised in profit or loss; gains ignored
Implications:
MAT implications on Book Profit

27. Fair Value (Contd.)
Service Concession Arrangement, e.g., Build-Operate-Transfer arrangement of a road
Revenue is required to be recognised at FV of the construction services rendered during construction period
Even though actual receipts start when the road is put under operation, i.e., toll is collected
Implications:
Should the income be taxed during construction period?
MAT implications on Book Profit

28. How to arrive at fair value?
There are various approaches for arriving at fair values. Namely
Cost approach
Market approach
Income approach
An enterprise should select the method which suits to its business environment from sustainability point of view.

29. Other significant differences
Component approach and concept of useful life of charging depreciation
Ind AS require depreciation to be charged on significant parts of a fixed asset where useful lives of the parts and the remaining asset are different
Presently, depreciation required to be charged on the complete asset at a single rate
Ind AS also confer primacy to useful life concept for charging depreciation, rather than statutory minimum depreciation concept hitherto followed
Implications: MAT on Book Profit

30. Other significant differences
Effects of Changes in Foreign Exchange Rates
Ind AS based on ‘functional currency’ concept, existing AS is not
Where functional currency of an entity other than INR, impact on profit or loss different from existing AS
Consequential tax impact
After transiting to Ind AS, option of capitalising/deferring foreign exchange differences under existing AS no longer available,
Such differences would be recognised in profit or loss
Implications: Consequential tax impact on Book Profit

31. Comparative Summary of Indian Accounting Standards & IFRS
S.no
AS No.
Existing Indian Standard
Ind AS No.
Ind AS 1
AS 1
Disclosure of Accounting Policies
Ind AS 1
Presentation of Financial Statements 2
AS 2
Valuation of Inventories
Ind AS 2
Inventories 3
AS 3
Cash Flow Statements
Ind AS 7
Statements of Cash Flows 4
AS 4
Events Occurring after the Balance Sheet Date
Ind AS 10
Events after the Reporting Period

32. Comparative Summary of Indian Accounting Standards & IFRS
S.no
AS No.
Indian Standard
Ind-AS No.
Ind AS 5
AS 5
Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies
Ind AS 8
Accounting Policies, Changes in Accounting Estimates and Errors 6
AS 6
Depreciation Accounting - 7
AS 7
Construction Contracts
Ind AS 18
Revenue

33. Comparative Summary of Indian Accounting Standards & IFRS
S.no
AS No.
Indian Standard
Ind-AS No.
Ind AS 8
AS 9
Revenue Recognition
Ind AS 18
Revenue 9
AS 10
Property, Plant and Equipment
Ind AS 16 10
AS 11
The Effects of Changes in Foreign Exchange Rates
Ind AS 21

34. Comparative Summary of Indian Accounting Standards & IFRS
S.no
AS No.
Indian Standard
Ind-AS No.
Ind AS 11
AS 12
Accounting for Government Grants
Ind AS 20
Accounting for Government Grants and Disclosure of Government Assistance 12
AS 13
Accounting for Investments
Ind AS 40
Ind AS 27
Investment Property
Separate Financial Statements

35. Comparative Summary of Indian Accounting Standards & IFRS
S.no
AS No.
Indian Standard
Ind-AS No.
Ind AS 13
AS 14
Accounting for amalgamations
Ind AS 103
Business combinations 14
AS 15
Employee Benefits
Ind AS 19 15
AS 16
Borrowing costs
Ind AS 23 16
AS 17
Segment Reporting
Ind AS 108
Operating Segments

36. Comparative Summary of Indian Accounting Standards & IFRS
S.no
AS No.
Indian Standard
Ind-AS No.
Ind AS 17
AS 18
Related Party Disclosures
Ind AS 24 18
AS 19
Leases
Ind AS 17 19
AS 20
Earnings Per Share
Ind AS 33

37. Comparative Summary of Indian Accounting Standards & IFRS
S.no
AS No.
Indian Standard
Ind-AS No.
Ind AS 20
AS 21
Consolidated Financial Statements
Ind AS 110 27
Ind AS 112
Separate Financial Statements
Disclosure of Interest in other entities 21
AS 22
Accounting for Taxes on Income
Ind AS 12
Income taxes

38. Comparative Summary of Indian Accounting Standards & IFRS
S.no
AS No.
Indian Standard
Ind-AS No.
Ind AS 22
AS 23
Accounting for Investments in Associates in Consolidated Financial Statements
Ind AS 28
Ind AS 111
Investments in Associates and Joint Ventures
 Joint Arrangements 23
AS 24
Discontinuing operations
Ind AS 105
Non Current Assets Held for Sale and Discontinued operations 24
AS 25
Interim financial reporting
Ind AS 34
Interim Financial Reporting

39. Comparative Summary of Indian Accounting Standards & IFRS
S.no
AS No.
Indian Standard
Ind-AS No.
Ind AS 25
AS 26
Intangible assets
Ind AS 38
Intangible Assets

40. Comparative Summary of Indian Accounting Standards & IFRS
S.no
AS No.
Indian Standard
Ind-AS No.
Ind AS 26
AS 27
Financial Reporting of Interests in Joint Ventures
Ind AS 28 27
Ind AS 111
Ind AS 112
Investments in Associates and Joint Ventures
Separate Financial Statements
Joint Arrangements
Disclosure of Interest in other entities

41. Comparative Summary of Indian Accounting Standards & IFRS
S.no
AS No.
Indian Standard
Ind-AS No.
Ind AS 27
AS 28
Impairment of assets
Ind AS 36 28
AS 29
Provisions, Contingent Liabilities and Contingent Assets
Ind AS 37 29
AS 30
Financial Instruments Accounting
Ind AS 109
Financial Instruments 30
AS 31
Financial Instruments Presentation
Ind AS 32
Financial Instruments – Presentation

42. Comparative Summary of Indian Accounting Standards & IFRS
S.no
AS No.
Indian Standard
Ind-AS No.
Ind AS 31
AS 32
Financial Instruments-Disclosures
Ind AS 107
Financial Instruments: Disclosures 32 -
Ind AS 102
Share based payment 33
Ind AS 29
Financial Reporting in hyperinflationary Economies 34
Ind AS 106
Exploration for and Evaluation of Mineral Resources

43. Comparative Summary of Indian Accounting Standards & IFRS
S.no
AS No.
Indian Standard
Ind-AS No.
Ind AS 35 -
Ind AS 26
Accounting and Reporting of Retirement Benefit Plans* 36
Ind AS 41
Agriculture 37
Ind AS 104
Insurance Contracts 38
Ind AS 101
First Time Adoption of Indian Accounting Standards

44. Comparative Summary of Indian Accounting Standards & IFRS
S.no
AS No.
Indian Standard
Ind-AS No.
Ind AS 39 -
Ind AS 114
Regulatory Deferral Accounts 40
Ind AS 113
Fair Value Measurement

45. Transition to Ind AS

46. Transition to Ind AS
An entity shall prepare and present an opening Ind AS Balance Sheet at the date of transition
An entity shall use the same accounting policies in its opening Ind AS Balance Sheet and throughout all periods presented in its first Ind AS financial statements
Use same accounting policies and recognize resulting differences in retained earnings
An entity’s first Ind AS FS shall include reconciliations
fair value - Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date
Schedule III format of FS for Ind AS changed

47. Transition to Ind AS
An entity shall in its opening Ind AS Balance Sheet:
recognise all assets and liabilities whose recognition is required by Ind ASs;
not recognise items as assets or liabilities if Ind ASs do not permit such recognition;
reclassify items that it recognised in accordance with previous GAAP as one type of asset, liability or component of equity, but are a different type of asset, liability or component of equity in accordance with Ind ASs; and
apply Ind ASs in measuring all recognised assets and liabilities.
Transition FS includes Balance sheet for three years, PL statements and Cash flow for two years and changes in equity

48. Mandatory Exemptions An entity shall apply the following exceptions:
derecognition of financial assets and financial liabilities  
hedge accounting
non-controlling interests ;
classification and measurement of financial assets
impairment of financial assets
embedded derivatives and
government loans

49. Voluntary Exemptions
An entity may elect to use one or more of the following exemptions:
share-based payment transactions
insurance contracts
deemed cost
leases
cumulative translation differences
investments in subsidiaries, joint ventures and associates
assets and liabilities of subsidiaries, associates and joint ventures
compound financial instruments
Designation of previously recognised financial instruments
fair value measurement of financial assets or financial liabilities at initial recognition
decommissioning liabilities included in the cost of property, plant and equipment
financial assets or intangible assets accounted for in accordance with Appendix C to Ind AS 115 Service Concession Arrangements
borrowing costs
extinguishing financial liabilities with equity instruments  
severe hyperinflation
stripping costs in the production phase of a surface mine  
designation of contracts to buy or sell a non-financial

50. Other points
The disclosure of IND AS are in addition to but not substitute
The definition of current asset and current liability has changed
If the entities operating cycle is not clearly identifiable, operating cycle is treated as period of 12 months.

51. Financial statements under IND AS
Balance sheet as at the end of financial year
Statement of profit and loss
Changes in Shareholders e equity
Cash flow statement for the period
Format of BS and Pl changed

52. Other points
Certain items are required or permitted by Ind AS to be recognized in Other Comprehensive income, including:
Revaluation surplus on PPE
Re-measurement of defined benefit plans
Fair value gains and losses on equity instruments through OCI
Gains and losses arising from translation of financial statements in foreign currency
Gains and losses on effective portion of cash flow hedges

53. REVIEW BOARDS IN EXISTENCE
PEER REVIEW BOARD [PRB]
FINANCIAL REPORTING REVIEW BOARD [FRRB]
QUALITY REVIEW BOARD[QRB]
QUALIFIED AUDIT REVIEW COMMITTEE [QARC] 2012
ABOVE ALL THE 4 BOARDS
NATIONAL FINANCIAL REPORTING AUTHORITY [2014]

54. Impact of Ind AS Features: Application: Time Value of Money
Fair Value approach
More disclosures
Application:
Separate as well as CFS
Presentation of Financial Statements

55. Ind AS impact to business decisions
ERP- SAP/Oracle/ERP
Financial Analysis and Ratio workings
Bonus to employees
Managerial Remuneration- Remuneration based on profit
Share valuation and market response
Dividend distribution
Taxation Issues-
MAT
GST
TDS

56. Questions ?????

57. Ind AS study begins here...
THANK YOU