Pipara & Co LLP

first- time adoption of indian accounting standards
Objective
  1. The objective of this Ind AS is to ensure that an entity’s first Ind AS financial statements, and its interim financial reports for part of the period covered by those financial statements, contain high quality information that:
    1. is transparent for users and comparable over all periods presented;
    2. provides a suitable starting point for accounting in accordance with Indian Accounting Standards (Ind ASs); and
    3. can be generated at a cost that does not exceed the benefits.
Scope
  1. An entity shall apply this Ind AS in:
    1. its first Ind AS financial statements; and
    2. each interim financial report, if any, that it presents in accordance with Ind AS 34, Interim Financial Reporting, for part of the period covered by its first Ind AS financial statements.
  2. An entity’s first Ind AS financial statements are the first annual  This Ind AS was notified vide G.S.R. 111(E) dated 16th February, 2015 and was amended vide Notification No. G.S.R. 365(E) dated 30th March, 2016, G.S.R. 310(E) dated 28th March, 2018, G.S.R. 273(E) dated 30th March, 2019, G.S.R. 274(E) dated 30th March, 2019, G.S.R. 419(E) dated 18th June, 2021 and G.S.R. 255(E) dated 23rd March, 2022.

financial statements in which the entity adopts Ind ASs, in accordance with Ind ASs notified under the Companies Act, 2013 and makes an explicit and unreserved statement in those financial statements of compliance with Ind ASs.

  1. [Refer to Appendix 1] 4A [Refer to Appendix 1] 4B [Refer to Appendix 1]
  2. This Ind AS does not apply to changes in accounting policies made by an entity that already applies Ind ASs. Such changes are the subject of:
    1. requirements on changes in accounting policies in Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors; and
    2. specific transitional requirements in other Ind ASs.
Recognition and measurement
Opening Ind AS Balance Sheet
  1. An entity shall prepare and present an opening Ind AS Balance Sheet at the date of transition to Ind ASs. This is the starting point for its accounting in accordance with Ind ASs subject to the requirements of paragraphs D13AA and D22.
Accounting policies
  • 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. Those accounting policies shall comply with each Ind AS effective at the end of its first Ind AS reporting period, except as specified in paragraphs 13–19 and Appendices B–D.
  1. An entity shall not apply different versions of Ind ASs that were effective at earlier dates. An entity may apply a new Ind AS that is not yet mandatory if that Ind AS permits early application.
  1. The transitional provisions in other Ind ASs apply to changes in accounting policies made by an entity that already uses Ind ASs; they do not apply to a first-time adopter’s transition to Ind ASs, except as specified in Appendices B–D.
  2. Except as described in paragraphs 13–19 and Appendices B–D, an entity shall, in its opening Ind AS Balance Sheet:
  1. recognise all assets and liabilities whose recognition is required by Ind ASs;
  2. not recognise items as assets or liabilities if Ind ASs do not permit such recognition;
  3. 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
  4. apply Ind ASs in measuring all recognised assets and liabilities.
  1. The accounting policies that an entity uses in its opening Ind AS Balance Sheet may differ from those that it used for the same date using its previous GAAP. The resulting adjustments arise from events and transactions before the date of transition to Ind ASs. Therefore, an entity shall recognise those adjustments directly in retained earnings (or, if appropriate, another category of equity) at the date of transition to Ind ASs.
  2. This Ind AS establishes two categories of exceptions to the principle that an entity’s opening Ind AS Balance Sheet shall comply with each Ind AS:
    1. paragraphs 14–17 and Appendix B prohibit retrospective application of some aspects of other Ind ASs.
    2. Appendices C–D grant exemptions from some requirements of other Ind ASs.
Exceptions to the retrospective application of other Ind ASs
  1. This Ind AS prohibits retrospective application of some aspects of other Ind ASs. These exceptions are set out in paragraphs 14–17 and Appendix B.
Estimates
  • An entity’s estimates in accordance with Ind ASs at the date of transition to Ind ASs shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies),
 
unless there is objective evidence that those estimates were in error.
  1. An entity may receive information after the date of transition to Ind ASs about estimates that it had made under previous GAAP. In accordance with paragraph 14, an entity shall treat the receipt of that information in the same way as non-adjusting events after the reporting period in accordance with Ind AS 10, Events after the Reporting Period. For example, assume that an entity’s date of transition to Ind ASs is 1 April 2015 and new information on 15 July 2015 requires the revision of an estimate made in accordance with previous GAAP at 31 March 2015. The entity shall not reflect that new information in its opening Ind AS Balance Sheet (unless the estimates need adjustment for any differences in accounting policies or there is objective evidence that the estimates were in error). Instead, the entity shall reflect that new information in profit or loss (or, if appropriate, other comprehensive income) for the year ended 31 March 2016.
  2. An entity may need to make estimates in accordance with Ind ASs at the date of transition to Ind ASs that were not required at that date under previous GAAP. To achieve consistency with Ind AS 10, those estimates in accordance with Ind ASs shall reflect conditions that existed at the date of transition to Ind ASs. In particular, estimates at the date of transition to Ind ASs of market prices, interest rates or foreign exchange rates shall reflect market conditions at that date.
  3. Paragraphs 14–16 apply to the opening Ind AS Balance Sheet. They also apply to a comparative period presented in an entity’s first Ind AS financial statements, in which case the references to the date of transition to Ind ASs are replaced by references to the end of that comparative period.
Exemptions from other Ind ASs
  1. An entity may elect to use one or more of the exemptions contained in Appendices C-D. An entity shall not apply these exemptions by analogy to other items.
  2. [Refer to Appendix 1]
Presentation and disclosure

This Ind AS does not provide exemptions from the presentation and disclosure requirements in other Ind ASs.

Comparative information
  1. An entity’s first Ind AS financial statements shall include at least three Balance Sheet, two Statements of profit and loss, two Statements of cash flows and two Statements of changes in equity and related notes, including comparative information for all statements presented.
Non-Ind AS comparative information and historical summaries
  1. Some entities present historical summaries of selected data for periods before the first period for which they present full comparative information in accordance with Ind ASs. This Ind AS does not require such summaries to comply with the recognition and measurement requirements of Ind ASs. Furthermore, some entities present comparative information in accordance with previous GAAP as well as the comparative information required by Ind AS 1. In any financial statements containing historical summaries or comparative information in accordance with previous GAAP, an entity shall:
    1. label the previous GAAP information prominently as not being prepared in accordance with Ind ASs; and
    2. disclose the nature of the main adjustments that would make it comply with Ind ASs. An entity need not quantify those adjustments.
Explanation of transition to Ind ASs
  • An entity shall explain how the transition from previous GAAP to Ind ASs affected its reported Balance sheet, financial performance and cash flows.
23A [Refer to Appendix 1] 23B [Refer to Appendix 1]  
Reconciliations
  1. To comply with paragraph 23, an entity’s first Ind AS financial statements shall include:
    1. reconciliations of its equity reported in accordance with previous GAAP to its equity in accordance with Ind ASs for both of the following dates:
      1. the date of transition to Ind ASs; and
      2. the end of the latest period presented in the entity’s most recent annual financial statements in accordance with previous GAAP.
    2. a reconciliation to its total comprehensive income in accordance with Ind ASs for the latest period in the entity’s most recent annual financial statements. The starting point for that reconciliation shall be total comprehensive income in accordance with previous GAAP for the same period or, if an entity did not report such a total, profit or loss under previous GAAP.
    3. if the entity recognised or reversed any impairment losses for the first time in preparing its opening Ind AS Balance Sheet, the disclosures that Ind AS 36, Impairment of Assets, would have required if the entity had recognised those impairment losses or reversals in the period beginning with the date of transition to Ind ASs.
  2. The reconciliations required by paragraph 24(a) and (b) shall give sufficient detail to enable users to understand the material adjustments to the Balance Sheet and Statement of profit and loss. If an entity presented a Statement of cash flows under its previous GAAP, it shall also explain the material adjustments to the Statement of cash flows.
  3. If an entity becomes aware of errors made under previous GAAP, the reconciliations required by paragraph 24(a) and (b) shall distinguish the correction of those errors from changes in accounting policies.
  4. Ind AS 8 does not apply to the changes in accounting policies an entity makes when it adopts Ind ASs or to changes in those policies until after it presents its first Ind AS financial statements. Therefore,
  Ind AS 8’s requirements about changes in accounting policies do not apply in an entity’s first Ind AS financial statements. 27A If during the period covered by its first Ind AS financial statements an entity changes its accounting policies or its use of the exemptions contained in this Ind AS, it shall explain the changes between its first Ind AS interim financial report and its first Ind AS financial statements, in accordance with paragraph 23, and it shall update the reconciliations required by paragraph 24(a) and (b). 27AA If an entity adopts the first time exemption option provided in accordance with paragraph D7AA, the fact and the accounting policy shall be disclosed by the entity until such time that those items of Property, plant and equipment, investment properties or intangible assets, as the case may be, are significantly depreciated, impaired or derecognised from the entity’s Balance Sheet.
  1. If an entity did not present financial statements for previous periods, its first Ind AS financial statements shall disclose that fact.
Designation of financial assets or financial liabilities
  1. An entity is permitted to designate a previously recognised financial asset as a financial asset measured at fair value through profit or loss in accordance with paragraph D19A. The entity shall disclose the fair value of financial assets so designated at the date of designation and their classification and carrying amount in the previous financial statements.
29A An entity is permitted to designate a previously recognised financial liability as a financial liability at fair value through profit or loss in accordance with paragraph D19. The entity shall disclose the fair value of financial liabilities so designated at the date of designation and their classification and carrying amount in the previous financial statements.
Use of fair value as deemed cost
  1. 1If an entity uses fair value in its opening Ind AS Balance Sheet as deemed cost for an item of property, plant and equipment, an

1 Substituted vide Notification No. G.S.R. 365(E) dated 30th March, 2016 and, thereafter, substituted vide Notification No. G.S.R. 273(E) dated 30th March, 2019.

intangible asset or a right-of-use asset (see paragraphs D5 and D7), the entity’s first Ind AS financial statements shall disclose, for each line item in the opening Ind AS Balance Sheet:

  1. the aggregate of those fair values; and
  2. the aggregate adjustment to the carrying amounts reported under previous GAAP.
Use of deemed cost for investments in subsidiaries, joint ventures and associates
  1. Similarly, if an entity uses a deemed cost in its opening Ind AS Balance Sheet for an investment in a subsidiary, joint venture or associate in its separate financial statements (see paragraph D15), the entity’s first Ind AS separate financial statements shall disclose:
    1. the aggregate deemed cost of those investments for which deemed cost is their previous GAAP carrying amount;
    2. the aggregate deemed cost of those investments for which deemed cost is fair value; and
    3. the aggregate adjustment to the carrying amounts reported under previous GAAP.
Use of deemed cost for oil and gas assets

31A If an entity uses the exemption in paragraph D8A(b) for oil and gas assets, it shall disclose that fact and the basis on which carrying amounts determined under previous GAAP were allocated.

Use of deemed cost for operations subject to rate regulation

31B If an entity uses the exemption in paragraph D8B for operations subject to rate regulation, it shall disclose that fact and the basis on which carrying amounts were determined under previous GAAP.

Use of deemed cost after severe hyperinflation

31C If an entity elects to measure assets and liabilities at fair value and to use that fair value as the deemed cost in its opening Ind AS Balance Sheet because of severe hyperinflation (see paragraphs D26–D30), the entity’s first Ind AS financial statements shall disclose an explanation of how, and why, the entity had, and then ceased to have, a functional currency that has both of the following

characteristics:

  1. a reliable general price index is not available to all entities with transactions and balances in the currency.
  2. exchangeability between the currency and a relatively stable foreign currency does not exist.
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