List of Key Ind AS Standards

Indian Accounting Standards (Ind AS), modeled after International Financial Reporting Standards (IFRS), apply to specific companies in India. Ind AS aims to enhance the quality of financial reporting by increasing transparency and comparability among companies and across borders.

India has implemented Ind AS gradually, mandating listed companies and certain other large entities to adopt it beginning in the financial year 2016–17. Ind AS encompasses various aspects of financial reporting, such as revenue recognition, financial instruments, leases, and business combinations.

The adoption of Ind AS has brought about substantial changes in Indian companies’ preparation and presentation of financial statements. Indian companies now have a mandate to provide more comprehensive and insightful disclosures in their financial statements. Such disclosures serve to empower investors and other stakeholders, enabling them to make more informed decisions.

The following are the Indian Accounting Standards that converged with IFRS, including details such as the Indian AS number, name, and objectives:

Ind AS 101 (First-time Adoption of Indian Accounting Standards)

The objective of this Indian Accounting Standard (Ind AS) is to ensure that an organization’s initial Ind-AS financial statements and interim financial reports for a portion of the period addressed in those financial statements provide top-notch information that:

1. ensures user transparency and consistency across all periods displayed.
2. provides an appropriate foundation for accounting in accordance with Ind-AS guidelines; and
3. can be produced at a price that doesn’t outweigh the benefits.

Ind AS 102 (Share-based Payment)

The objective of this standard is to outline the financial reporting requirements for an entity engaged in share-based payment transactions. Essentially, it mandates that an entity accounts for the impacts of such transactions, including expenses associated with employee share options, within its profit or loss statement and overall financial position.

Ind AS 103 (Business Combinations)

This Indian Accounting Standard objective is to improve the reliability, relevance, and comparability of information a reporting entity provides in its financial statements regarding a business combination and its consequences. To achieve this goal, the standard outlines principles, and requirements that the acquiring entity must follow:

1. It must recognize and measure in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree.
2. It should acknowledge and measure the goodwill obtained in the business combination or any gain resulting from a bargain purchase.
3. It must determine the necessary information to disclose, enabling users of the financial statements to assess the nature and financial implications of the business combination.

 Ind AS 104 (Insurance Contracts)

This Indian Accounting Standard explains how insurance contracts issued by any entity (called an “insurer” in this standard) should be reported financially. Specifically, the standard mandates the following:

1. Insurers must make specific improvements to their insurance contract accounting.
2. The insurer’s financial statements should provide disclosure, identifying and explaining the amounts arising from insurance contracts. This disclosure aims to assist users of the financial statements in comprehending the amount, timing, and uncertainty of future cash flows from insurance contracts.

Ind AS 105 (Non-current Assets Held for Discontinued Operations and Sales)

The objective of this Indian Accounting Standard is to define the accounting for assets held for sale as well as the presentation and disclosure of discontinued operations. Specifically, the Indian Accounting Standard mandates the following:

1. Measure assets meeting the criteria for sale at the lower of their carrying amount and fair value, minus the selling costs, and stop depreciating them.
2. The balance sheet should separate assets that meet the criteria for holding for sale, and the statement of profit and loss should separately present the results of discontinued operations.

Ind AS 106 (Exploration for and Evaluation of Mineral Resources)

The objective of this Indian Accounting Standard is to delineate the financial reporting guidelines for mineral resource exploration and evaluation. Specifically, the standard necessitates the following:

1. There are limited enhancements to current accounting practices regarding exploration and evaluation expenditures.
2. Entities recognizing exploration and evaluation assets must evaluate these assets for impairment following the Indian Accounting Standard and measure any impairment as per Ind AS 36, Impairment of Assets.
3. In its financial statements, the entity sets forth disclosure requirements to identify and elucidate the amounts resulting from mineral resource exploration and evaluation. These disclosures aim to aid users of the financial statements in comprehending the amount, timing, and certainty of future cash flows from any recognized exploration and evaluation assets.

Ind AS 107 (Financial Instruments: Disclosures)

The objective of this Indian Accounting Standard is to mandate that entities provide disclosures in their financial statements, allowing users to assess:

1. The significance of financial instruments in relation to an entity’s financial status and performance.
2. The nature and scope of financial instrument risks faced by the entity, both during and after the reporting period, as well as its risk management strategies.

Ind AS 108 (Operating Segments)

Companies are required by IND AS 108, which focuses on Operating Segments, to provide information that enhances stakeholders’ understanding of their business activities and the economic contexts in which they operate. Specifically, the standard aims to:

1. Identify the entity’s operating segments and disclose financial details for each segment.
2. Offer insights into the various products and services generating revenue for the entity.
3. Enable users of financial statements to evaluate the nature and financial implications of the entity’s business operations and the economic environments it operates within.

IND AS 108 enhances transparency by providing segment-specific financial information, enabling stakeholders to gain a deeper understanding of an entity’s performance and associated risks.

Ind AS 109 (Financial Instruments)

The objective of this Standard is to set forth principles governing the financial reporting of financial assets and financial liabilities, with the objective of providing users of financial statements with pertinent and beneficial information. This information enables users to evaluate the amounts, timing, and uncertainty associated with an entity’s future cash flows.

Ind AS 110 (Consolidated Financial Statements)

The objective of this Indian Accounting Standard (Ind AS) is to lay down principles governing the presentation and preparation of consolidated financial statements in situations where an entity exercises control over one or more other entities.

Ind AS 111 (Joint Arrangements)

The objective of this Indian Accounting Standard (Ind AS) is to establish financial reporting guidelines for entities engaged in jointly controlled arrangements.

Ind AS 112 (Disclosure of Interests in Other Entities)

The objective of this Indian Accounting Standard (Ind AS) is to compel an entity to disclose information, enabling users of its financial statements to assess:

1. The nature of its interests in other entities and the associated risks.
2. These interests have a significant influence on the company’s financial position, financial performance, and cash flows.

 Ind AS 113 (Indian Accounting Standard (Ind AS) 113 Fair Value Measurement)

This Ind AS:

1. Provides a definition of fair value.
2. Establishes a framework for measuring fair value within a single Ind AS.
3. Mandates disclosures regarding fair value measurements.

Ind AS 114 (Regulatory Deferral Accounts)

This standard aims to outline the financial reporting requirements for regulatory deferral account balances, which arise when an entity provides goods or services to customers at a price or rate that authorities regulate.

Ind AS 115 (Revenue from Contracts with Customers)

This Standard aims to establish principles that guide an entity in reporting pertinent information to users of financial statements regarding the nature, timing, amount, and uncertainty of revenue and cash flows stemming from contracts with customers.

Ind AS 116 (Leases)

This standard describes principles for recognizing, presenting, measuring, and disclosing leases. Its objective is to ensure that both lessees and lessors furnish relevant information in a manner that accurately reflects these transactions. Such information offers financial statement users a basis to evaluate the impact of leases on an entity’s financial position, performance, and cash flows.

In applying this standard, an entity must consider the terms and conditions of contracts, along with all pertinent facts and circumstances. This standard must be applied consistently to contracts with similar characteristics and under similar circumstances.

Ind AS 1 (Presentation of Financial Statements)

This standard lays the foundation for presenting general-purpose financial statements, aiming to ensure comparability with both the entity’s financial statements from previous periods and the financial statements of other entities. It establishes overarching financial statement presentation requirements, provides guidelines for their structure, and outlines minimum content requirements.

Ind AS 2 (Inventories)

The goal of this standard is to provide guidelines for the accounting treatment of inventories. Determining the amount of cost to recognize as an asset and carrying it forward until the recognition of related revenues is a crucial aspect of inventory accounting. This standard addresses the determination of cost and its subsequent recognition as an expense, which may include write-downs to net realizable value. It also covers cost formulas used to allocate costs to inventories.

Ind AS 7 (Statement of Cash Flows)

The objective of this standard is to offer guidance on the accounting treatment of inventories. Determining the appropriate cost to recognize as an asset and carrying it forward until the recognition of related revenues is a crucial aspect of inventory accounting. This standard focuses on cost determination and subsequent recognition as an expense, including potential write-downs to net realizable value. Additionally, it addresses the cost formulas utilized to allocate costs to inventories.

Ind AS 8 (Accounting Policies, Changes in Accounting Estimates and Errors)

The purpose of this standard is to establish the guidelines for choosing and modifying accounting policies, as well as the procedures for accounting for and disclosing changes in accounting policies, adjustments in accounting estimates, and corrections of errors. The standard seeks to enhance the relevance and reliability of an entity’s financial statements, making them more comparable over time and across different entities.

Ind AS 1, Presentation of Financial Statements, specifies the disclosure requirements for accounting policies, except for those related to changes in accounting policies.

Ind AS 10 (Events after the Reporting Period)

This standard aims to set guidelines for:

1. An entity should modify its financial statements to reflect events that transpired beyond the reporting period.
2. An entity is required to disclose the approval date for the financial statements and any events that transpired after the reporting period.

Additionally, the Standard mandates that an entity should not prepare its financial statements on a going concern basis if events occurring after the reporting period suggest that the going concern assumption is no longer appropriate.

Ind AS 12 (Income Taxes)

The objective of this standard is to provide guidelines for income tax accounting procedures. The primary focus of income tax accounting is to identify the most effective methods for managing both current and potential tax implications.

1. The assets (or liabilities) recorded in an entity’s balance sheet for eventual recovery or settlement.
2. The process involves the recognition of transactions and other occurrences in an entity’s financial statements during the current period.

Ind AS 16 (Property, Plant and Equipment)

This standard aims to outline the accounting procedures for property, plant, and equipment to enable users of financial statements to understand details about an entity’s investment in these assets and the alterations in such investment over time. Key focal points in property, plant, and equipment accounting include asset recognition, the determination of their carrying values, and the acknowledgment of depreciation charges and impairment losses.

Ind AS 19 (Employee Benefits)

The goal of this standard is to provide guidelines for employee benefit accounting and disclosure. The standard requires an entity to do the following:

1. Recognize a liability representing services provided by employees in exchange for future employee benefits; and
2. Record an expense that reflects the financial gain the company received from the services its employees provided in exchange for benefits.

 Ind AS 20 (Accounting for Government Grants and Disclosure of Government Assistance)

The objective of IND AS 20 is to set forth guidelines for the accounting treatment and disclosure requirements pertaining to government grants and assistance, which may include subsidies, subventions, and similar forms of support provided by the government.

Ind AS 21(The Effects of Changes in Foreign Exchange Rates)

An entity can engage in foreign activities through two avenues: conducting transactions in foreign currencies or operating in foreign markets. Moreover, the entity may choose to present its financial statements in a foreign currency. The objective of this standard is to provide guidelines on incorporating foreign currency transactions and foreign operations into an entity’s financial statements, as well as translating financial statements into a presentation currency.

The primary concerns revolve around determining the appropriate exchange rate(s) to utilize and reporting the impact of exchange rate fluctuations in the financial statements.       

 Ind AS 23 (Borrowing Costs)

The goal of IAS 23 is to provide guidelines for accounting for borrowing costs. IAS 23 treats various elements such as interest on bank overdrafts and loans, finance charges related to finance leases, and exchange rate differences on foreign currency borrowings as adjustments to interest expenses.

Ind AS 24 (Related Party Disclosures)

The objective of this standard is to ensure that an entity’s financial statements contain the necessary disclosures to emphasize the potential influence of related parties’ presence, transactions, and outstanding balances, including commitments, on its financial position and results of operations.

Ind AS 27 (Separate Financial Statements)

When an entity compiles separate financial statements, the aim of this standard is to specify the accounting and disclosure criteria for investments in subsidiaries, joint ventures, and associates.

Ind AS 28 (Investments in Associates and Joint Ventures)

The goal of this standard is to provide guidelines for the accounting treatment of investments in associates and to outline the requirements for applying the equity method when accounting for investments in associates and joint ventures.

Ind AS 29 (Financial Reporting in Hyperinflationary Economies)

IAS 29 aims to establish clear guidelines for entities operating in hyperinflationary economies, ensuring that the financial information they present is meaningful and accurately reflects the economic reality.

Ind AS 32 (Financial Instruments: Presentation)

The goal of this standard is to establish guidelines for presenting financial instruments as liabilities or equity, as well as for offsetting financial assets and financial liabilities. From the issuer’s viewpoint, it involves categorizing financial instruments into financial assets, financial liabilities, and equity instruments, specifying the treatment of related interest, dividends, losses, and gains, and determining the conditions for offsetting financial assets as well as financial liabilities.

These principles complement those outlined for recognizing and measuring financial assets and liabilities in Ind AS 39 Financial Instruments: Recognition and Measurement, as well as disclosing information about them in Ind AS 107 Financial Instruments: Disclosures.

Ind AS 33 (Earnings per Share)

The aim of this standard is to establish principles for calculating and presenting earnings per share (EPS) to enhance performance comparisons among various entities within the same reporting period and between different reporting periods for the same entity. Despite the challenges posed by different accounting policies in determining ‘earnings,’ maintaining a consistently determined denominator improves financial reporting. This standard primarily focuses on the denominator aspect of the earnings per share calculation.

Ind AS 34 (Interim Financial Reporting)

The objective of this standard is to establish the minimum requirements for the content of an interim financial report, along with principles for recognition and measurement in both complete and condensed financial statements for an interim period. Timely and dependable interim financial reporting enhances the comprehension of an entity’s ability to generate earnings and cash flows, as well as its financial condition and liquidity, thereby benefiting investors, creditors, and other stakeholders.

Ind AS 36 (Impairment of Assets)

This standard aims to outline the steps an entity must take to guarantee that the value of its assets does not exceed their recoverable amount. If an asset’s carrying value surpasses the amount expected to be recovered through its use or sale, it is carried at more than its recoverable amount. In such instances, the standard mandates the recognition of an impairment loss and identifies the asset as impaired. Additionally, the standard outlines conditions under which an entity should reverse an impairment loss and provides guidelines for necessary disclosures.

Ind AS 37 (Provisions, Contingent Liabilities and Contingent Assets)

The objective of this standard is to apply appropriate recognition criteria and measurement bases to provisions, contingent liabilities, and contingent assets, while also ensuring sufficient disclosure in the notes for users to understand their nature, timing, and amounts.

Ind AS 38 (Intangible Assets)

This standard aims to establish the accounting treatment for intangible assets not explicitly addressed by another standard. It mandates that an entity recognizes an intangible asset only when specific criteria are met. Additionally, the standard provides guidance on how to measure the carrying amount of intangible assets and requires specific disclosures regarding intangible assets.

Ind AS 40 (Investment Property)

This standard aims to provide guidelines for the accounting treatment of investment property and the accompanying disclosure requirements.

Ind AS 41(Agriculture)

The objective of this standard is to establish guidelines for accounting treatment and disclosures relating to agricultural activity.

Questions to Test Your Understanding

Ques1: What is the primary objective of Ind AS 101 (First-time Adoption of Indian Accounting Standards)?

1. To ensure user transparency and consistency across all periods displayed.
2. Simplifying financial reporting for small businesses.
3. To reduce the cost of preparing financial statements.
4. To eliminate the need for interim financial reports.

Ques2: Which Ind AS standard deals with the financial reporting requirements for share-based payment transactions?

1. Ind AS 103
2. Ind AS 107
3. Ind AS 102
4. Ind AS 108

Ques3: The objective of Ind AS 109 (Financial Instruments) is to:

1. Provide guidelines for the accounting treatment of inventories.
2. Establish principles for financial reporting of financial assets and liabilities.
3. Set rules for the preparation of interim financial reports.
4. Describe the principles for recognizing leases.

Ques4: Ind AS 115 (Revenue from Contracts with Customers) is primarily concerned with:

1. Measurement and presentation of financial instruments.
2. Guidelines for employee benefits accounting.
3. Principles for reporting revenue and cash flows from contracts with customers.
4. Accounting for borrowing costs.

Ques5: Which standard is specifically aimed at ensuring proper disclosure of an entity’s interests in other entities?

1. Ind AS 112
2. Ind AS 24
3. Ind AS 28
4. Ind AS 10

Summary

The Indian Accounting Standards (Ind AS) play a crucial role in enhancing the quality and transparency of financial reporting in India, aligning with the International Financial Reporting Standards (IFRS) to promote comparability across borders. These standards cover a wide range of financial reporting aspects, including revenue recognition, financial instruments, leases, business combinations, and more.

The convergence of Ind AS with IFRS has led to significant changes in how Indian companies prepare and present their financial statements. Indian companies now have a mandate to provide more comprehensive and insightful disclosures, enabling investors and stakeholders to make informed decisions.

Each Ind AS standard has specific objectives and guidelines tailored to address various aspects of financial reporting, such as the recognition and measurement of assets and liabilities, disclosure requirements, and accounting treatment for specific transactions or activities.

Overall, the adoption of India AS signifies a commitment to international best practices in financial reporting, contributing to greater transparency, comparability, and confidence in India’s financial markets.