IND AS EYE

  Offsetting of Income & Expenditure: Facts of the case: Company RIGG has entered into a contract with the customer to construct and handover the Building. However, based on the requirement of the customer there is an addition in scope of work and the costs incurred along with service charge are reimbursed from the customer. RIGG subcontracts the work to the third party and recovers the cost along with service charge from the customer. Can the revenue and expenditure related to additional scope of work be netted off in P&L account?   Extracts of the standard: As per Ind AS 1: As per para 32, An entity shall not offset assets and liabilities or income and expenses, unless required or permitted by an Ind AS. As per Para 33, An entity reports separately both assets and liabilities, and income and expenses. Offsetting in the statement of profit and loss or balance sheet, except when offsetting reflects the substance of the transaction or other event, det...

                  Consolidation of financial statements- Ind AS 110 When does consolidation required ? Sec 129(3) of the Companies Act 2013 requires all companies to present consolidated financial statements (CFS) apart from separate financial statements. SEBI-LODR also requires listed companies to present its consolidated financial statements. Such  Consolidated financial statements are required when the entity has a Subsidary, Associate or Joint venture. Ind AS 110 Specifies procedures for consolidation after acquisition date Ind AS 103 "Business Combinations" specifies procedures for consolidation on acquistion date     Although there is an exception for preparation of consolidated financials statements  which you can understand easily by reading the scope. (a) A parent need not present consolidated financial statements if it meets all the following conditions: it is a wholly-owned subsi...

We will discuss about the accounting treatment of upfront fee/loan processing fee paid. IGAAP: Accounting standard 16 : Borrowing costs Borrowing costs are interest and other costs incurred by an enterprise in connection with the borrowing of funds/amount. Borrowing costs may include:  (a) interest and commitment charges on bank borrowings and other short-term and long-term borrowings;  (b) amortization of discounts or premiums relating to borrowings;  (c) amortization of ancillary costs incurred in connection with the arrangement of borrowings;  (d) finance charges in respect of assets acquired under finance leases or under other similar arrangements; and  (e) exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs Upfront fee/processing fee are  recognized as an expense in the period in which they are incurred. However, to the exte...

                    Discounting of Security Deposit There are two types of deposits available 1. Interest free deposits 2. Deposits having interest. As per Ind AS 109, Interest free security deposits are discounted to bring it to the present value..The whole Ind AS speaks about Fair value. Evaluation: A company receives a security deposit as per the terms of agreement and repays the same when the agreement is ended/terminated i.e. after 5 years. For the period of 5 years the company has the company and as per the time value of money the amount repaid after 5 years is not the same amount which is received now. It involves time factor. In order to bring it to the fair value, security deposit is discounted using the Incremental borrowing rate. The difference between the discounted amount and the amount received will be accounted as income received in advance. Such amount will be transferred to p&l (in...

                           Changes in CARO,  2020                       I. Non - current assets Verification of the title deeds of the immovable properties and it’s disclosure in the financial statements Specific format for maintaining the details of the fixed assets (PPE). In case of revaluation of Property, Plant and Equipment or intangible assets, whether the revaluation is based on the valuation made by a Registered Valuer, if the change is 10% or more of the net carrying value. II. Inventory In case of working capital loan based on current assets in excess of 5 crore rupees is sanctioned from the financial institutions, the quarterly returns or statements filed by the company are in agreement with the books of accounts, if not, give details. III. Investments, loans or advances by company In case of any investments, provision of lo...

      Highlights of Ind AS 16 - Property, Plant & Equipment Scope: It applies to all tangible assets except for Assets held for Sale and Assets of Discontinued Operations (Ind AS 2)  Biological Assets other than bearer plant (Ind AS 41)  Assets for Exploration and Evaluation of Mineral Resources (Ind AS 106)  Mineral Right and Mineral, oil and natural gas reserves  What is Plant, Property and Equipment (PPE):   Plant, Property and Equipment (PPE) are assets which are held for use in production of goods, rendering of services, administrative use, and rental purpose and are expected to be used in more than one period It does not include assets held for sale.  Recognition Principle: Plant, Property and Equipment (PPE) shall be recognized if it is :  Probable that future economic benefita will flow to entity, and Cost can be measured reliably.  Spare parts, Stand-by equ...