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© The Institute of Chartered Accountants of India
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a
This Study Material has been prepared by the faculty of the Board of Studies (Academic). The
objective of the Study Material is to provide teaching material to the students to enable them to
obtain knowledge in the subject. In case students need any clarification or have any suggestion for
further improvement of the material contained herein, they may write to the Director of Studies.
All care has been taken to provide interpretations and discussions in a manner useful for the
students. However, the Study Material has not been specifically discussed by the Council of the
Institute or any of its committees and the views expressed herein may not be taken to necessarily
represent the views of the Council or any of its Committees.
Permission of the Institute is essential for reproduction of any portion of this material.
© THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
All rights reserved. No part of this book may be reproduced, stored in a retrieval system, or
transmitted, in any form, or by any means, electronic, mechanical, photocopying, recording, or
otherwise, without prior permission, in writing, from the publisher.
Basic draft of this publication was prepared by CA. Vandana D Nagpal
Edition : April, 2023
Committee/Department : Board of Studies (Academic)
E-mail : [email protected]
Website : www.icai.org
Price : ` /- (For All Modules)
ISBN No. : 978-81-19472-10-9
Published by : The Publication & CDS Directorate on behalf of

The Institute of Chartered Accountants of India,
ICAI Bhawan, Post Box No. 7100,
Indraprastha Marg, New Delhi 110 002 (India)
Printed by :

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BEFORE WE BEGIN …
The role of a chartered accountant is evolving continually to assume newer responsibilities in a

dynamic environment. There has been a notable shift towards strategic decision making and
entrepreneurial roles that add value beyond traditional accounting and auditing. The causative
factors for the change include globalisation leading to increase in cross border transactions and
consequent business complexities, significant developments in information and technology and
financial scams underlining the need for a stringent regulatory set up. These factors necessitate
an increase in the competence level of chartered accountants to bridge the gap in competence
acquired and competence expected from stakeholders. Towards this end, the scheme of
education and training is being continuously reviewed so that it is in sync with the requisites of
the dynamic global business environment; the competence requirements are being stepped up
to enable aspiring chartered accountants to acquire the requisite professional competence to
take on new roles.
Concurrent Practical Training along with academic education: Key to achieving the
desired level of Professional Competence
Under the Revised Scheme of Education and Training, at the Final Level, you are ex pected to
apply the professional knowledge acquired through academic education and the practical
exposure gained during articleship training in addressing issues and solving practical problems.
The integrated process of learning through academic education and practical training should
also help you inculcate the requisite technical competence, professional skills and professional
values, ethics and attitudes necessary for achieving the desired level of professional
competence.
Indian Accounting Standards (Ind AS): High Standards of Financial Reporting
Consistent, comparable and understandable financial reporting is essential to develop a robust

economy. High standards of financial reporting underpin the trust investors place in financial
and non-financial information. Thus, the case for a single set of globally accepted accounting
standards has prompted many countries to pursue convergence of our national accounting
standards (I GAAP) with IFRS.
The Government of India in consultation with the ICAI decided to converge and not to adopt
IFRS issued by the IASB. The decision of convergence rather than adoption was taken after the

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detailed analysis of IFRS requirements and extensive discussion with various stakeholders.
Accordingly, while formulating IFRS-converged Indian Accounting Standards (Ind AS), efforts
have been made to keep these Standards, as far as possible, in line with the corresponding
IAS/IFRS and departures have been made where considered absolutely essential. These
changes have been made considering various factors, such as, various terminology related
changes have been made to make it consistent with the terminology used in law, e.g.,
‘statement of profit and loss’ in place of ‘statement of comprehensive income’ and ‘balance
sheet’ in place of ‘statement of financial position’. Certain changes have been made considering
the economic environment of the country, which is different as compared to the economic
environment presumed to be in existence by IFRS.
Thereafter, the Ministry of Corporate Affairs (MCA) had notified IFRS-converged Indian
Accounting Standards (Ind AS) as Companies (Indian Accounting Standards) Rules, 2015 vide
Notification dated February 16, 2015 and also the roadmap for the applicability of Ind AS for
certain class of companies from financial year 2016-17. With the financial year 2016-17, the era
of implementation of Ind AS in India had begun for the listed and unlisted companies as per the
MCA roadmap for implementation of Ind AS. The MCA has also laid down roadmap for
implementation of Ind AS for NBFCs. These developments are a significant step in achieving
international benchmarks of financial reporting.
Ind AS, at the Final level, involves understanding, application and analysing of the concepts and
testing of the same. The nitty-gritties of this new standard coupled with its inherent dynamism,
makes the learning, understanding and application of the standards in problem solving very
interesting and challenging.
Know your Syllabus
Accounts being the core competence areas of chartered accountants, at Final level, the syllabus
of Financial Reporting covers Indian Accounting Standards alongwith Ethics and Technology
integrated with the profession and accounting. However, for understanding the coverage of
syllabus, it is important to read the Study Material as the content therein has been developed
keeping in mind the extent of coverage of various topics in commensuration with 100 marks
allotted to the paper. Certain Ind AS / portion of Ind AS are excluded from the study material,
keeping in view the relevancy of the content in the Indian scenario and also to avoid the volume
of the study material.

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For understanding the coverage of syllabus, it is important to read the Study Material along with
the reference to Study Guidelines. The Study Guidelines specify the topic-wise exclusions from
the syllabus.
Know your Study Material
Efforts have been made to present the multifaceted Ind AS in a lucid manner. The Study
Material carries 17 chapters. Care has been taken to present the chapters in a logical sequence
to facilitate easy understanding by the students. Ind AS have been grouped under various
categories to make you understand the areas of relevancy and application of Ind AS. The
chapters have been numbered based on those categories and Ind AS falling in the same
category are included in that chapter. Therefore, certain chapters on Ind AS, contain several
units each unit dedicated to one Ind AS. However, for bare text of Indian Accounting standards,
students are advised to refer the notified Indian Accounting Standards uploaded on the website
at the link https://www.icai.org/post.html?post_id=15365
The various chapters/units of this subject have been structured uniformly and comprise of the
following components:
Components About the component

of each
Chapter
1. Learning Learning outcomes which you need to demonstrate after learning

Outcomes each topic have been detailed in the first page of each chapter/unit.
Demonstration of these learning outcomes will help you to achieve
the desired level of technical competence.
2. Chapter / Unit As the name suggests, the flow chart/table/diagram given at the
Overview beginning of each chapter will give a broad outline of the contents
covered in the chapter.
3. Content Ind AS have been explained by following a systematic approach of

first discussing the objective, then the scope of the pronouncement
and then extracting the underlying concepts. The concepts and
provisions of Ind AS are explained in student-friendly manner with
the aid of examples / illustrations / diagrams / flow charts.
Diagrams and flow charts will help you understand and retain the

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concept / provision learnt in a better manner. Examples and

illustrations will help you understand the application of
concepts/provisions.
Later, in the topics of Ind AS, the significant differences vis-à-vis AS

has also been incorporated so that students appreciate and
recapitulate their learning done at Intermediate level.
These value additions will, thus, help you develop conceptual clarity
and get a good grasp of the topic.
4. Illustrations Illustrations would help the students to understand the application of

involving concepts / provisions of Indian Accounting Standards. In effect, it
conceptual would test understanding of concepts / provisions as well as ability
understanding to apply the concepts / provisions learnt in solving problems and
addressing issues.
5. Summary of The summary of each Ind AS has been linked through a QR Code in
Ind AS the respective chapter/unit dedicated to that Ind AS. The QR Code
has been given at the end of the chapter discussion i.e. before ‘Test
Your Knowledge’ section
6. Test Your Questions

Knowledge
This section comprises of variety of questions which will help you to
apply what you have learnt in problem solving, and, thus, sharpen
your application skills. In effect, it will test your understanding of
concepts as well as your ability to apply the concepts learnt in
solving problems and addressing issues.
Answers
After you work out the problems / questions given under the section
“Test Your Knowledge”, you can verify your answers with the
answers given under this section. This way you can self-assess
your level of understanding of the concepts of a chapter.

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A new feature has been added at the end of each Module of Financial Reporting namely ‘Ind AS
Puzzlers: Test Your Accounting Acumen’. Under the title there is a crossword puzzle
Crossword After going through the chapters of a Module, you can test your Ind AS
Puzzle acumen by solving a crossword puzzle. The crossword puzzle has been
given at the end of every module with respect to the chapters dealt with in
that module. These crossword puzzles will be a fun for you to solve by
going through the clues, recall the concepts and review your understanding
and knowledge acquired. You are advised to solve the puzzle earnestly
after going through the chapters of the Module thoroughly.
Answer of the Ind AS Crossword puzzle is again linked through a QR

Code. You can scan the QR Code to match your filled crossword with the
answer given therein.
Though all efforts have been taken in developing this Study Material, the possibilities of errors /
omissions cannot be ruled out. You may bring such errors / omissions, if any, to our notice so
that the necessary corrective action can be taken.
We hope that the student-friendly features in the Study Material makes your learning process
more enjoyable, enriches your knowledge and sharpens your application skills.
Happy Reading and Best Wishes!

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SYLLABUS
PAPER – 1: FINANCIAL REPORTING
(One paper – Three hours – 100 Marks)
Objectives:
(a) To acquire the ability to integrate and solve problems in practical scenarios on Indi an
Accounting Standards (Ind AS) for deciding the appropriate accounting treatment and
formulating suitable accounting policies.
(b) To gain the prowess to recognize and apply disclosure requirements specified in Indian
Accounting Standards (Ind AS) while preparing and presenting the financial statements.
(c) To develop the expertise to prepare financial statements of group entities which includes
subsidiaries, associates and joint arrangements based on Indian Accounting Standards
(Ind AS).
(d) To develop understanding of certain Accounting Standards and solve problems in

practical scenarios where treatment is different in both the standards.
Contents:
1. Introduction to General Purpose Financial Statements as per Indian Accounting

Standard (Ind AS)
2. Conceptual Framework for Financial Reporting under Indian Accounting Standards

(Ind AS)
3. Application of Ind AS with reference to General Purpose Financial Statements
(i) Ind AS on Presentation of Items in the Financial Statements
(ii) Ind AS on Measurement based on Accounting Policies
(iii) Ind AS on Income Statement
(iv) Ind AS on Assets and Liabilities of the Financial Statements

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(v) Ind AS on Items impacting the Financial Statements
(vi) Ind AS on Disclosures in the Financial Statements
(vii) Other Ind AS
(viii) Ind AS on Financial Instruments (it includes Ind AS 32, Ind AS 109, Ind AS 107)
4. Ind AS on Group Accounting
5. First time adoption of Indian Accounting Standards (Ind AS 101)
6. Analysis of financial statements (as per Ind AS)
7. Ethics with Accounting Concepts
Identify and explain the key ethical issues
8. Technology and Accounting
Evolution of Accounting in the technological environment
Notes:
1. Discussion on AS 7, AS 9, AS 19 and AS 22 will be given along with corresponding Ind

AS 115, Ind AS 116 and Ind AS 12.
2. If either a new Ind AS or Announcements and Limited Revisions to Ind AS are issued or
the earlier one is withdrawn or new Ind AS, Announcements and Limited Revisions to
Ind AS are issued in place of existing Ind AS, the syllabus will accordingly include /
exclude such new developments in the place of the existing ones with effect from the
date to be notified as decided by the Institute.
3. The specific inclusions / exclusions in any topic covered in the syllabus will be af fected
every year by way of Study Guidelines.

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CONTENTS
MODULE – 1
Chapter 1: Introduction to Indian Accounting Standards
Chapter 2: Conceptual Framework for Financial Reporting under Indian Accounting
Standards (Ind AS)
Chapter 3: Ind AS on Presentation of Items in the Financial Statements
Unit 1: Ind AS 1 “Presentation of Financial Statements”
Unit 2: Ind AS 34 “Interim Financial Reporting”
Unit 3: Ind AS 7 “Statement of Cash Flows”
Chapter 4: Ind AS on Measurement based on Accounting Policies
Unit 1: Ind AS 8 “Accounting Policies, Changes in Accounting Estimates and Errors ”
Unit 2: Ind AS 10 “Events after the Reporting Period”
Unit 3: Ind AS 113 “Fair Value Measurement”
Chapter 5: Ind AS 115 “Revenue from Contracts with Customers”
Annexure: Division II of Schedule III to the Companies Act, 2013
Ind AS Puzzlers: Test Your Accounting Acumen
MODULE – 2
Chapter 6: Ind AS on Assets of the Financial Statements
Unit 1: Ind AS 2 “Inventories”
Unit 2: Ind AS 16 “Property, Plant and Equipment”
Unit 3: Ind AS 23 “Borrowing Costs”
Unit 4: Ind AS 36 “Impairment of Assets”
Unit 5: Ind AS 38 “Intangible Assets”
Unit 6: Ind AS 40 “Investment Property”
Unit 7: Ind AS 105 “Non-current Assets Held for Sale and Discontinued Operations”
Unit 8: Ind AS 116 “Leases”

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Chapter 7: Other Indian Accounting Standards

Unit 1: Ind AS 41 “Agriculture”
Unit 2: Ind AS 20 “Accounting for Government Grants and Disclosure of Government Assistance”
Unit 3: Ind AS 102 “Share Based Payment”
MODULE – 3
Chapter 8: Ind AS on Liabilities of the Financial Statements
Unit 1: Ind AS 19 “Employee Benefits”
Unit 2: Ind AS 37 “Provisions, Contingent Liabilities and Contingent Assets”
Chapter 9: Ind AS on Items impacting the Financial Statements
Unit 1: Ind AS 12 “Income Taxes”
Unit 2: Ind AS 21 “The Effects of Changes in Foreign Exchange Rates”
Chapter 10: Ind AS on Disclosures in the Financial Statements
Unit 1: Ind AS 24 “Related Party Disclosures”
Unit 2: Ind AS 33 “Earnings per Share”
Unit 3: Ind AS 108 “Operating Segments”
Chapter 11: Accounting and Reporting of Financial Instruments
Unit 1: Financial Instruments: Scope and Definitions
Unit 2: Classification and Measurement of Financial Assets and Financial Liabilities
Unit 3: Financial Instruments: Equity and Financial Liabilities
Unit 4 : Derivatives and Embedded Derivatives
Unit 5: Recognition and Derecognition of Financial Instruments
Unit 6: Hedge Accounting
Unit 7: Disclosures
Comprehensive Illustrations

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MODULE – 4
Chapter 12: Ind AS 103 “Business Combinations”
Chapter 13: Consolidated and Separate Financial Statements of Group Entities
Unit 1 : Introduction to Consolidated and Separate Financial Statements
Unit 2 : Important Definitions
Unit 3 : Consolidated Financial Statements
Unit 4 : Ind AS 110: Consolidation Procedure for Subsidiaries
Unit 5 : Ind AS 111: Joint Arrangements
Unit 6 : Ind AS 28: Investment in Associates & Joint Ventures
Unit 7 : Ind AS 27: Separate Financial Statements
Unit 8 : Disclosures
Chapter 14: Ind AS 101 “First-time Adoption of Indian Accounting Standards”
Chapter 15: Analysis of Financial Statements
Chapter 16: Professional and Ethical Duty of a Chartered Accountant
Chapter 17: Accounting and Technology

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DETAILED CONTENTS: MODULE – 1
CHAPTER 1: INTRODUCTION TO INDIAN ACCOUNTING STANDARDS (IND AS)

Learning Outcomes ................................................................................................................... 1.1
Chapter Overview ..................................................................................................................... 1.2
Contents:
1. Introduction ................................................................................................................. 1.3
2. Indian Scenario prior to introduction of Ind AS in India .................................................. 1.4
3. Limitations of Accounting Standards ............................................................................ 1.7
4. Emergence of Global Accounting Standards ................................................................. 1.7
5. Need for Global Accounting standards in India ............................................................. 1.9
6. Benefits of Global Accounting Standards ................................................................... 1.10
7. Convergence vs Adoption of IFRS .............................................................................. 1.10
8. Process of development and finalisation of Indian Accounting Standards ................... 1.11
9. Transition from AS to Ind AS ...................................................................................... 1.12
9.1 About Indian Accounting Standards ............................................................... 1.13
9.2 How Ind AS have been numbered? ............................................................... 1.15
9.3 How Ind AS have been structured? ............................................................... 1.16
10. Roadmap for applicability of Ind AS ............................................................................ 1.18
10.1 For Listed Entities ......................................................................................... 1.18
10.2 Ind AS Roadmap for Non -Banking Financial Companies (NBFC) .................. 1.27
10.3 Ind AS Roadmap for Banking and Insurance Companies .............................. 1.30
10.4 Ind AS Roadmap for Mutual Funds ................................................................ 1.30
11. Ind AS relevant Statutory Provisions .......................................................................... 1.31
11.1 Relevant Sections referring to Ind AS in the Companies Act, 2013
and Rules ..................................................................................................... 1.31
11.2 Relevant SEBI Rules and Regulations ........................................................... 1.32
12. Format of Division II to Schedule III to the Companies Act – Structure ........................ 1.33

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12.1 Introduction .................................................................................................. 1.33

12.2 Applicability .................................................................................................. 1.33
13. Guidance Note on Division II to Schedule III to the Companies Act, 2013 .................... 1.34
Summary ............................................................................................................................... 1.40
CHAPTER 2: CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING UNDER INDIAN

ACCOUNTING STANDARDS (IND AS)
Contents:
Unit 1 : Introduction ................................................................................................................ 2.4
Unit 2 : Objective of General Purpose Financial Reporting ................................................... 2.6
2.1 Objectives and usefulness of general -purpose financial reporting ................................. 2.6
2.2 Limitations of general-purpose financial reporting ......................................................... 2.6
2.3 Information provided by general purpose financial reports ............................................. 2.7
2.3.1 Economic resources and claims ...................................................................... 2.7
2.3.2 Changes in economic resources and claims .................................................... 2.8
Unit 3 : Qualitative Characteristics of Useful Financial Information ................................... 2.10
3.1 Qualitative characteristics of useful financial information ............................................. 2.10
3.1.1 Relevance .................................................................................................... 2.10
3.1.2 Faithful representation .................................................................................. 2.11
3.1.3 Applying the fundamental qualitative characteristics ...................................... 2.12
3.1.4 Enhancing qualitative characteristics ............................................................. 2.13
3.1.5 Applying the enhancing qualitative characteristics ......................................... 2.14
3.2 The cost constraint on useful financial information ...................................................... 2.14
Unit 4 : Financial Statements and the Reporting Entity ....................................................... 2.16
4.1 Objective and scope of financial statements ............................................................... 2.16
4.1.1 Reporting period ........................................................................................... 2.17

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4.1.2 Perspective adopted in financial statements .................................................. 2.17

4.1.3 Going concern assumption ............................................................................ 2.17
4.2 The reporting entity .................................................................................................... 2.18
4.2.1 Consolidated and unconsolidated financial statements .................................. 2.18
Unit 5 : The Elements of Financial Statements .................................................................... 2.20
5.1 Link between information in general purpose financial reports as per conceptual
framework and elements of financial statements ......................................................... 2.20
5.2 Definition of an asset ................................................................................................. 2.21
5.2.1 Right ............................................................................................................ 2.21
5.2.2 Potential to produce economic benefits ......................................................... 2.23
5.2.3 Control ......................................................................................................... 2.24
5.3 Definition of a liability ................................................................................................. 2.25
5.3.1 Obligation ..................................................................................................... 2.26
5.3.2 Transfer of an economic resource ................................................................. 2.26
5.3.3 Present obligation as a result of past events .................................................. 2.27
5.4 Aspects which are common to assets and liabilities .................................................... 2.28
5.4.1 Unit of account ............................................................................................. 2.28
5.4.2 Executory contracts ...................................................................................... 2.29
5.4.3 Substance of contractual rights and contractual obligations ........................... 2.29
5.5 Definition of equity ..................................................................................................... 2.30
5.6 Definition of income and expenses ............................................................................. 2.30
Unit 6 : Recognition and Derecognition ............................................................................... 2.32
6.1 The recognition process ............................................................................................. 2.32
6.2 Recognition criteria .................................................................................................... 2.33
6.2.1 Relevance .................................................................................................... 2.34
6.3 Derecognition ............................................................................................................ 2.38
Unit 7 : Measurement ............................................................................................................ 2.40

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7.1 Measurement bases of an asset or a liability .............................................................. 2.40

7.1.1 Historical cost ............................................................................................... 2.41
7.1.2 Current value ................................................................................................ 2.42
7.2 Information provided by particular measurement bases ............................................... 2.43
7.2.1 Assets .......................................................................................................... 2.44
7.2.2 Liabilities ...................................................................................................... 2.46
7.3 Factors to consider when selecting a measurement basis for initial
recognition and subsequent measurement of an asset or a liability ............................. 2.48
7.3.1 Relevance .................................................................................................... 2.49
7.3.3 Implications of enhancing qualitative characteristics for
the selection of measurement basis .............................................................. 2.56
7.4 Factors specific to initial measurement of an asset or a liability ................................... 2.57
7.4.1 Transactions on market terms ....................................................................... 2.57
7.4.2 Transactions not on market terms (or off-market transactions) ....................... 2.58
7.5 More than one measurement basis ............................................................................. 2.58
7.6 Measurement of equity ............................................................................................... 2.60
Unit 8 : Presentation and Disclosure .................................................................................... 2.61
8.1 Presentation and disclosure objectives and principles ................................................. 2.61
8.2 Classification ............................................................................................................. 2.61
8.2.1 Classification of assets and liabilities ............................................................. 2.61
8.2.2 Offsetting ...................................................................................................... 2.62
8.2.3 Classification of equity .................................................................................. 2.62
8.2.4 Classification of income and expenses .......................................................... 2.62
8.2.5 Profit or loss and other comprehensive income .............................................. 2.62
8.3 Aggregation ............................................................................................................... 2.63

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Unit 9 : Concepts of Capital and Capital Maintenance ......................................................... 2.66

9.1 Concepts of capital .................................................................................................... 2.66
9.2 Concepts of capital maintenance and the determination of profit ................................. 2.66
9.3 Capital maintenance adjustments ............................................................................... 2.67
Test Your Knowledge ............................................................................................................ 2.70
Question ................................................................................................................................. 2.70
Answer ................................................................................................................................. 2.70
CHAPTER-3: IND AS ON PRESENTATION OF GENERAL PURPOSE FINANCIAL

STATEMENTS
Unit 1: Indian Accounting Standard 1: Presentation of Financial Statements
Unit Overview ........................................................................................................................... 3.2
Contents:
1.1 Ind AS 1 ‘Presentation of Financial Statements’ – Introduction ...................................... 3.3
1.2 Objective ..................................................................................................................... 3.3
1.3 Scope .......................................................................................................................... 3.3
1.4 Definitions ................................................................................................................... 3.4
1.5 Purpose of financial statements.................................................................................... 3.7
1.6 Complete set of financial statements ............................................................................ 3.7
1.7 General features of financial statements ..................................................................... 3.10
1.7.1 Presentation of True and Fair View and compliance with Ind AS .................... 3.10
1.7.2 Going concern .............................................................................................. 3.14
1.7.3 Accrual basis of accounting ........................................................................... 3.17
1.7.4 Materiality and aggregation ........................................................................... 3.17
1.7.5 Offsetting ...................................................................................................... 3.18
1.7.6 Frequency of reporting .................................................................................. 3.19
1.7.7 Comparative information ............................................................................... 3.20
1.7.8 Consistency of presentation .......................................................................... 3.22

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1.8 Structure and content ................................................................................................. 3.23

1.8.1 Identification of Financial Statements ............................................................ 3.23
1.8.2 Balance sheet ............................................................................................... 3.24
1.8.3 Statement of profit and loss........................................................................... 3.41
1.8.4 Statement of changes in equity ..................................................................... 3.49
1.8.5 Statement of cash flows ................................................................................ 3.51
1.8.6 Notes ........................................................................................................... 3.52
1.9 Significant differences in Ind AS 1 vis-à-vis AS 1 ........................................................ 3.62
1.10 Carve out in Ind AS 1 from IAS 1 ................................................................................ 3.66
Shortcut to Ind AS Wisdom .................................................................................................. 3.68
Questions ............................................................................................................................... 3.68
Answers ................................................................................................................................. 3.72
Unit 2: Indian Accounting Standard 34: Interim Financial Reporting
Learning Outcomes ................................................................................................................. 3.77
Unit Overview ......................................................................................................................... 3.78
Contents:
2.1 Introduction ............................................................................................................... 3.79
2.2 Objective ................................................................................................................... 3.79
2.3 Scope ........................................................................................................................ 3.79
2.4 Definitions ................................................................................................................. 3.79
2.5 Contents of an interim financial report ........................................................................ 3.80
2.5.1 Form and content of interim financial report ................................................... 3.81
2.5.2 Significant events and transactions ............................................................... 3.81
2.5.3 Other disclosures .......................................................................................... 3.83
2.5.4 Periods for which interim financial statements are
required to be presented ............................................................................... 3.86
2.5.5 Materiality ..................................................................................................... 3.88

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2.6 Disclosure in annual financial statements ................................................................... 3.89

2.7 Recognition and measurement ................................................................................... 3.89
2.8 Restatement of previously reported interim periods..................................................... 3.99
2.9 Interim financial reporting and impairment ................................................................ 3.100
2.10 Significant differences in Ind AS 34 vis-à-vis AS 25 .................................................. 3.102
Shortcut to Ind AS Wisdom ................................................................................................ 3.105
Test Your Knowledge .......................................................................................................... 3.105
Questions ............................................................................................................................. 3.105
Answers ............................................................................................................................... 3.106
Unit 3: Indian Accounting Standard 7: Statement of Cash Flows
Learning Outcomes ............................................................................................................... 3.111
Unit Overview ....................................................................................................................... 3.112
Contents:
3.1 Introduction ............................................................................................................. 3.113
3.2 Meaning of statement of cash flows .......................................................................... 3.113
3.3 Objective ................................................................................................................. 3.114
3.3.1 To provide information about historical changes in cash
and cash equivalents .................................................................................. 3.114
3.3.2 To assess the ability to generate cash and cash equivalents ........................ 3.114
3.3.3 To understand the timing and certainty of their generation ........................... 3.115
3.4 Benefits of cash flow information .............................................................................. 3.115
3.4.1 Provides information enabling evaluation of changes in net
assets and financial structure (Liquidity and solvency) ................................ 3.115
3.4.2 Assesses the ability to manage the cash ..................................................... 3.115
3.4.3 Assess and compare the present value of future cash flows ......................... 3.116
3.4.4 Compares the efficiency of different entities ................................................ 3.116
3.5 Scope ...................................................................................................................... 3.116
3.6 Definitions ............................................................................................................... 3.116
3.7 Cash and Cash Equivalents ..................................................................................... 3.117

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3.8 Presentation of Statement of cash flows ................................................................... 3.119

3.8.1 Operating activities ..................................................................................... 3.119
3.8.2 Investing activities ...................................................................................... 3.121
3.8.3 Financing activities ..................................................................................... 3.124
3.9 Reporting cash flows from operating activities .......................................................... 3.126
3.10 Reporting cash flows from investing and financing activities ...................................... 3.130
3.11 Reporting cash flows on a net basis ......................................................................... 3.131
3.12 Foreign currency cash flows ..................................................................................... 3.132
3.13 Interest and dividends .............................................................................................. 3.133
3.14 Taxes on income ..................................................................................................... 3.135
3.15 Investments in subsidiaries, associates and joint ventures ........................................ 3.136
3.16 Changes in ownerships interests in subsidiaries and other businesses ...................... 3.136
3.16.1 Classification of cash flows as investing activity ........................................... 3.136
3.16.2 Classification of cash flows as financing activity .......................................... 3.137
3.17 Non-cash transactions ............................................................................................. 3.138
3.17.1 Changes in liabilities arising from financing activities ................................... 3.139
3.18 Components of cash and cash equivalents .............................................................. 3.140
3.19 Other disclosures ..................................................................................................... 3.141
3.20 Extracts of financial statements of listed entity .......................................................... 3.149
3.21 Significant differences in Ind AS 7 vis-à-vis AS 3 ...................................................... 3.152
Quick Recap .................................................................................................................. 3.155
Questions ............................................................................................................................. 3.156
Answers ............................................................................................................................... 3.161
CHAPTER 4: IND AS ON MEASURMENT BASED ON ACCOUNTING POLICIES

Unit 1 : Indian Accounting Standard 8: Accounting Policies, Changes in
Accounting Estimates and Errors

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Unit Overview ........................................................................................................................... 4.2
Contents:
1.1 Introduction ................................................................................................................. 4.3
1.2 Objective ..................................................................................................................... 4.3
1.2.1 To prescribe the criteria for selecting and changing
accounting policies ......................................................................................... 4.3
1.2.2 To prescribe the accounting treatment and disclosure
of changes in accounting policies .................................................................... 4.4
1.2.3 To prescribe the accounting treatment and disclosure of
changes in accounting estimates ..................................................................... 4.4
1.2.4 To prescribe the accounting treatment and disclosure
of corrections of errors .................................................................................... 4.4
1.2.5 To provide better base of inter-firm and intra-firm comparison .......................... 4.4
1.3 Scope .......................................................................................................................... 4.5
1.4 Definitions ................................................................................................................... 4.5
1.5 Accounting policies ...................................................................................................... 4.8
1.5.1 Selection and application of accounting policies .............................................. 4.8
1.5.2 Is it Compulsory to follow the accounting policies?........................................... 4.8
1.5.3 How to select and apply an accounting policy when specific Ind AS
is not available on the particular transaction/condition/ event? ......................... 4.9
1.5.4 Consistency of accounting policies ................................................................ 4.11
1.5.5 Changes in accounting policies .................................................................... 4.12
1.5.6 Disclosure regarding the Changes in Accounting Policies .............................. 4.23
1.6 Change in accounting estimates ................................................................................. 4.25
1.6.1 Meaning ...................................................................................................... 4.25
1.6.2 Can changes in estimates be related to prior periods? ................................... 4.26
1.6.3 Change in the basis of measurement – Whether a change
in accounting policy or change in estimate? ................................................... 4.26
1.6.4 Accounting treatment for applying changes in accounting estimates ............... 4.27

xxii
1.6.5 Disclosure of changes in estimates ............................................................... 4.29

1.7 Errors ........................................................................................................................ 4.29
1.7.1 Meaning ....................................................................................................... 4.29
1.7.2 Common types of errors ................................................................................ 4.30
1.7.3 Treatment of errors ....................................................................................... 4.30
1.7.4 Limitations on retrospective restatement ....................................................... 4.35
1.8 Disclosure of prior period errors ................................................................................. 4.36
1.9 Impracticability in respect of retrospective application
and retrospective restatement .................................................................................... 4.36
1.10 Significant differences in Ind AS 8 and AS 5 ............................................................... 4.37
Questions ............................................................................................................................... 4.41
Answers ................................................................................................................................. 4.45
Unit 2 : Ind AS 10: “Events after the Reporting Period”
Unit Overview ......................................................................................................................... 4.52
Contents:
2.1 Introduction ............................................................................................................... 4.53
2.2 Objective ................................................................................................................... 4.53
2.3 Scope ........................................................................................................................ 4.54
2.4 Definitions and explanations ...................................................................................... 4.54
2.4.1 Events after the Reporting Period .................................................................. 4.55
2.4.2 Approval of Financial Statements .................................................................. 4.55
2.4.3 When date of approval is after the public announcement of
some other financial information .................................................................... 4.57
2.4.4 Should the company report only unfavourable events? .................................. 4.59
2.5 Type of Events ........................................................................................................... 4.59

xxiii
2.6 Recognition and measurement of adjusting events ..................................................... 4.60

2.7 Accounting treatment and disclosure of Non-adjusting events after
the reporting period .................................................................................................... 4.65
2.8 Special cases ............................................................................................................ 4.66
2.8.1 Long-term Loan Arrangements ...................................................................... 4.66
2.8.2 Going concern .............................................................................................. 4.67
2.9 Dividends .................................................................................................................. 4.70
2.10 Disclosure required under Ind AS 10 .......................................................................... 4.71
2.10.1 Date of approval for issue ............................................................................ 4.71
2.10.2 Updating disclosure about conditions at the end of the reporting
period .......................................................................................................... 4.71
2.10.3 Disclosure of Non-adjusting events after the reporting period ........................ 4.72
2.11 Distribution of non cash assets to owners ................................................................... 4.74
2.11.1 Applicability .................................................................................................. 4.75
2.11.2 Non-applicability ........................................................................................... 4.75
2.11.3 Issues addressed by Appendix A to AS 10 ..................................................... 4.76
2.11.4 Accounting principles enunciated by Appendix A to Ind As 10 ......................... 4.76
2.12 Extracts of financial statements of listed entity ............................................................ 4.77
2.13 Significant differences between Ind AS 10 and AS 4 .................................................. 4.78
2.14 Carve out in Ind AS 10 from IAS 10 ........................................................................... 4.79
Questions ............................................................................................................................... 4.80
Answers ................................................................................................................................. 4.82
Unit 3- Indian Accounting Standard 113 : Fair Value Measurement
Unit Overview ......................................................................................................................... 4.87
Contents:
3.1 What is fair value? ..................................................................................................... 4.88

xxiv
3.2 Objective ................................................................................................................... 4.88

3.3 Scope ........................................................................................................................ 4.89
3.3.1 What is not covered? .................................................................................... 4.90
3.4 Definition ................................................................................................................... 4.90
3.5 Asset or liability specific fair value .............................................................................. 4.91
3.6 Unit of Account .......................................................................................................... 4.92
3.7 The transaction .......................................................................................................... 4.93
3.7.1 Principal market ............................................................................................ 4.93
3.7.2 Most advantageous market ........................................................................... 4.94
3.8 Market participants .................................................................................................... 4.94
3.8.1 What are market participants? ....................................................................... 4.95
3.9 The price ................................................................................................................... 4.95
3.9.1 Transaction cost ........................................................................................... 4.96
3.9.2 Transport cost .............................................................................................. 4.96
3.10 Applying fair value rules on non-financial assets ......................................................... 4.98
3.10.1 Highest and best use .................................................................................... 4.98
3.10.2 Valuation premise ....................................................................................... 4.100
3.11 Applying fair value rules to liabilities and an entity’s own equity instruments .............. 4.101
3.11.1 When liability and equity instruments are held by
other parties as assets ................................................................................ 4.102
3.11.2 When liability and equity Instruments are not held by other
parties as assets ........................................................................................ 4.102
3.12 Applying fair value rules to financial asset & financial liability
with offsetting position in market risk or counterparty risk .......................................... 4.102
3.13 Fair value at initial recognition .................................................................................. 4.104
3.14 Valuation techniques ................................................................................................ 4.105
3.15 Inputs to valuation techniques .................................................................................. 4.108
3.15.1 Level 1 Inputs ............................................................................................. 4.109
3.15.2 Level 2 Inputs ............................................................................................ 4.111

xxv
3.15.3 Level 3 Inputs ............................................................................................ 4.112

3.16 Disclosures .............................................................................................................. 4.113
3.17 Extracts of financial statements of listed entity .......................................................... 4.115
Questions ............................................................................................................................. 4.117
Answers ............................................................................................................................... 4.121
CHAPTER 5: IND AS 115 “REVENUE FROM CONTRACTS WITH CUSTOMERS”

Contents:
1. Scope .......................................................................................................................... 5.3
2. Definitions ................................................................................................................... 5.4
3. Overview ..................................................................................................................... 5.5
4. Transition .................................................................................................................... 5.6
5. Step 1: Identifying the contract ..................................................................................... 5.7
5.1 Criteria for recognizing a contract .................................................................... 5.7
5.2 Contracts that do not pass Step 1: Reassessing the Step 1 criteria ................ 5.11
5.3 Contract term ................................................................................................ 5.12
5.4 Combining contracts ..................................................................................... 5.13
5.5 Contract Modifications .................................................................................. 5.15
6. Step 2: Identifying performance obligations ................................................................ 5.20
6.1 Criteria for identifying performance obligation ................................................ 5.20
6.2 Multiple Element Arrangements/Goods and services that are not distinct ....... 5.29
6.3 Customer options for additional goods or services ......................................... 5.34
6.4 Long term arrangements ............................................................................... 5.38
6.5 Consignment Arrangements .......................................................................... 5.38
6.6 Principal vs agent consideration .................................................................... 5.40

xxvi
6.7 Non-refundable upfront fees .......................................................................... 5.44

7. Step 3: Determining the transaction price ................................................................... 5.45
7.1 Variable consideration .................................................................................. 5.46
7.2 Significant financing component .................................................................... 5.64
7.3 Non-cash consideration ................................................................................ 5.75
7.4 Consideration payable to a customer ............................................................. 5.78
8. Step 4: Allocating the transaction price to performance obligations ............................. 5.82
8.1 Determining stand-alone selling price ............................................................ 5.82
8.2 Changes in the transaction price ................................................................... 5.92
9. Step 5: Satisfying performance obligation ................................................................... 5.95
9.1 What does transfer of control mean? ............................................................. 5.96
9.2 Does the customer acquire control over a period of time or at a
point in time? ................................................................................................ 5.97
9.3 Repurchase agreements ............................................................................. 5.112
9.4 Bill-and-hold ............................................................................................... 5.117
9.5 Licences of intellectual property .................................................................. 5.119
10. Contract Costs ......................................................................................................... 5.124
10.1 Costs to obtain a contract (contract acquisition costs) .................................. 5.124
10.2 Costs to fulfil a contract (contract fulfilment costs) ....................................... 5.126
10.3 Amortisation and impairment ....................................................................... 5.128
11. Presentation & disclosure......................................................................................... 5.129
11.1 Presentation ............................................................................................... 5.129
11.2 Disclosure .................................................................................................. 5.129
12. Service Concession Arrangements ........................................................................... 5.131
12.1 About Arrangement ..................................................................................... 5.131
12.2 Accounting Principles .................................................................................. 5.132
12.3 Service Concession Arrangements: Disclosures .......................................... 5.136
13. Extracts of financial statements of listed entity .......................................................... 5.140

xxvii
14. Significant Differences in Ind AS 115 vis-à-vis AS 7 and AS 9 ................................... 5.143

Test your knowledge ........................................................................................................... 5.146
Questions ............................................................................................................................. 5.146
Answers ............................................................................................................................... 5.149
ANNEXURE: DIVISION II OF SCHEDULE III TO THE COMPANIES ACT, 2013 ............. A.1 – A.37
Ind AS Puzzlers: Test Your Accounting Acumen ............................................................. (1)-(4)

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© The Institute of Chartered Accountants of India

© THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

Basic draft of this publication was prepared by CA. Vandana D Nagpal

Edition : April, 2023

Committee/Department : Board of Studies (Academic)

Price : ` /- (For All Modules)

ISBN No. : 978-81-19472-10-9

Published by : The Publication & CDS Directorate on behalf of

© The Institute of Chartered Accountants of India

The role of a chartered accountant is evolving continually to assume newer responsibilities in a

Indian Accounting Standards (Ind AS): High Standards of Financial Reporting

Consistent, comparable and understandable financial reporting is essential to develop a robust

© The Institute of Chartered Accountants of India

Know your Syllabus

© The Institute of Chartered Accountants of India

Know your Study Material

Components About the component

1. Learning Learning outcomes which you need to demonstrate after learning

3. Content Ind AS have been explained by following a systematic approach of

© The Institute of Chartered Accountants of India

concept / provision learnt in a better manner. Examples and

Later, in the topics of Ind AS, the significant differences vis-à-vis AS

4. Illustrations Illustrations would help the students to understand the application of

6. Test Your Questions

© The Institute of Chartered Accountants of India

Answer of the Ind AS Crossword puzzle is again linked through a QR

Happy Reading and Best Wishes!

© The Institute of Chartered Accountants of India

(d) To develop understanding of certain Accounting Standards and solve problems in

1. Introduction to General Purpose Financial Statements as per Indian Accounting

2. Conceptual Framework for Financial Reporting under Indian Accounting Standards

3. Application of Ind AS with reference to General Purpose Financial Statements

(i) Ind AS on Presentation of Items in the Financial Statements

(ii) Ind AS on Measurement based on Accounting Policies

(iii) Ind AS on Income Statement

(iv) Ind AS on Assets and Liabilities of the Financial Statements

© The Institute of Chartered Accountants of India

(vi) Ind AS on Disclosures in the Financial Statements

(vii) Other Ind AS

4. Ind AS on Group Accounting

5. First time adoption of Indian Accounting Standards (Ind AS 101)

6. Analysis of financial statements (as per Ind AS)

7. Ethics with Accounting Concepts

Identify and explain the key ethical issues

8. Technology and Accounting

Evolution of Accounting in the technological environment

1. Discussion on AS 7, AS 9, AS 19 and AS 22 will be given along with corresponding Ind

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

Chapter 7: Other Indian Accounting Standards

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

DETAILED CONTENTS: MODULE – 1

CHAPTER 1: INTRODUCTION TO INDIAN ACCOUNTING STANDARDS (IND AS)

© The Institute of Chartered Accountants of India

12.1 Introduction .................................................................................................. 1.33

CHAPTER 2: CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING UNDER INDIAN

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