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Accounting Standards
IND AS 1: PRESENTATION OF FINANCIAL STATEMENTS
1. Objective
This Standard prescribes the basis for presentation of general purpose financial
statements to ensure comparability both with the entity’s financial statements of
previous periods and with the financial statements of other entities. It sets out
• Overall requirements for the presentation of financial statements.
• Guidelines for their structure and
• Minimum requirements for their content
2. Purpose of financial statements
Financial statements are a structured representation of the
• Financial position and
• Financial performance of an entity.
3. Presentation of True and Fair view
Presentation of true and fair view requires the faithful representation of
• The effects of transactions, other events and conditions in accordance with
the definitions and recognition criteria for assets, liabilities, income and
expenses set out in the Framework.
• The application of Ind Ass, with additional disclosure when necessary, is
pressured to result in financial statements that present a true and fair view.
4. Structure and Content
The Standard requires that an entity shall clearly identity the financial statements
and distinguish them from other information in the same published document. The
Standard requires some minimum line items to be presented in the balance sheet. It
also prescribes the information to be presented in statement of profit and loss, other
comprehensive income section and statement of changes in equity. However, this
Standard does not apply to the structure and content of condensed interim financial
statements prepared in accordance with Ind AS 34 ‘Interim Financial Reporting’.
5. Other Comprehensive Income
Other comprehensive income comprises items of income and expenses
(including reclassification adjustments) that are not recognized in profit or loss as
required or permitted by other Ind Ass.
6. Current/non-current distinction
The Standard requires that an early shall present current and non-current assets,
and current and non-current liabilities, as separate classifications in its balance sheet
except when a presentation based on liquidity provides information that is reliable
and more relevant. When that exception applies, an entity shall present all assets
and liabilities in order of liquidity.

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7. Other Issues
a) Going Concern
• When preparing financial statements, management shall make an
assessment of an entity’s ability to continue as a going concern.
• An entity shall prepare its financial statements on a going concern basis
unless management either intends to liquidate the entity or to cases trading,
or has no realistic alternative but to do so.
b) Accrual Basis of Accounting
• An entity shall prepare its financial statements, except for cash flow
information, using the accrual basis of accounting.
• When the accrual basis of accounting is used, an entity recognizes items as
assets, liabilities, equity, income and expenses (the elements of financial
statements) when they satisfy the definitions and recognition criteria for
those elements in the Framework.
c) Materiality and Aggregation
• An entity shall present separately each material class of similar items.
• An entity shall present separately items of a dissimilar nature or function
unless they are immaterial except when required by law.
d) Offsetting
• An entity shall not offset assets and liabilities or income and expenses, unless
required or permitted by an Ind AS.
• 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, detracts from the ability of users both to understand the transactions,
other events and conditions that have occurred and to assess the entity’s
future cash flows.
e) Frequency of Reporting
An entity shall present a complete set of financial statements (including
comparative information) at least annually.
f) Comparative Information
Except when Ind Ass permit or require otherwise, an entity shall present
comparative information in respect of the preceding period for all amounts
reported in the current period’s financial statements.
An entity shall present, as a minimum:
• 2 Balance Sheets
• 2 Statement of Profit and Loss
• 2 Statement of Cash Flows
• 2 Statement of Charges in Equity and
• Related Notes

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g) Change in Accounting Policy, Retrospective Restatement or Reclassification

An entity shall present a Third Balance Sheet as at the beginning of the
preceding period in addition to the minimum comparative financial statement if:
i. It applies an accounting policy retrospectively, makes a retrospective
restatement of items in its financial statements or reclassifies items in
its financial statements; and
ii. The retrospective application, retrospective restatement or the
reclassification has a material effect on the information in the balance
sheet at the beginning of the preceding period.
In the above circumstances, an entity shall present 3 Balance sheets as at:
a. The end of the current period;
b. The end of the preceding period;
c. The beginning of the preceding period.
h) Consistency of Presentation
An entity shall retain the presentation and classification of items in the
financial statements from one period to the next.
8. Disclosures
The Standard, among other things, requires that:
a) An entity shall disclose, in the summary of significant accounting policies or
other notes, the judgements, apart from those involving estimations, that
management has made in the process of applying the entity’s accounting
policies and that have the most significant effect on the amounts recognized
in the financial statements.
b) An entity shall disclose information about the assumption it makes about the
future, and other major sources of estimation uncertainty at the reporting
period, that have a significant risk of resulting in a material adjustment to the
carrying a mounts of assets and liabilities within the next financial year.
c) An entity shall disclose information that enables users of its financial
statements to evaluate the entity’s objectives, policies and processes for
managing capital.

IND AS 16: PROPERTY, PLANT AND EQUIPMENT

1. Objective
The objective of this Standard is to prescribed the accounting treatment for
property, plant and equipment to that users of the financial statements can discern
information about an entity’s investment in its property, plant and equipment and
the changes in such investment.
The principal issues in accounting for property, plant and equipment are:
a) The recognition of the assets
b) The determination of their carrying amounts

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c) The depreciation charges

d) Impairment losses to be recognized in relation to them

Scope
This Standard shall be applied in accounting for property, plant and equipment
except when another Standard requires or permits a different accounting treatment.
This Standard applies to property, plant and equipment used to develop or
maintain the assets described above.
For example: Ind AS 17 ‘Leases” requires an entity to evaluate its recognition of an
item of leased property, plant and equipment on the basis of the transfer of risks
and rewards. However, in such cases other aspects of the accounting treatment for
these assets, including depreciation, are prescribed by this Standard.
2. Definition
Property, plant and equipment are tangible items that:
a) Are held for use in the production or supply of goods or services, for rental to
others, or for administrative purposes and
b) Are expected to be used during more than one period.
Recognition
The cost of an item of property, plant and equipment shall be recognized as an
asset if, and only it:
a) It is probable that future economic benefits associated with the item will flow
to the entity; and
b) The cost of the item can be measured reliably.
An entity evaluated under this recognition principle all its property, plant and
equipment costs at the time they are incurred. These cost include:
a) Initial Costs: Costs incurred initially to acquire or construct an item of
property, plant and equipment and
b) Subsequent Costs: Costs incurred subsequently to add to, replace part of, or
service it.
3. Measurement at Recognition
An item of property, plant and equipment that qualifies for recognition as an asset
shall be measured at its cost.
The cost of an item of property, plant and equipment is the cash price equipment
at the recognition date. If payment is deferred beyond normal credit terms: the
difference between the cash price equivalent and the total payment is recognized as
interest over the period of credit unless such interest is capitalized in accordance
with Ind AS 23.
Cost is :
• The amount of cash or cash equipment paid or the fair value of the other
consideration given to acquire an asset

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• At the time of its acquisition or construction or, where applicable, the

amount attributed to that asset when initially recognized in accordance with
the specific requirements of other Indian Accounting Standards, e.g. Ind AS
102 ‘Share-based Payment’.
4. Elements of Cost
The cost of an item of property, plant and equipment companies:
Cost at initial Recognition
i. Its purchase price including import duties and non-refundable purchase
taxes, after deducting trade discounts and rebates
ii. The initial estimate of the costs of dismantling and removing the item and
restoring the site on which it is located
iii. Any cost directly attributable to bringing the asset to the location and
condition necessary for it to be capable of operating in the manner intended
by management
iv. The obligation for which an entity incurs either when the item is acquired of
as a consequence of having used the item during a particular period for
purposes other than to produce inventories during that period.
Note:
Examples of Directly Attributable Costs
• Costs of employee benefits (as defined in Ind AS 19 ‘Employee Benefits’)
arising directly from the construction or acquisition of the item of property,
plant and equipment;
• Costs of site preparation;
• Initial delivery and handling costs;
• Installation and assembly costs;
• Costs of testing whether the asset is functioning properly, after deducting the
net proceeds from selling any items produced while bringing the asset to that
location and condition (such as samples produced when testing equipment);
and
• Professional fees
5. Self-constructed Asset
The cost of a self-constructed asset is determined using the same principles as for
an acquired asset. Therefore, any internal profits are eliminated in arriving at such
costs.
6. Asset Exchange Transaction
One or more items of property, plant and equipment may be acquired in exchange
for.
• A non-monetary asset or assets. Or
• A combination of monetary and non-monetary assets.
The cost of such an item of property, plant and equipment is measured at fair value
unless:

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a) The exchange transaction lacks commercial substance or

b) The fair value of neither the asset received nor the asset given up is reliably
measurable.
7. Cost Model
After recognition as an asset, an item of property, plant and equipment shall be
carried at its cost less any accumulated depreciation less any accumulated
impairment losses.
Revaluation Model
After recognition as an asset, an item of property, plant and equipment whose
fair value can be measured reliably shall be carried at revalued amount, being its fair
value at the date of the revaluation less any subsequent accumulated depreciation
less subsequent accumulated impairment losses.
8. Depreciation
Depreciation is the systematic allocation of the depreciable amount of an asset
over its useful life. The depreciable amount of an asset should be determined after
deducting its residual value.
Component Cost Approach
Each part of an item of property, plant and equipment with a cost that is
significant in relation to the total cost of the item shall be depreciated separately.
An entity allocates the amount initially recognized in respect of an item of
property, plant and equipment to its significant parts and depreciates separately
each such part.
The depreciation charge for each period shall be recognized in profit or loss
unless it is included in the carrying amount of another asset.
The depreciation charge for a period is usually recognized in profit or loss.
Depreciation Beings: Depreciation of an asset begins when it is available for use,
i.e. when it is in the location and condition necessary for it to be capable of
operating in the manner intended by management.
Depreciation Ceases: Depreciation of an asset ceases at the earlier of the date
that the asset is classified as held for sale (or included in a disposal group that is
classified as held for sale) in accordance with Ind AS 105 and the date that the asset
is derecognized.
9. Depreciation Method
• The depreciation method used shall reflect the pattern in which the asset’s
future economic benefits are expected to be consumed by the entity.
10. De-recognition
The carrying amount of an item of property, plant and equipment shall be
derecognized:
a) On disposal; or
b) When on future economic benefits are expected from its use or disposal.

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The gain or loss arising from the de-recognition of an item of property, plant and
equipment shall be included in profit or loss when the item is derecognized.
Gains shall not be classified as revenue.

IND AS 33: EARNINGS PER SHARE

1. Objective
This Indian Accounting Standard shall apply to companies that have issued
ordinary shares to which Indian Accounting Standards (Ind Ass) notified under the
Companies Act apply.
1. In consolidated financial statements such disclosures shall be based on
consolidated information and in separate financial statements such disclosures
shall be based on information given in separate financial statements.
2. An entity shall not present in consolidated financial statements, earning s per
share based on the information given in separate financial statements and shall
not present in separate financial statements, earnings per share based on the
information given in consolidated financial statements.
2. Basic Earnings Per Share
Ordinary share is an equity instrument that is subordinate to all other classes of
equity instruments.
Basic earnings per share shall be calculated by:
Profit or loss attributable to ordinary equity holders of the parent entity
Weighted average number of ordinary shares outstanding during the period
For the purpose of calculating basic earnings per share, the amounts attributable
to ordinary equity holders of the parent entity in respect of:
a) profit or loss from continuing operations attributable to the parent entity;
and
b) profit or loss attributable to the parent entity
adjusted for the after-tax amounts of preference dividends, differences arising on
the settlement of preference shares, and other similar effects of preference shares
classified as equity.
Note: For the purpose of calculating basic earnings per share, the number of
ordinary shares shall be the weighted average number of ordinary shares
outstanding during the period.
Note: Ordinary shares may be issued, or the number of ordinary shares
outstanding may be reduced, without a corresponding change in resources.
Examples include:
• Capitalization or bonus issue
• Bonus element in any other issue
• A share split
• A reverse share split

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3. Diluted Earnings Per Share

An entity shall calculate diluted earnings per share amounts for profit or loss
attributable to ordinary equity holders of the parent entity and, if presented, profit
or loss from continuing operations attributable to those equity holders.
Diluted EPS shall be calculated by:
Adjusted Profit/loss attributable to ordinary Equity holders of the parent entity
Adjusted Weighted average number of ordinary shares outstanding during the
period
For the purpose of calculating diluted earnings per share, the number of ordinary
shares shall be the weighted average number of ordinary shares plus the weighted
average number of ordinary shares that would be issued on the conversion of all the
dilutive potential ordinary shares into ordinary shares.
Potential ordinary shares shall be treated as dilutive when, and only when, their
conversion to ordinary shares would decrease earnings per share or increase loss per
share from continuing operations.
4. Presentation
Shall present in the statement of profit and loss basic and diluted earnings per share
for profit or loss from continuing operations attributable to the ordinary equity
holders of the parent entity and for profit or loss attributable to the ordinary equity
holders of the parent entity for the period for each class of ordinary shares that has a
different right to share in profit for the period.
An entity shall present basic and diluted earnings per share with equal prominence
for all periods presented.

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