Differences as
compared to Indian
GAAP
Summary of Standards issued under IAS /
IFRS
• IFRS and IAS
– 8 Standards under IFRS
– 41 Standards issued under IAS, of which 29 are LIVE – balance have been withdrawn /
superseded
– Final Interpretation issued – 14 , of which 13 are LIVE (International Financial Reporting
Interpretations Committee)
– SIC – 33 issued, of which 11 LIVE (Standing Interpretations Committee)
– 4 Draft Interpretations are outstanding
Slide 1
AS 2 – Valuation of Inventories
Vs
IAS 2 – Inventories
Difference between IFRS and Indian GAAP
Cost formulae
Indian GAAP
IFRS
AS 2 requires that the formula used in
IAS 2 prescribes same cost
determining the cost of an item of inventory
formula to be used for all
needs to be selected with a view to
inventories having a similar
providing the fairest possible approximation
nature and use to the entity. If
to the cost incurred in bringing the item to
it is different product / use,
its present location and condition. However,
different formulae may be
there is no stipulation for use of same cost
used
formula in AS 2 as compared to IFRS.
Deferred
No guidance
Excess over normal price is to
Settlement
be accounted as interest over
basis
the period of financing.
Slide 3
Difference between IFRS and Indian GAAP
Biological
Assets
Indian GAAP
IFRS
Generally done at COST.
Fair Value less Estimated cost
to sell
Slide 4
AS 3 Cash Flow Statements
Vs
IAS 3 - Cash Flow Statements
Difference between IFRS and Indian GAAP
SME’s
Indian GAAP
IFRS
Exemption for SME’s (Tier II
No exemption for SME’s
and III entities)
Bank overdrafts
AS 3 is silent. Generally
Bank overdrafts are to be treated
considered in cash flow from
as a component of cash/cash
financing activity
equivalents under IAS 7.
Interest and Dividend
AS 3 mandates disclosure of
IAS 7 allows interest and dividend
paid / Received
interest and dividend paid
paid to be classified either under
under Financial Activities only
Operating Activities or Financing
and received under investing
Activities. (depends on a case to
activities. (except for financial
case basis)
enterprises)
Slide 6
Difference between IFRS and Indian GAAP
Extraordinary Items
Indian GAAP
IFRS
AS 3 requires disclosure of
There is no longer any concept of
extraordinary items.
extraordinary items in IFRS
Methodology to be used Generally for Listed Companies
and Insurance Companies,
Both Direct and Indirect are in use
– more use of Indirect Method
Indirect Method is must
Restricted Cash –
No specific disclosure
Amounts not available
requirements
To be disclosed with explanations
for group
Slide 7
AS 4 – Contingencies and Events Occurring After Balance
Sheet Date
Vs
IAS 10 – Events after the Balance Sheet Date
Difference between IFRS and Indian GAAP
Disclosure
Indian GAAP
IFRS
Non Adjusting events t be
Non Adjusting events to form part of
disclosed only in Director’s
Notes on Accounts to the Financial
Report
Statements
Slide 9
AS 5 – Net Profit or Loss for the Period, Prior Period
Items and Changes in Accounting Policies
Vs
IAS 8 – Changes in accounting policies, estimates and
prior period errors
Difference between IFRS and Indian GAAP
Indian GAAP
IFRS
Change in accounting
Effect of changes in
Retrospective effect needs to be given
policy
accounting policy needs to
by adjusting retained earnings. If
be given in P&L
possible, comparative information also
prospectively – with
needs to be modified and presented.
opening impact also
Where retrospective effect is not
flowing thru current PL . No
possible, to give effect from the year in
changes in prior periods
which it is practical / specific
presented. (Alternate
exemptions should be available
Treatment per IAS) –
Benchmark treatment not
permitted
Change in method of
Change in accounting
depreciation
policy
Change in accounting estimate
Slide 11
Difference between IFRS and Indian GAAP
Accounting for prior period errors
Indian GAAP
IFRS
Effect given in current year with
IAS 8 requires retrospective
disclosures / no restatement of
restatement of prior period figures
prior years
by restatement of opening
balances of assets, liabilities and
equity for the earliest period
practicable – balance flows thru
opening reserve
Accounting pronouncement yet to
come into effect
No disclosure required
Disclosure required. Also
estimation of possible impact on
adoption needs to be disclosed
Slide 12
Difference between IFRS and Indian GAAP
Proposed dividend – Accounting
Indian GAAP
IFRS
Provision required as mandated
Provision prohibited – accounted
by statute. – accounted in the year
in the year declared
proposed
Proposed Dividend – Disclosure
Face of Income Statement – as
Part of Statement of Changes in
part of Appropriations of Profits
Equity
Slide 13
AS 6 Depreciation Accounting
and AS 10 – Accounting for Fixed Assets
Vs
IAS 16 - Property, Plant and Equipment
Difference between IFRS and Indian GAAP
Basis of Valuation
Basis of Revaluation
Revaluation frequency
Indian GAAP
IFRS
Generally COST.
Historic Cost. Fair Value is more
Revaluation possible
prevalent
Selection of few class on a
Generally done for the entire class
systematic basis is possible
of assets
No need to update regularly
Need to update regularly if
revaluation method is chosen
Depreciation on Revalued
Recouped from Revaluation
Assets
Reserve
Income Statement
Slide 15
Difference between IFRS and Indian GAAP
Depreciation
Indian GAAP
IFRS
Useful life – but usually Sch
Useful life
XIV rates followed
Depreciation – change in
Change in policy –
Change in estimate – prospective
method and residual value
retrospective effect
effect
Residual value not revisited
Residual value revisited
AS 10 recommends but
IAS 16 mandates component
does not force component
accounting
Component approach
accounting.
Slide 16
Difference between IFRS and Indian GAAP
Indian GAAP
IFRS
Recognition criteria
Increase in future benefits beyond its
Replacements are capitalised
for subsequent
original standard of performance /
and replaced part is
expenditure
else expensed
decapitalised.
Repairs, maintenance
Expense off
Major repairs and overhaul
and overhauling
expenditure are capitalized as
if it is a separate component.
Site restoration
No guidance. Guidance note on Oil &
Provision mandatory and
Gas, requires capitalization of site
needs to be capitalised
restoration cost
Slide 17
AS 9 Revenue Recognition
Vs
IAS 18 – Revenue Recognition
IAS 18 – Revenue Recognition
Service income
Discounting
Indian GAAP
IFRS
AS 9 allows completed service
In case of revenue from rendering of
contract method or percentage
services, IAS 18 allows only percentage
of completion method.
of completion method.
At Cost – no discounting
If amounts receivable after 12 months,
receivable and sales accounted at
discounted values
Interest income /
AS 9 requires interest income / IAS 18 requires effective interest method
Expense
Expense to be recognised on
to be followed for interest income /
a time proportion basis.
expense recognition.
Slide 19
IAS 18 – Revenue Recognition
Indian GAAP
IFRS
Barter
No guidance on barter
Revenue on barter transactions recorded
Transactions
transactions. (except
on dissimilar exchange.
Guidance Note for dot.com
companies)
Multiple Element
No guidance – but in practice
For multiple element contracts, the
Contracts
done in same way as in IFRS.
standard broadly requires that each
element is fair valued and recognized
when the underlying service is
performed.
Slide 20
AS 11 – Accounting for Effects of Changes in Foreign
Exchange rates
Vs
IAS 21 – The Effect of Changes in Foreign exchange rates
IAS 39 – Financial Instruments : Recognition and
Measurement
IFRS 7 – Financial Instruments : Disclosures
Difference between Indian GAAP and IFRS
Indian GAAP
IFRS
Framework for
AS-11 is based on the concept of
IAS-21 is based on the concept of
accounting for
integral and non-integral operations. It
functional currency v reporting
foreign operations
therefore provides guidance on what
currency. It therefore provides
operations are integral and what are
guidance on what should be the
not in respect of an enterprise.
functional currency of an
enterprise.
Derivatives and
No comprehensive guidance except for
Hedge instruments are measured
other financial
interim clarification on forward
at fair value
instruments –
exchange contract to hedge foreign
Effective portion of gain/losses on
Cash flow and fair
currency risk of a firm commitment or
hedges of net investment are
value hedges
highly probable forecasted transaction
recognised in equity and ineffective
portion is recorded in income
statement
Slide 22
IAS 21 - Amendments
Effective date
Key Changes
1/1/2006
• Deal with circumstance where a monetary item that forms part of an
entity’s net investment in a foreign operation (i.e., net investment
hedging in a foreign operation).
• Exchange difference arising from such monetary item are
reclassified to a separate component of equity in the financial
statements.
Slide 23
AS 12 – Accounting for Government Grants
Vs
IAS 20 – Accounting for Government Grants and
Disclosure of Government Assistance
Difference between Indian GAAP and IFRS
Indian GAAP
IFRS
Capital Grants and
Two broad approaches may be
Revenue based grants are
Revenue Grants
followed in accounting for government
deferred in the balance sheet and
grants
released to income statement to
The capital approach under which the
match the related expenditure they
grant is treated as a part of
are intended to compensate.
Shareholders’ funds
Capital based grants are deferred
The income approach under which a
and matched to the depreciation
grant is taken to income over one or
on the asset for the which the
more periods
grant arises
Slide 25
AS 13 – Accounting for investments
Vs
IAS 39 – Financial Instruments : Recognition and
Measurement
IFRS 7 – Financial Instruments : Disclosures
Difference between Indian GAAP and IFRS
Indian GAAP
IFRS
Framework for
No equivalent standard.
AS-13 IAS 32 and 39 deal with
accounting for
deals with investment in a limited financial instruments and
financial instruments
manner. Foreign exchange hedging entity’s own equity in detail
is covered by AS-11.
including matters relating to
hedging.
Classification of
If classified as held to maturity or Long-term investments are
investments
loans and receivables, they are carried at cost less
carried at cost.
Unrealized gains impairment, if any
and losses on “Fair value through Current investments are
profit or loss” classification is carried at lower of cost and
recognized in the income statement fair value
and on “Available for sale”
classification is taken to equity
Slide 27
IAS 39 - Amendments
Effective date
Key Changes
1/1/2006
• Cash flow hedge accounting of forecast intragroup transactions
– foreign currency risk of a highly probable intragroup forecast
transaction is qualified as the hedged item.
– any gain or loss previously recognized in equity should be
reclassified to profit or loss.
• Fair value option
– restrict the use of the option to designate financial instruments as
at fair value through profit and loss.
• Financial guarantee contracts
– any financial guarantee contract issued by an entity is included
within the scope of IAS 39 (unless for insurance contract that may
fall within the scope of IFRS 4).
Slide 28
AS 14 – Accounting for Amalgamations
Vs
IFRS 3 – Business Combinations
Difference between Indian GAAP and IFRS
Pronouncements
Indian GAAP
IFRS
AS 10, AS 14, AS 21, AS 23, AS
IFRS 3
27
Pooling Method
Permitted under AS 14 if certain Prohibited
conditions are fulfilled
Valuation of Acquiree
Generally book value, though
Only fair value
fair value is allowed under AS
14 as an alternative in the case
of purchase method and AS 10
Valuation of Acquiree –
Not valued if not in the books of
Valued even if not in the
Intangible Assets
the acquiree
books of the acquire
provided fair value can be
measured reliably
Slide 30
Difference between Indian GAAP and IFRS
Valuation of Acquiree –
Indian GAAP
IFRS
Not valued
Valued
Amortisation over 5 years
Amortisation prohibited.
unless a longer period can be
Impairment test mandatory
Contingent liabilities
Goodwill
justified
Negative goodwill
Capital reserve
P&L account
Slide 31
AS 15 – Employee Benefits
Vs
IAS 19 – Employee Benefits
Difference between Indian GAAP and IFRS
Actuarial gains and losses
Indian GAAP
IFRS
Recognized upfront in the
Allowed to be deferred
income statement
Employee Share
Compensation expenses for
Compensation expenses for
Compensation
share options are recorded
share options are recorded
either based on intrinsic
at fair value of share or the
value or based on fair value
options granted
using the option pricing
model
VRS deferral
Permitted
Not permitted
Slide 33
IAS 19 Employee Benefits
• Additional recognition option for actuarial gains and losses for defined benefit schemes.
– No corridor within which movements need not be recognized.
– No smoothing of the impact over the average remaining working lives of employees.
– The alternative option of presenting the comprehensive SCE as a primary statement is
no longer available.
• The physical layout of the additional disclosure requirements can be challenging to the
preparers in terms of the volume and narrative forms.
Slide 34
AS 16 – Borrowing Costs
Vs
IAS 23 – Borrowing Costs
Difference between Indian GAAP and IFRS
Indian GAAP
IFRS
Accounting for
Capitalisation in relation to
Benchmark treatment –
Borrowing cost
qualifying assets
expense off. However,
option available to capitalise
in relation to qualifying asset
Disclosure of
AS 16 does not require such
IAS 23 requires disclosure of
capitalization rate
disclosure.
capitalization rate used to
determine the amount of
borrowing costs
Slide 36
IAS 23 - Amendments
Effective date
Key Changes
1/1/2009
• Eliminates the option to recognise all borrowing costs on qualifying
assets immediately as an expense.
• Scope exclusions for:
– Qualifying assets measured at fair value
– Inventories that are manufactured, or otherwise produced, in
large quantities on a repetitive basis.
Slide 37
AS 17 – Segment Reporting
Vs
IAS 14 – Segment Reporting
Difference between IFRS and Indian GAAP
Indian GAAP
IFRS
Treatment of
AS 17 is silent on the aspect of
If JV based on proportionate consolidation, then
associates and
treatment in consolidated financial
segment reporting is matched with the total
JV’s in CFS
statements.
reported numbers.
JV/associate equity accounted is allocated to a
predominant segment or else would be disclosed
as a reconciling item
Reportable
Under AS 17, no external customer is
IAS 14 provides that a business segment can be
Segment
required to constitute a segment
treated as reportable segment only if, inter alia,
majority of its revenue is earned from sales to
external customers.
Vertical
AS 17 does not make any distinction
IAS 14 encourages reporting of vertically
Segments
between vertically integrated
integrated activities as separate segments but
segment and other segments.
does not mandate the disclosure.
Slide 39
AS 18 – Related Party Disclosures
Vs
IAS 24 – Related Party Transactions
Difference between IFRS and Indian GAAP
Indian GAAP
IFRS
Whether post employment
AS 18 does not
The definition of related party under
benefit plans are related
include this
IAS 24 includes post employment
parties?
relationship.
benefit plans (e.g. gratuity fund,
pension fund) of the enterprise or of
any other entity, which is a related
party of the enterprise.
Definition of relatives of Key
AS 18 covers
The definition of related party under
Management Personnel
relatives of KMPs.
IAS 24 includes close members of the
(KMP)
Relatives are as
families of KMPs as related party as
defined under
well as of persons who exercise control
Companies Act.
or significant influence.
Slide 41
Difference between IFRS and Indian GAAP
Indian GAAP
IFRS
Definition of
AS 18 read with ASI-18 excludes
KMP’s under IAS 24 includes any director
KMP
non-executive directors from the
whether executive or otherwise i.e. non-
definition of KMP’s. AS 18 does not
executive directors are also related party.
specifically cover indirect authority
Under IAS 24, if any person has indirect
and responsibility, eg, non-executive
authority and responsibility for planning,
chairman.
directing and controlling the activities of the
enterprise, he will be treated as a KMP
Compensation
AS 18 read with ASI 23 requires
IAS 24 requires compensation to KMPs to
to KMP
disclosure of remuneration paid to
be disclosed category-wise including
KMPs but does not mandate
share-based payments.
category-wise disclosures.
Slide 42
Difference between IFRS and Indian GAAP
Disclosure of
Indian GAAP
IFRS
AS 18 contains no such stipulations.
IAS 24 mandates that no disclosure should be
RPT on Arms
made to the effect that related party
Length
transactions were made on arms length basis
unless terms of the related party transaction
can be substantiated.
Exemption from
AS 18 provides exemption from
No concession is provided under IAS 24 where
disclosure in
disclosure where confidentiality is
disclosure of information would conflict with the
case of
required by a statute or a regulator.
duties of confidentiality in terms of statute or
confidentiality
regulating authority.
conflict
Slide 43
Difference between IFRS and Indian GAAP
Indian GAAP
IFRS
Definition of
AS 18 includes control over
The definition of “control” under IAS 24 is
“control”
composition of Board of Directors in
restrictive on the count that it does not include
the definition of “control”.
control over composition of Board of Directors
Disclosure of
No such disclosure requirement is
IAS 24 requires disclosure of terms and
terms and
contained in AS 18.
conditions of outstanding items pertaining to
conditions
related parties
Threshold for
AS 18 prescribe a rebuttable
IAS 24 does not prescribe a rebuttable
significant
presumption of significant influence
presumption of significant influence
influence
if 20% or more of the voting power
held by any party
Transactions
Transactions between state
between state
controlled enterprises are not
controlled
required to be disclosed under AS-
enterprises
18.
No exemption.
Slide 44
IAS 24 Related Party Disclosures
• Removal of the exemptions covering parent-only financial statements.
– Increase burden on groups with large number of subsidiaries.
• Disclosures for state-controlled entities.
– Significant implications in jurisdictions which caused the disclosures to be cumbersome.
• Expanded definition of related party.
– The entity’s system may not support identification of all transactions and balances.
Slide 45
IAS 24 Related Party Disclosures
• More specific disclosure requirements regarding the disclosure of the entity’s parent and
ultimate parent.
– This may be a sensitive disclosure as the entity’s ultimate controlling party may not be a
corporate but an individual.
• More specific disclosure requirements covering the compensation of key management
personnel.
– These additional requirements exist independently of any local laws or regulations.
Slide 46
AS 19 – Leases
Vs
IAS 17 - Leases
Difference between IFRS and Indian GAAP
Indian GAAP
IFRS
Accounted upfront
Deferred over the lease period
Lease of Land &
AS -19 – “Accounting for Leases”
Under IAS 17 it has been clarified
Buildings
scopes out lease agreements to
that in a combined lease, lease of
Brokerage
expenses
use lands. Hence, the classification land and buildings need to be
criteria are applicable only to
considered separately. The land
buildings as separate asset.
element is normally an operating
lease unless title passes to the
lessee at the end of the lease term.
The buildings element is classified
as an operating or finance lease by
applying the classification criteria.
Slide 48
AS 20 – Earnings Per Share
Vs
IAS 33 – Earnings Per Share
Difference between IFRS and Indian GAAP
Discontinued Operations.
Indian GAAP
IFRS
AS 20 does not require any such
IAS 33 requires separate
separate computation or disclosure
disclosure of basic and diluted
EPS for continuing operations
and discontinued operations
Share based payments
AS 20 does not contain any such
IAS 33 deals with computation
provision. The Guidance note
of EPS in case of Share based
issued by ICAI on “Employee Share
payment transactions.
Based Payments” deals with the
same
Treatment of written put
AS 20 is silent
IAS 33 prescribes treatment of
options and forward
written put options and forward
purchase contracts
purchase contracts in
computing EPS.
Slide 50
Difference between IFRS and Indian GAAP
Indian GAAP
IFRS
Changes in Accounting
AS 20 does not prescribe such
IAS 33 requires changes in
Policy
treatment.
accounting policy to be given
retrospective effect for
computing EPS, which means
EPS to be adjusted for prior
periods presented
Impact of extra-ordinary
AS 20 requires EPS/DEPS with and
Not applicable since IAS
items
without extra-ordinary items to be
prohibits disclosure of extra-
disclosed separately
ordinary items
Treatment of application
Under AS 20, application money
IAS 33 is silent
money held pending
held pending allotment should be
allotment
included in the computation of
diluted EPS
Slide 51
AS 21 – Consolidated Financial Statements
Vs
IAS 27 - Consolidated financial statements
Difference between IFRS and Indian GAAP
Preparation of CFS
Indian GAAP
IFRS
Mandatory for listed companies
Mandatory for all
as per SEBI rules
enterprises (certain
exceptions) – Minority
Interest holders informed /
not listed (or) process of
listing / ultimate parent
company prepares CFS
Separate Financial
Are required to prepare
Only if local regulations so
Statements
separate financial statements as
require.
per statute
Slide 53
Difference between IFRS and Indian GAAP
Indian GAAP
IFRS
Exclusion of subsidiary
a)Long term restriction
Dissimilar activities and
from consolidation
b)Acquired and held with an
hence not consolidated is not
intention to dispose
possible
Over composition of Board of
This clause is not there
Directors. For voting rights not
under IFRS. These kind of
considering concurrently
voting rights are also
exercisable voting rights
considered to determine
Control
51% holdings
Consolidation based on
Maximum gap – 6 months
Maximum gap – 3 months
Non- coterminous period
Slide 54
Difference between IFRS and Indian GAAP
Indian GAAP
IFRS
Disclosed separately from
Disclosed separately in
liability and equity
equity
Goodwill determination
Based on carrying value
Based on fair value
Special Purpose Vehicles
No specific guidance
If substance of relationship
Minority Interest
can be proved, then SPVs
are also consolidated
Slide 55
AS 22 – Accounting for Income Taxes
Vs
IAS 12 – Income taxes
Difference between IFRS and Indian GAAP
Basic approach
Indian GAAP
IFRS
Timing Difference
Temporary Difference i.e. Balance sheet
i.e. Income
approach
Statement approach
DTA on unabsorbed
Virtual certainty
Convincing evidence (Probable)
depreciation and
supported by
carry forward losses
convincing evidence
Fringe Benefit Tax
Shown in Income
Included as part of Expenditure which results in
Statement along
FBT
with Taxes after PAT
Slide 57
Difference between IFRS and Indian GAAP
Indian GAAP
IFRS
Credit for Minimum
Shown as
DTA created
Alternate Tax Paid
Recoverable under
Loans and
Advances
Disclosure
Face of BS – Net
Generally Non Current / notes should give those
Position
items expected to reverse within 12 months /
after 12 months
Reconciliation of Tax
To Statutory Rate
Provision
not required
Required as part of Notes
Slide 58
AS 23 – Accounting for Investments in Associates in
Consolidated Financial Statements
Vs
IAS 28 - Investment in Associates
Difference between IFRS and Indian GAAP
Indian GAAP
IFRS
Determination of significant
Potential voting rights not
Potential voting rights
influence
considered
currently exercisable
considered
Maximum gap – 3 mths
Consolidation based on
No specific period specified.
Non- coterminous period
Only consistency required
Disclosure
Not so much details of
Detailed disclosure
Associates expected
requirements are there for
Significant Associates
Slide 60
Difference between IFRS and Indian GAAP
Indian GAAP
IFRS
Goodwill determination
Based on carrying value
Based on fair value
Impairment
If decline in value of
Under IAS 28 it is
investment in an associate
necessary to subject the
is permanent, provision for
investments in
diminution to be made.
associates/joint ventures to
Impairment testing is not
the test of impairment
required under AS 23
Slide 61
AS 24 Discontinuing Operations
Vs
IFRS 5 – Non Current Assets Held for Sale and
Discontinued Operations
Difference between IFRS and Indian GAAP
Indian GAAP
IFRS
Criteria
Single Plan as approved
Disposed / Held for Sale
Disclosure
Separate from Continuing Operations – Single Line items on Face of
Valuations
face of Income Statement (Tax
PL; analysis as part of Notes –
effected); detailed disclosure for
both Years for Income
Income Statement in Notes and no
Statement and CY for BS. No
disclosure for BS
restatement pf PY BS required
Governed by the respective Standards
Carrying Value / Fair Value less
Cost to Sell
Slide 63
AS 25 Interim Financial Reporting
Vs
IAS 34 – Interim Financial Statements
Difference between IFRS and Indian GAAP
Indian GAAP
IFRS
Presentation of Statement of
No such disclosure is required
Under IAS 34, minimum
Changes in Equity (SOCIE)
under AS 25, since the concept of
components of Interim Financial
in Interim Financial Report
SOCIE does not prevail under
Report includes – SOCIE
Indian GAAP
Change in accounting policy
AS 25 requires recognition of
Under IAS 34, in case of any
impact in the current financial year
change in accounting policy,
only. However, for SEBI quarterly
figures of prior interim periods of
results changes in accounting
the current financial year and
policies are retroactively restated.
comparable figures of
corresponding previous periods
to be restated.
Slide 65
AS 26 – Intangible Assets
Vs
IAS 38 – Intangible Assets
Difference between IFRS and Indian GAAP
Revaluation
Indian GAAP
IFRS
Not permitted
Permitted for intangibles
with active markets
Intangibles having
Not specifically mentioned.
No amortisation; only
indefinite life
Amortisation required
impairment required
Amortisation
10 year rebuttable
No presumption
assumption
Business Combination -
Intangibles recognised
Intangibles not in
Consolidation
based on carrying value
acquiree’s book should
also be recognised
Slide 67
Difference between IFRS and Indian GAAP
Impairment testing
Indian GAAP
IFRS
AS 26 requires test of impairment to
IAS 38 does not require any
be applied even if there is no
impairment testing if there
indication of that asset being impaired
are no indications of
for following assets:
impairment. However, for
-Intangible asset not yet available for
intangible asset having
use
indefinite useful life,
-Intangible asset amortized over > 10
years
impairment testing needs to
be done annually or
whenever there are
impairment indicators.
Intangible Asset ‘held
There is no such stipulation under AS
Under IAS 38, if Intangible
for sale’
26.
Asset is ‘held for sale’ then
amortization should be
stopped
Slide 68
Difference between IFRS and Indian GAAP
R&D expenditure
Indian GAAP
IFRS
AS 26 is silent on this
Under IAS 38, R&D
expenditure that relates to
an in-process R&D project
acquired separately or in a
business combination shall
be accounted as Intangible
asset
Slide 69
AS 27 –Financial Reporting in interests in Joint Venture
Vs
IAS 31 – Investment in Joint Ventures
Difference between IFRS and Indian GAAP
Indian GAAP
IFRS
Method of Accounting for joint
Proportionate
Proportionate consolidation or
ventures
consolidation
equity method
Accounting for subsidiary
Accounting for
Accounting for subsidiary where
where joint control is
subsidiary where joint
joint control is established
established
control is established
through contractual agreement
through contractual
should be done as joint venture,
agreement should be
ie, either proportionate
done as subsidiary –
consolidation or equity
ie, full consolidation
accounting
Slide 71
AS 28 – Impairment of Assets
Vs
IAS 36 – Impairment of Assets
Difference between IFRS and Indian GAAP
Allocation of Goodwill
Indian GAAP
IFRS
No such requirement.
Goodwill acquired on
business combination is
allocated to each CGU
Slide 73
IAS 36 Impairment of Assets
• Disclosure requirements on goodwill are more detailed.
– Detailed narrative description for the impairment are required which would prove to be
challenging and sensitive to the preparers.
– Comprehensive and complex disclosure requirements relating to impairment losses or
reversal of impairments losses during the period.
– Comprehensive and complex disclosure requirements relating to estimates used in
measuring recoverable amounts for CGUs containing goodwill or intangible assets with
indefinite useful lives.
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AS 29 – Provisions, Contingent Liabilities and Contingent
Assets
Vs
IAS 37 – Provisions, Contingent Liabilities and
Contingent Assets
Difference between Indian GAAP and IFRS
Onerous Contract
Indian GAAP
IFRS
Required for accounting
Provision required
periods commencing 1
April, 2006
Discounting
Prohibited
Required
Restructuring provision
Provision based on legal
Provision based on
obligation
constructive obligation
Disclosure not permitted
Disclosure required
Contingent asset
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Questions?
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