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Disclosure of Interests in Other Entities

Ind AS - 112 - Rule - B. Indian Accounting Standards (Ind AS) - Companies Law - Ind AS - 112 - Indian Accounting Standard (Ind AS) 112 (This Indian Accounting Standard includes paragraphs set in bold type and plain type, which have equal authority. Paragraphs in bold type indicate the main principles.) Objective 1 The objective of this Indian Accounting Standard (Ind AS) is to require an entity to disclose information that enables users of its financial statements to evaluate: (a) the nature of, .....

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finition of an investment entity, if applicable (paragraph 9A); and (b) information about its interests in: (i) subsidiaries (paragraphs 10-19); (ii) arrangements and associates (paragraphs 20-23); and (iii) structured entities that are not controlled by the entity (unconsolidated structured entities) (paragraphs 24-31). 3 If the disclosures required by this Ind AS, together with disclosures required by other Ind ASs, do not meet the objective in paragraph 1, an entity shall disclose whatever ad .....

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pplied by an entity that has an interest in any of the following: (a) subsidiaries (b) joint arrangements (ie joint operations or joint ventures) (c) associates (d) unconsolidated structured entities. 6 This Ind AS does not apply to: (a) post-employment benefit plans or other long-term employee benefit plans to which Ind AS 19, Employee Benefits, applies. 1[ (b) an entity s separate financial statements to which Ind AS 27, Separate Financial Statements, applies. However: (i) if an entity has int .....

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S.] (c) an interest held by an entity that participates in, but does not have joint control of, a joint arrangement unless that interest results in significant influence over the arrangement or is an interest in a structured entity. (d) an interest in another entity that is accounted for in accordance with Ind AS 109, Financial Instruments. However, an entity shall apply this Ind AS: (i) when that interest is an interest in an associate or a joint venture that, in accordance with Ind AS 28, Inve .....

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ncial Statements; (b) that it has joint control of an arrangement or significant influence over another entity; and (c) the type of joint arrangement (ie joint operation or joint venture) when the arrangement has been structured through a separate vehicle. 8 The significant judgements and assumptions disclosed in accordance with paragraph 7 include those made by the entity when changes in facts and circumstances are such that the conclusion about whether it has control, joint control or signific .....

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have significant influence even though it holds 20 per cent or more of the voting rights of another entity. (e) it has significant influence even though it holds less than 20 per cent of the voting rights of another entity. Investment entity status 9A When a parent determines that it is an investment entity in accordance with paragraph 27 of Ind AS 110, the investment entity shall disclose information about significant judgements and assumptions it has made in determining that it is an investme .....

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tus on the financial statements for the period presented, including: (a) the total fair value, as of the date of change of status, of the subsidiaries that cease to be consolidated; (b) the total gain or loss, if any, calculated in accordance with paragraph B101 of Ind AS 110; and (c) the line item(s) in profit or loss in which the gain or loss is recognised (if not presented separately). Interests in subsidiaries 10 An entity shall disclose information that enables users of its consolidated fin .....

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equences of changes in its ownership interest in a subsidiary that do not result in a loss of control (paragraph 18); and (iv) the consequences of losing control of a subsidiary during the reporting period (paragraph 19). 11 When the financial statements of a subsidiary used in the preparation of consolidated financial statements are as of a date or for a period that is different from that of the consolidated financial statements (see paragraphs B92 and B93 of Ind AS 110), an entity shall disclo .....

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he principal place of business) of the subsidiary. (c) the proportion of ownership interests held by non-controlling interests. (d) the proportion of voting rights held by non-controlling interests, if different from the proportion of ownership interests held. (e) the profit or loss allocated to non-controlling interests of the subsidiary during the reporting period. (f) accumulated non-controlling interests of the subsidiary at the end of the reporting period. (g) summarised financial informati .....

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rict dividends and other capital distributions being paid, or loans and advances being made or repaid, to (or from) other entities within the group. (b) the nature and extent to which protective rights of non-controlling interests can significantly restrict the entity s ability to access or use the assets and settle the liabilities of the group (such as when a parent is obliged to settle liabilities of a subsidiary before settling its own liabilities, or approval of non-controlling interests is .....

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ding events or circumstances that could expose the reporting entity to a loss (eg liquidity arrangements or credit rating triggers associated with obligations to purchase assets of the structured entity or provide financial support). 15 If during the reporting period a parent or any of its subsidiaries has, without having a contractual obligation to do so, provided financial or other support to a consolidated structured entity (eg purchasing assets of or instruments issued by the structured enti .....

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the entity controlling the structured entity, the entity shall disclose an explanation of the relevant factors in reaching that decision. 17 An entity shall disclose any current intentions to provide financial or other support to a consolidated structured entity, including intentions to assist the structured entity in obtaining financial support. Consequences of changes in a parent s ownership interest in a subsidiary that do not result in a loss of control 18 An entity shall present a schedule .....

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date when control is lost; and (b) the line item(s) in profit or loss in which the gain or loss is recognised (if not presented separately). Interests in unconsolidated subsidiaries (investment entities) 19A An investment entity that, in accordance with Ind AS 110, is required to apply the exception to consolidation and instead account for its investment in a subsidiary at fair value through profit or loss shall disclose that fact. 19B For each unconsolidated subsidiary, an investment entity sh .....

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y subsidiary. The disclosure may be provided by including, in the financial statements of the parent, the financial statements of the subsidiary (or subsidiaries) that contain the above information. 19D An investment entity shall disclose: (a) the nature and extent of any significant restrictions (eg resulting from borrowing arrangements, regulatory requirements or contractual arrangements) on the ability of an unconsolidated subsidiary to transfer funds to the investment entity in the form of c .....

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unconsolidated subsidiary (eg purchasing assets of, or instruments issued by, the subsidiary or assisting the subsidiary in obtaining financial support), the entity shall disclose: (a) the type and amount of support provided to each unconsolidated subsidiary; and (b) the reasons for providing the support. 19F An investment entity shall disclose the terms of any contractual arrangements that could require the entity or its unconsolidated subsidiaries to provide financial support to an unconsolida .....

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entity that the investment entity did not control, and if that provision of support resulted in the investment entity controlling the structured entity, the investment entity shall disclose an explanation of the relevant factors in reaching the decision to provide that support. Interests in joint arrangements and associates 20 An entity shall disclose information that enables users of its financial statements to evaluate: (a) the nature, extent and financial effects of its interests in joint arr .....

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nt arrangement and associate that is material to the reporting entity: (i) the name of the joint arrangement or associate. (ii) the nature of the entity s relationship with the joint arrangement or associate (by, for example, describing the nature of the activities of the joint arrangement or associate and whether they are strategic to the entity s activities). (iii) the principal place of business (and country of incorporation, if applicable and different from the principal place of business) o .....

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nd B13. (iii) if the joint venture or associate is accounted for using the equity method, the fair value of its investment in the joint venture or associate, if there is a quoted market price for the investment. (c) financial information as specified in paragraph B16 about the entity s investments in joint ventures and associates that are not individually material: (i) in aggregate for all individually immaterial joint ventures and, separately, (ii) in aggregate for all individually immaterial a .....

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dends, or to repay loans or advances made by the entity. (b) when the financial statements of a joint venture or associate used in applying the equity method are as of a date or for a period that is different from that of the entity: (i) the date of the end of the reporting period of the financial statements of that joint venture or associate; and (ii) the reason for using a different date or period. (c) the unrecognised share of losses of a joint venture or associate, both for the reporting per .....

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robability of loss is remote, contingent liabilities incurred relating to its interests in joint ventures or associates (including its share of contingent liabilities incurred jointly with other investors with joint control of, or significant influence over, the joint ventures or associates), separately from the amount of other contingent liabilities. Interests in unconsolidated structured entities 24 An entity shall disclose information that enables users of its financial statements: (a) to und .....

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ity no longer has any contractual involvement with the structured entity at the reporting date. 25A An investment entity need not provide the disclosures required by paragraph 24 for an unconsolidated structured entity that it controls and for which it presents the disclosures required by paragraphs 19A-19G. Nature of interests 26 An entity shall disclose qualitative and quantitative information about its interests in unconsolidated structured entities, including, but not limited to, the nature, .....

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n of the types of income presented; and (c) the carrying amount (at the time of transfer) of all assets transferred to those structured entities during the reporting period. 28 An entity shall present the information in paragraph 27(b) and (c) in tabular format, unless another format is more appropriate, and classify its sponsoring activities into relevant categories (see paragraphs B2-B6). Nature of risks 29 An entity shall disclose in tabular format, unless another format is more appropriate, .....

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posure to loss from its interests in unconsolidated structured entities it shall disclose that fact and the reasons. (d) a comparison of the carrying amounts of the assets and liabilities of the entity that relate to its interests in unconsolidated structured entities and the entity s maximum exposure to loss from those entities. 30 If during the reporting period an entity has, without having a contractual obligation to do so, provided financial or other support to an unconsolidated structured e .....

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cluding intentions to assist the structured entity in obtaining financial support. Appendix A Defined terms This appendix is an integral part of the Ind AS. income from a structured entity For the purpose of this Ind AS, income from a structured entity includes, but is not limited to, recurring and non-recurring fees, interest, dividends, gains or losses on the remeasurement or derecognition of interests in structured entities and gains or losses from the transfer of assets and liabilities to th .....

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ncludes the means by which an entity has control or joint control of, or significant influence over, another entity. An entity does not necessarily have an interest in another entity solely because of a typical customer supplier relationship. Paragraphs B7-B9 provide further information about interests in other entities. Paragraphs B55-B57 of Ind AS 110 explain variability of returns. structured entity An entity that has been designed so that voting or similar rights are not the dominant factor .....

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; control of an entity • equity method • group • investment entity • joint arrangement • joint control • joint operation • joint venture • non-controlling interest • parent • protective rights • relevant activities • separate financial statements • separate vehicle • significant influence • subsidiary. Appendix B Application guidance This appendix is an integral part of the Ind AS. It describes the application of paragrap .....

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emphasis it places on different aspects of the requirements and how it aggregates the information. It is necessary to strike a balance between burdening financial statements with excessive detail that may not assist users of financial statements and obscuring information as a result of too much aggregation. B3 An entity may aggregate the disclosures required by this Ind AS for interests in similar entities if aggregation is consistent with the disclosure objective and the requirement in paragrap .....

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entity it is considering for aggregation and the significance of each such entity to the reporting entity. The entity shall present the disclosures in a manner that clearly explains to users of financial statements the nature and extent of its interests in those other entities. B6 Examples of aggregation levels within the classes of entities set out in paragraph B4 that might be appropriate are: (a) nature of activities (eg a research and development entity, a revolving credit card securitisati .....

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losures in this Ind AS. That assessment shall include consideration of the risks that the other entity was designed to create and the risks the other entity was designed to pass on to the reporting entity and other parties. B8 A reporting entity is typically exposed to variability of returns from the performance of another entity by holding instruments (such as equity or debt instruments issued by the other entity) or having another involvement that absorbs variability. For example, assume a str .....

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ntity to another entity. Such instruments create variability of returns for the other entity but do not typically expose the reporting entity to variability of returns from the performance of the other entity. For example, assume a structured entity is established to provide investment opportunities for investors who wish to have exposure to entity Z s credit risk (entity Z is unrelated to any party involved in the arrangement). The structured entity obtains funding by issuing to those investors .....

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ty s return from its asset portfolio and the CDS fee. The swap counterparty does not have involvement with the structured entity that exposes it to variability of returns from the performance of the structured entity because the CDS transfers variability to the structured entity, rather than absorbing variability of returns of the structured entity. Summarised financial information for subsidiaries, joint ventures and associates (paragraphs 12 and 21) B10 For each subsidiary that has non-control .....

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urrent liabilities, revenue, profit or loss and total comprehensive income. B11 The summarised financial information required by paragraph B10(b) shall be the amounts before inter-company eliminations. B12 For each joint venture and associate that is material to the reporting entity, an entity shall disclose: (a) dividends received from the joint venture or associate. (b) summarised financial information for the joint venture or associate (see paragraphs B14 and B15) including, but not necessari .....

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h and cash equivalents included in paragraph B12(b)(i). (b) current financial liabilities (excluding trade and other payables and provisions) included in paragraph B12(b)(iii). (c) non-current financial liabilities (excluding trade and other payables and provisions) included in paragraph B12(b)(iv). (d) depreciation and amortisation. (e) interest income. (f) interest expense. (g) income tax expense or income. B14 The summarised financial information presented in accordance with paragraphs B12 an .....

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d adjustments for differences in accounting policies. (b) the entity shall provide a reconciliation of the summarised financial information presented to the carrying amount of its interest in the joint venture or associate. B15 An entity may present the summarised financial information required by paragraphs B12 and B13 on the basis of the joint venture s or associate s financial statements if: (a) the entity measures its interest in the joint venture or associate at fair value in accordance wit .....

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close separately the aggregate amount of its share of those joint ventures or associates : (a) profit or loss from continuing operations. (b) post-tax profit or loss from discontinued operations. (c) other comprehensive income. (d) total comprehensive income. An entity provides the disclosures separately for joint ventures and associates. B17 When an entity s interest in a subsidiary, a joint venture or an associate (or a portion of its interest in a joint venture or an associate) is classified .....

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ontrol of a joint venture) relating to its interests in joint ventures. Commitments are those that may give rise to a future outflow of cash or other resources. B19 Unrecognised commitments that may give rise to a future outflow of cash or other resources include: (a) unrecognised commitments to contribute funding or resources as a result of, for example: (i) the constitution or acquisition agreements of a joint venture (that, for example, require an entity to contribute funds over a specific pe .....

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relating to a joint venture. (b) unrecognised commitments to acquire another party s ownership interest (or a portion of that ownership interest) in a joint venture if a particular event occurs or does not occur in the future. B20 The requirements and examples in paragraphs B18 and B19 illustrate some of the types of disclosure required by paragraph 18 of Ind AS 24, Related Party Disclosures. Interests in unconsolidated structured entities (paragraphs 24-31) Structured entities B21 A structured .....

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h and development activities, provide a source of capital or funding to an entity or provide investment opportunities for investors by passing on risks and rewards associated with the assets of the structured entity to investors. (c) insufficient equity to permit the structured entity to finance its activities without subordinated financial support. (d) financing in the form of multiple contractually linked instruments to investors that create concentrations of credit or other risks (tranches). .....

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s 29-31, an entity shall disclose additional information that is necessary to meet the disclosure objective in paragraph 24(b). B26 Examples of additional information that, depending on the circumstances, might be relevant to an assessment of the risks to which an entity is exposed when it has an interest in an unconsolidated structured entity are: (a) the terms of an arrangement that could require the entity to provide financial support to an unconsolidated structured entity (eg liquidity arran .....

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during the reporting period relating to its interests in unconsolidated structured entities. (c) the types of income the entity received during the reporting period from its interests in unconsolidated structured entities. (d) whether the entity is required to absorb losses of an unconsolidated structured entity before other parties, the maximum limit of such losses for the entity, and (if relevant) the ranking and amounts of potential losses borne by parties whose interests rank lower than the .....

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