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Interim Financial Reporting

Ind AS - 034 - Rule - B. Indian Accounting Standards (Ind AS) - Companies Law - Ind AS - 034 - Indian Accounting Standard (Ind AS) 34 (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 The objective of this Standard is to prescribe the minimum content of an interim financial report and to prescribe the principles for recognition and measurement in complete or condensed .....

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require entities whose debt or equity securities are publicly traded to publish interim financial reports1. This Standard applies if an entity is required or elects to publish an interim financial report in accordance with Indian Accounting Standards (Ind ASs). [Refer Appendix 1] 2 Each financial report, annual or interim, is evaluated on its own for conformity to Ind ASs. The fact that an entity may not have provided interim financial reports during a particular financial year or may have prov .....

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reporting period shorter than a full financial year. Interim financial report means a financial report containing either a complete set of financial statements (as described in Ind AS 1, Presentation of Financial Statements, or a set of condensed financial statements (as described in this Standard) for an interim period. Content of an interim financial report 5 Ind AS 1 defines a complete set of financial statements as including the following components: (a) a balance sheet as at the end of the .....

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makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements in accordance with paragraphs 40A-40D of Ind AS 1. 6 In the interest of timeliness and cost considerations and to avoid repetition of information previously reported, an entity may be required to or may elect to provide less information at interim dates as compared with its annual financial statements. This Standard defines the minimum content of an interim financial .....

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financial report, rather than condensed financial statements and selected explanatory notes. Nor does this Standard prohibit or discourage an entity from including in condensed interim financial statements more than the minimum line items or selected explanatory notes as set out in this Standard. The recognition and measurement guidance in this Standard applies also to complete financial statements for an interim period, and such statements would include all of the disclosures required by this .....

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im financial statements 9 If an entity publishes a complete set of financial statements in its interim financial report, the form and content of those statements shall conform to the requirements of Ind AS 1 for a complete set of financial statements. 10 If an entity publishes a set of condensed financial statements in its interim financial report, those condensed statements shall include, at a minimum, each of the headings and subtotals that were included in its most recent annual financial sta .....

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pendix 1] 14 An interim financial report is prepared on a consolidated basis if the entity s most recent annual financial statements were consolidated statements. The parent s separate financial statements are not consistent or comparable with the consolidated statements in the most recent annual financial report. If an entity s annual financial report included the parent s separate financial statements in addition to consolidated financial statements, this Standard neither requires nor prohibit .....

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nted in the most recent annual financial report. 15A A user of an entity s interim financial report will have access to the most recent annual financial report of that entity. Therefore, it is unnecessary for the notes to an interim financial report to provide relatively insignificant updates to the information that was reported in the notes in the most recent annual financial report. 15B The following is a list of events and transactions for which disclosures would be required if they are signi .....

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y, plant and equipment; (f) litigation settlements; (g) corrections of prior period errors; (h) changes in the business or economic circumstances that affect the fair value of the entity s financial assets and financial liabilities, whether those assets or liabilities are recognised at fair value or amortised cost; (i) any loan default or breach of a loan agreement that has not been remedied on or before the end of the reporting period; (j) related party transactions; (k) transfers between level .....

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ion or performance since the last annual reporting period, its interim financial report should provide an explanation of and an update to the relevant information included in the financial statements of the last annual reporting period. 16-18 [Refer Appendix 1] Other Disclosures 16A 3[ 16A In addition to disclosing significant events and transactions in accordance with paragraphs 15-15C, an entity shall include the following information, in the notes to its interim financial statements or elsewh .....

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ce on the same terms and at the same time, the interim financial report is incomplete. The information shall normally be reported on a financial year-to-date basis. ] (a) a statement that the same accounting policies and methods of computation are followed in the interim financial statements as compared with the most recent annual financial statements or, if those policies or methods have been changed, a description of the nature and effect of the change. (b) explanatory comments about the seaso .....

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or per share) separately for ordinary shares and other shares2. (g) the following segment information (disclosure of segment information is required in an entity s interim financial report only if Ind AS 108, Operating Segments, requires that entity to disclose segment information in its annual financial statements): (i) revenues from external customers, if included in the measure of segment profit or loss reviewed by the chief operating decision maker or otherwise regularly provided to the chie .....

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he last annual financial statements for that reportable segment. (v) a description of differences from the last annual financial statements in the basis of segmentation or in the basis of measurement of segment profit or loss. (vi) a reconciliation of the total of the reportable segments measures of profit or loss to the entity s profit or loss before tax expense (tax income) and discontinued operations. However, if an entity allocates to reportable segments items such as tax expense (tax income .....

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ng-term investments, restructurings, and discontinued operations. In the case of business combinations, the entity shall disclose the information required by Ind AS 103, Business Combinations. (j) for financial instruments, the disclosures about fair value required by paragraphs 91-93(h), 94-96, 98 and 99 of Ind AS 113, Fair Value Measurement, and paragraphs 25, 26 and 28-30 of Ind AS 107, Financial Instruments: Disclosures. (k) for entities becoming, or ceasing to be, investment entities, as de .....

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o be presented 20 Interim reports shall include interim financial statements (condensed or complete) for periods as follows: (a) balance sheet as of the end of the current interim period and a comparative balance sheet as of the end of the immediately preceding financial year. (b) statements of profit and loss for the current interim period and cumulatively for the current financial year to date, with comparative statements of profit and loss for the comparable interim periods (current and year- .....

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financial information for the twelve months up to the end of the interim period and comparative information for the prior twelve-month period may be useful. Accordingly, entities whose business is highly seasonal are encouraged to consider reporting such information in addition to the information called for in the preceding paragraph. 22 [Refer Appendix 1] Materiality 23 In deciding how to recognise, measure, classify, or disclose an item for purposes, materiality shall be assessed in relation .....

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ding (for example) discontinued operations, and Ind AS 8 requires disclosure of changes in accounting estimates, errors, and changes in accounting policies. The two Standards do not contain quantified guidance as to materiality. 25 While judgement is always required in assessing materiality, this Standard bases the recognition and disclosure decision on data for the interim period by itself for reasons of understandability of the interim figures. Thus, for example, unusual items, changes in acco .....

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riod is changed significantly during the final interim period of the financial year but a separate financial report is not published for that final interim period, the nature and amount of that change in estimate shall be disclosed in a note to the annual financial statements for that financial year. 27 Ind AS 8 requires disclosure of the nature and (if practicable) the amount of a change in estimate that either has a material effect in the current period or is expected to have a material effect .....

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An entity is not required to include additional interim period financial information in its annual financial statements. Recognition and measurement Same accounting policies as annual 28 An entity shall apply the same accounting policies in its interim financial statements as are applied in its annual financial statements, except for accounting policy changes made after the date of the most recent annual financial statements that are to be reflected in the next annual financial statements. Howev .....

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period. However, by providing that the frequency of an entity s reporting shall not affect the measurement of its annual results, paragraph 28 acknowledges that an interim period is a part of a larger financial year. Year-to-date measurements may involve changes in estimates of amounts reported in prior interim periods of the current financial year. But the principles for recognising assets, liabilities, income, and expenses for interim periods are the same as in annual financial statements. 30 .....

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onal amount of loss or by reversal of the previously recognised amount; (b) a cost that does not meet the definition of an asset at the end of an interim period is not deferred in the balance sheet either to await future information as to whether it has met the definition of an asset or to smooth earnings over interim periods within a financial year; and (c) income tax expense is recognised in each interim period based on the best estimate of the weighted average annual income tax rate expected .....

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tement of profit and loss an item that meets the definition of an element and satisfies the criteria for recognition . The definitions of assets, liabilities, income, and expenses are fundamental to recognition, at the end of both annual and periods. 32 For assets, the same tests of future economic benefits apply at interim dates and at the end of an entity s financial year. Costs that, by their nature, would not qualify as assets at financial year-end would not qualify at interim dates either. .....

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ecognised in the statement of profit and loss when a decrease in future economic benefits related to a decrease in an asset or an increase of a liability has arisen that can be measured reliably… [The] Framework does not allow the recognition of items in the balance sheet which do not meet the definition of assets or liabilities. 34 In measuring the assets, liabilities, income, expenses, and cash flows reported in its financial statements, an entity that reports only annually is able to t .....

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eported for the first six-month period. The amounts reported in the interim financial report for the first six-month period are not retrospectively adjusted. Paragraphs 16A(d) and 26 require, however, that the nature and amount of any significant changes in estimates be disclosed. 36 An entity that reports more frequently than half-yearly measures income and expenses on a year-to-date basis for each interim period using information available when each set of financial statements is being prepare .....

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casionally within a financial year shall not be anticipated or deferred as of an interim date if anticipation or deferral would not be appropriate at the end of the entity s financial year. 38 Examples include dividend revenue, royalties, and government grants. Additionally, some entities consistently earn more revenues in certain interim periods of a financial year than in other interim periods, for example, seasonal revenues of retailers. Such revenues are recognised when they occur. Costs inc .....

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nancial information that is relevant to an understanding of the financial position or performance of the entity is appropriately disclosed. While measurements in both annual and interim financial reports are often based on reasonable estimates, the preparation of interim financial reports generally will require a greater use of estimation methods than annual financial reports. 42 [Refer Appendix 1] Restatement of previously reported interim periods 43 A change in accounting policy, other than on .....

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e financial statements of prior interim periods of the current financial year, and comparable interim periods of prior financial years to apply the new accounting policy prospectively from the earliest date practicable. 44 One objective of the preceding principle is to ensure that a single accounting policy is applied to a particular class of transactions throughout an entire financial year. Under Ind AS 8, a change in accounting policy is reflected by retrospective application, with restatement .....

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than the beginning of the financial year. 45 To allow accounting changes to be reflected as of an interim date within the financial year would allow two differing accounting policies to be applied to a particular class of transactions within a single financial year. The result would be interim allocation difficulties, obscured operating results, and complicated analysis and understandability of interim period information. 1 Unaudited Financial Results required to be prepared and presented under .....

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riod, conditions may have so changed that the impairment loss would have been reduced or avoided had the impairment assessment been made only at that date. This appendix provides guidance on whether such impairment losses should ever be reversed. 2 The appendix addresses the interaction between the requirements of Ind AS 34 and the recognition of impairment losses on goodwill in Ind AS 36, and the effect of that interaction on subsequent interim and annual financial statements. Issue 3 Ind AS 34 .....

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shall not be reversed in a subsequent period. 5-6 [Refer Appendix 1] 7 The appendix addresses the following issue: Should an entity reverse impairment losses recognised in an interim period on goodwill if a loss would not have been recognised, or a smaller loss would have been recognised, had an impairment assessment been made only at the end of a subsequent reporting period? Accounting Principle 8 An entity shall not reverse an impairment loss recognised in a previous interim period in respect .....

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this Appendix is only to bring out the major differences, if any, between Indian Accounting Standard (Ind AS) 34 and the corresponding International Accounting Standard (IAS) 34, , and IFRIC 10, and Impairment, issued by the International Accounting Standards Board. Comparison with IAS 34, , and IFRIC 10 1 With regard to preparation of statement of profit and loss, International Accounting Standard (IAS) 34, , provides option either to follow single statement approach or to follow two statement .....

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ent of Profit and Loss is used instead of Statement of comprehensive income or Statement of profit or loss and other comprehensive income . 3 Last sentence of paragraph 1 of IAS 34 is deleted in Ind AS 34 since it is felt that the requirement to present interim financial report should be governed by the relevant law or regulation and not by way of an encouragement through an Accounting Standard. 4 The following paragraph numbers appear as Deleted in IAS 34. In order to maintain consistency with .....

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s to Illustrative examples which are not integral part of IAS 34 have been deleted in Ind AS 34. The paragraph numbers have been retained in Ind AS 34 in order to maintain consistency with paragraph numbers of IAS 34: (i) Paragraph 22 making reference to Illustration A of Illustrative Examples illustrating the periods required to be presented by an entity that reports half yearly and an entity that reports quarterly. (ii) Paragraph 40 making reference to Illustration B of Illustrative Examples i .....

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