TMI BlogCompanies (Indian Accounting Standards) Amendment Rules, 2020X X X X Extracts X X X X X X X X Extracts X X X X ..... t is a business combination by applying the definition in this Ind AS, which requires that the assets acquired and liabilities assumed constitute a business. If the assets acquired are not a business, the reporting entity shall account for the transaction or other event as an asset acquisition. Paragraphs B5 B12D provide guidance on identifying a business combination and the definition of a business. ; (ii) after paragraph 64O, the following shall be inserted, namely:- 64P Definition of a Business (Amendments to Ind AS 103), added paragraphs B7A B7C, B8A and B12A B12D, amended the definition of the term ‗business in Appendix A, amended paragraphs 3, B7 B9, B11 and B12 and deleted paragraph B10. An entity shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after the 1st April, 2020 and to asset acquisitions that occur on or after the beginning of that period. ; (iii) in Appendix A, for definition of the term business , the following definition shall be substituted, namely:- business An integrated set of activities and assets that is ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concentration test is met, the set of activities and assets is determined not to be a business and no further assessment is needed; (b) if the concentration test is not met, or if the entity elects not to apply the test, the entity shall then perform the assessment set out in paragraphs B8 B12D. B7B The concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. For the concentration test: (a) gross assets acquired shall exclude cash and cash equivalents, deferred tax assets, and goodwill resulting from the effects of deferred tax liabilities; (b) the fair value of the gross assets acquired shall include any consideration transferred (plus the fair value of any non-controlling interest and the fair value of any previously held interest) in excess of the fair value of net identifiable assets acquired. The fair value of the gross assets acquired may normally be determined as the total obtained by adding the fair value of the consideration transferred (plus the fair value of any non-controlling interest and the fair value of any previously held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets to qualify as a business. To be capable of being conducted and managed for the purpose identified in the definition of a business, an integrated set of activities and assets requires two essential elements-inputs and processes applied to those inputs. A business need not include all of the inputs or processes that the seller used in operating that business. However, to be considered a business, an integrated set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. Paragraphs B12-B12D specify how to assess whether a process is substantive. ; (IV) after paragraph B8, the following shall be inserted, namely:- B8A If an acquired set of activities and assets has outputs, continuation of revenue does not on its own indicate that both an input and a substantive process have been acquired. ; (V) for paragraph B9, the following shall be substituted, namely:- B9 The nature of the elements of a business varies by industry and by the structure of an entity s operations (activities), including the entity s stage of development. Established businesses often hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uts could include- (i) intellectual property that could be used to develop a good or service; (ii) other economic resources that could be developed to create outputs; or (iii) rights to obtain access to necessary materials or rights that enable the creation of future outputs. Examples of the inputs mentioned in subparagraphs (b)(i) (iii) include technology, in-process research and development projects, real estate and mineral interests. B12C If a set of activities and assets has outputs at the acquisition date, an acquired process (or group of processes) shall be considered substantive if, when applied to an acquired input or inputs, it- (a) is critical to the ability to continue producing outputs, and the inputs acquired include an organised workforce with the necessary skills, knowledge, or experience to perform that process (or group of processes); or (b) significantly contributes to the ability to continue producing outputs and- (i) is considered unique or scarce; or (ii) cannot be replaced without significant cost, effort, or delay in the ability to continue producing outputs. B12D The following additional discussion supports b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following shall be inserted, namely:- 44DD [Refer Appendix 1]; 44DE Interest Rate Benchmark Reform (amendments to Ind AS 109 and Ind AS 107) added paragraphs 24H and 44DF. An entity shall apply these amendments when it applies the amendments to Ind AS 109. 44DF In the reporting period in which an entity first applies Interest Rate Benchmark Reform, an entity is not required to present the quantitative information required by paragraph 28(f) of Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors. (iii) in Appendix 1, for paragraph 5, the following shall be substituted, namely:- 5 Paragraphs 42I-42S of IFRS 7 have not been included in Ind AS 107 as these paragraphs relate to initial application of IFRS 9 which are not relevant in Indian context. Paragraphs 43-44BB related to effective date and transition given in IFRS 7 have not been given in Ind AS 107 since it is not relevant in Indian context. However, in order to maintain consistency with paragraph numbers of IFRS 7, these paragraph numbers are retained in Ind AS 107. Paragraph 44DD relates to IFRS 17, Insurance Contracts, for which corresponding Ind AS is under formulation. ; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mic relationship between the hedged item and the hedging instrument 6.8.6 For the purpose of applying the requirements in paragraphs 6.4.1(c)(i) and B6.4.4 B6.4.6, an entity shall assume that the interest rate benchmark on which the hedged cash flows and/or the hedged risk (contractually or non-contractually specified) are based, or the interest rate benchmark on which the cash flows of the hedging instrument are based, is not altered as a result of interest rate benchmark reform. Designating a component of an item as a hedged item 6.8.7 Unless paragraph 6.8.8 applies, for a hedge of a non-contractually specified benchmark component of interest rate risk, an entity shall apply the requirement in paragraphs 6.3.7(a) and B6.3.8-that the risk component shall be separately identifiable-only at the inception of the hedging relationship. 6.8.8 When an entity, consistent with its hedge documentation, frequently resets (i.e, discontinues and restarts) a hedging relationship because both the hedging instrument and the hedged item frequently change (i.e, the entity uses a dynamic process in which both the hedged items and the hedging instruments used to manage that ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments as the hedging instrument, an entity shall prospectively cease applying paragraphs 6.8.4 6.8.6 to an individual item or financial instrument in accordance with paragraphs 6.8.9, 6.8.10, or 6.8.11, as relevant, when the uncertainty arising from interest rate benchmark reform is no longer present with respect to the hedged risk and/or the timing and the amount of the interest rate benchmark-based cash flows of that item or financial instrument. ; (ii) after paragraph 7.1.7, the following shall be inserted, namely:- 7.1.8 Interest Rate Benchmark Reform (amendments to Ind AS 109 and Ind AS 107), added Section 6.8 and amended paragraph 7.2.26. An entity shall apply these amendments for annual periods beginning on or after the 1st April, 2020. ; (iii) after paragraph 7.2.20, the following heading shall be inserted, namely:- Transition for hedge accounting (Chapter 6) ; (iv) for paragraph 7.2.26, the following shall be substituted, namely:- 7.2.26 As an exception to prospective application of the hedge accounting requirements of this Standard, an entity- (a)-(c) [Refer Appendix 1] (d) shall apply the requirements in Section 6.8 retrospec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he lessee shall disclose- (a) that it has applied the practical expedient to all rent concessions that meet the conditions in paragraph 46B or, if not applied to all such rent concessions, information about the nature of the contracts to which it has applied the practical expedient (see paragraph 2); and (b) the amount recognised in profit or loss for the reporting period to reflect changes in lease payments that arise from rent concessions to which the lessee has applied the practical expedient in paragraph 46A. ; (iii) in Appendix C, (a) after paragraph C1, the following paragraph shall be inserted, namely:- C1A Covid-19-Related Rent Concessions, added paragraphs 46A, 46B, 60A, C20A and C20B. A lessee shall apply that amendment for annual reporting periods beginning on or after the April 1st, 2020. In case a lessee has not yet approved the financial statements for issue before the issuance of this amendment, then the same may be applied for annual reporting periods beginning on or after the April 1st, 2019. ; (b) after paragraph C20, the following shall be inserted, namely:- Covid-19-related rent concessions for lessees C20A A lessee sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ific reporting entity s general purpose financial statements requires an entity to consider the characteristics of those users while also considering the entity s own circumstances. Many existing and potential investors, lenders and other creditors cannot require reporting entities to provide information directly to them and must rely on general purpose financial statements for much of the financial information they need. Consequently, they are the primary users to whom general purpose financial statements are directed. Financial statements are prepared for users who have a reasonable knowledge of business and economic activities and who review and analyse the information diligently. At times, even wellinformed and diligent users may need to seek the aid of an adviser to understand information about complex economic phenomena. ; (ii) after paragraph 139Q, the following shall be inserted, namely:- 139R-139S [Refer Appendix 1] 139T Definition of Material (Amendments to Ind AS 1 and Ind AS 8) amended paragraph 7 of Ind AS 1 and paragraph 5 of Ind AS 8, and deleted paragraph 6 of Ind AS 8. An entity shall apply those amendments prospectively for annual periods begi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined in Ind AS 8. ; (G) in Indian Accounting Standard (Ind AS) 10 , - (i) for paragraph 21, the following shall be substituted, namely:- 21 If non-adjusting events after the reporting period are material, non-disclosure could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity. Accordingly, an entity shall disclose the following for each material category of non-adjusting event after the reporting period- (a) the nature of the event; and (b) an estimate of its financial effect, or a statement that such an estimate cannot be made. ; (ii) after paragraph 22, the following shall be inserted, namely:- Effective date 23-23B [Refer Appendix 1] 23C Definition of Material (Amendments to Ind AS 1 and Ind AS 8), amended paragraph 21. An entity shall apply those amendments when it applies the amendments to the definition of material in paragraph 7 of Ind AS 1 and paragraphs 5 and 6 of Ind AS 8. (iii) in Appendix 1, after paragraph 2, the following shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tity will carry out the restructuring. If an entity starts to implement a restructuring plan, or announces its main features to those affected, only after the reporting period, disclosure is required under Ind AS 10 Events after the Reporting Period, if the restructuring is material and non-disclosure could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity. ; (ii) after paragraph 102, the following shall be inserted, namely:- 103 [Refer Appendix 1] 104 Definition of Material (Amendments to Ind AS 1 and Ind AS 8), amended paragraph 75. An entity shall apply those amendments when it applies the amendments to the definition of material in paragraph 7 of Ind AS 1 and paragraphs 5 and 6 of Ind AS 8. ; (iii) in Appendix 1, for paragraph 4, the following shall be substituted, namely:- 4. Paragraphs 93-99 and 101 related to Transitional Provisions and Effective date given in IAS 37 have not been given in Ind AS 37, since all transitional provisions related to Ind ASs, wherever consid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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