Ind AS 1, Presentation of Financial Statements | Ind AS 1 Vs AS 1

Ind AS 1, Presentation of Financial Statements: Ind AS 1 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.

Financial Statements

The Standard requires an entity to present a complete set of financial statements at least annually, with comparative amounts for  the  preceding year (including comparative amounts in the notes).

A complete set of financial statements comprises:

• a balance sheet as at the end of the period ;
• a statement of profit and loss for the period;
• Statement of changes in equity for the period;
• a statement of cash flows for the period;
• notes, comprising significant accounting policies and other explanatory information; and
• comparative information in respect of the preceding period; and
• a balance sheet as at the beginning of the preceding period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its  financial statements, or when  it reclassifies items in its financial

The Standard requires an entity to present, in a statement of changes  in equity, all owner changes in equity. All non-owner changes in equity (i.e., comprehensive income) are required to be presented in single statement of profit and loss, with profit or loss and other comprehensive income presented in two sections. The sections shall be presented together, with  the profit or  loss section presented first followed directly by the other comprehensive income section.

The Standard requires that an entity whose financial statements comply wi th Ind AS  must make an explicit and unreserved statement of  such compliance  in the notes. An entity must not describe financial statements as complying  with Ind AS unless they comply with all the requirements of Ind AS. The application of Ind AS, with additional disclosure  when  necessary,  is  presumed to result in financial statements that achieve a presentation of true and fair view.

The Standard also deals with  going concern issues, offsetting and  changes  in presentation or classification.

Structure and Content

The Standard requires that an entity shall clearly identify the financial statements and distinguish them from other information  in  the  same published document. The Standard requires some 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.

Other Comprehensive Income

Other comprehensive income comprises items of income and expenses (including reclassification adjustments) that are not recognised  in  profit  or loss as required or permitted by other Ind AS.

The Standard requires an entity to disclose reclassification adjustments and income tax relating to each component of other comprehensive income. Reclassification adjustments are the amounts reclassified to profit or loss in  the current period that were previously recognised in other comprehensive income.

The other comprehensive income section shall present  line  items  for  amounts for the period of:

• items of other comprehensive income (excluding amounts  in  paragraph (b)), classified by nature and grouped into those that, in accordance with other Ind AS:
  • will not be reclassified subsequently to profit or loss; and
  • will be reclassified subsequently to profit or loss when specific conditions are
• the share of the other comprehensive income of associates and joint

ventures accounted for using the equity method, separated into the share of items that in accordance with other Ind AS:

• will not be reclassified subsequently to profit or loss; and
• will be reclassified subsequently to profit or loss when specific conditions are

Current / non-current distinction

The Standard requires that an entity 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.

The Standard also requires that whichever method  of  presentation  is adopted, an entity shall disclose the amount expected to be recovered or settled after more than twelve months for  each asset and liability  line item  that combines amounts expected to be recovered or settled:

• no more than twelve months after the reporting period, and
• more than twelve months after the reporting period. The Standard, among other things, requires that:
• An entity shall disclose, along with its 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 recognised in the financial
• An entity shall disclose information about the assumptions it makes about the future, and other major sources of estimation uncertainty at the end of the reporting period, that have a significant risk of resultin g  in a material adjustment to the carrying amounts of  assets  and  liabilities within the next financial

An entity shall disclose information that enables users of its financial statements to evaluate the entity’s objectives, policies and processes for managing capital. An entity shall also provide additional disclosures on puttable financial instruments classified as equity instruments.

Difference Between Ind AS 1 and AS 1

AS 1	IND AS 1
Deals only with disclosure of accounting policies.	Deals with presentation of financial statements in general and its scope is much wider than AS 1.
Does not specifically deals with this aspect as it is deals only with the discosure of accounting policies. However, as per AS 5, extraordinary items are to be disclosed separately in the statement of profit and loss.	Ind AS 1 prohibits presentation of any item as ‘Extraordinary Item’ in the statement of profit and loss or in the notes.
AS 1 is silent on this matter.	Requires an enterprise to explicitly state in the notes, that all IND AS have been complied with. Deviation from the requirements of IND AS will be allowed only when: the management concludes that such compliance will be misleading and the regulatory framework does not prohibit such deviation.
It requires the classification of expense on the basis of their function.  Eg: Classification into cost of sales, administrative expense, selling and distribution expense, etc.	For the purpose of presentation of expenses in the statement of Profit and loss, the expenses shall be classified based on their nature. Eg: they can be classified as finance cost, depreciation, employee cost, etc.
There is no such requirement in AS 1.	If a presentation based on liquidity is more relevant and reliable, than the presentation based on current / non current classification, the assets and liabilities shall be presented in the order of liquidity.
There is no specific requirement of presentation of Statement of Profit and loss in two parts. Generally, a single P&L Statement is presented.	The statement of profit and loss has two distinct parts. The first part displays the various components of the profit or loss for the period (Just like profit and loss account) The second part displays the various components of “Other comprehensive Income” for the period, which includes Items like unrealised gains and losses (gains on revaluation of fixed assets, actuarial gains and losses on employee benefits, etc.)
There is no such requirement in AS 1.	Requires that the assets and liabilities should be classified as current and non current and also provides a criteria for such classification.
AS 1 is silent on this matter.	Requires the disclosure of judgments made by management while framing of accounting polices. It also requires disclosure of key assumptions about the future and other sources of measurement uncertainty, that have significant risk  of causing material adjustment to the carrying amounts of assets and liabilities in the next financial year.
In such cases, AS 1 requires the effect of such change in accounting policy or rectification of error to be adjusted in current period only.	Where there is a change in accounting policy or when there is rectification of error (i.e. Prior period item), IND AS 1 requires retrospective changes i.e. all comparative information, current period information and opening balances should be restated.

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