International Financial Reporting Standards Long Answer Type Questions

Question 1.
Give the list of IFRS issued by IASB.
Answer:

  • IFRS 1: First-time Adoption of International Financial Reporting Standards
  • IFRS 2: Share-based Payment
  • IFRS 3: Business Combinations
  • IFRS 4: Insurance Contracts
  • IFRS 5: Non-current Assets Held for Sale and Discontinued Operations
  • IFRS 6: Exploration for and Evaluation of Mineral Assets
  • IFRS 7: Financial Instruments: Disclosures
  • IFRS 8: Operating Segments
  • IFRS 9: Financial Instruments

Question 2.
Give the list of IAS issued by IASB.
Answer:

  • IAS 1 Disclosures requirements about assessment of going concerned
  • IAS 1 Issues related to the application of IAS 1
  • IAS 1 Encouraged versus required disclosures
  • IAS 1 Classification of liabilities
  • IAS 1 Presentation of other OCI arising from equity-accounted investments
  • IAS 1 Clarification of the requirements for comparative information
  • IAS 2 Should interest be accreted on prepayments in long-term supply contracts?
  • IAS 7 Identification of cash equivalents
  • IAS 7 Classification of expenditures in the statement of cash flows
  • IAS 7 Definitions of operating, investing and financing
  • IAS 7 Interest paid that is capitalised
  • IAS 8 Classification of cash payments for deferred and contingent consideration
  • IAS 8 Distinction between a change in an accounting policy and a change in an accounting estimate
  • IAS 1 Reissuing previously issued financial statements
  • IAS 12 Accounting for income tax consequences of interest payments on, and issuing costs of, financial instruments that are classified as equity
  • IAS 12 Recognition of current income tax on uncertain tax position Recognition and measurement of deferred tax assets when an entity is loss-making
  • IAS 12 Recognition of deferred tax for a single asset in a corporate wrapper
  • IAS 12 Impact of an internal reorganisation on deferred tax amounts related to goodwill
  • IAS 12 Recognition of deferred tax assets for unrealised losses
  • IAS 12 Selection of applicable tax rate for measurement of deferred tax relating to investment in associate
  • IAS 12 Draft IFRIC Interpretation-Uncertainty in income taxes
  • IAS 12 Recognition through profit or loss of deferred faxes for the effect of exchange rate changes on the tax basis of non-current assets through profit or loss
  • IAS 12 Expected manner of recovery of indefinite life intangible assets when measuring deferred tax
  • IAS 16 Recognition of compensation when it ‘becomes receivable’
  • IAS 16 Classification of servicing equipment
  • IAS 16 Revaluation method-proportionate restatement of accumulated depreciation
  • IAS 16 Variable payments for the separate acquisition of PPE and intangible assets
  • IAS 16 Accounting for net proceeds and costs of testing for property, plant and equipment
  • IAS 16 Accounting for core inventories
  • IAS 16 Disclosure of carrying amounts under the cost model
  • IAS 16 Clarification of acceptable methods of depreciation and amortisation (Proposed amendments to
  • IAS 16 and IAS 38)
  • IAS 17 Meaning of ‘incremental costs’
  • IAS 19 Actuarial assumptions: Determination of discount rate
  • IAS 19 Pre-tax or post-tax discount rate
  • IAS 19 Employee benefits plans with a guaranteed return on contributions or notional contributions
  • IAS 19 Discount rate: regional market issue
  • IAS 19 Defined Benefit Plans: Employee Contributions (proposed amendments to IAS 19)
  • IAS 19 Remeasurement on a plan amendment, curtailment or settlement
  • IAS 19 Should longevity swaps held under a defined benefit plan be measured at fair value as part of plan assets or on another basis as a qualifying insurance policy?
  • IAS 20 Accounting for recoverable cash payments
  • IAS 21 Foreign exchange restrictions and hyperinflation
  • IAS 21 Draft IFRIC Interpretation Foreign Currency Transactions and Advance Consideration
  • IAS 23 Borrowing costs on completed qualifying assets
  • IAS 24 Key management personnel
  • IAS 24 Definition of close members of the family of a person
  • IAS 27 Contributions to a jointly controlled entity or an associate
  • IAS 28 Associates and common control
  • IAS 28 Purchase in stages-fair value as deemed cost
  • IAS 28 Application of the equity method by a non-investment entity investor to an investment entity investee
  • IAS 28 Equity method: Share of Other Net Asset Changes
  • IAS 28 Elimination of gains or losses arising from transactions between an entity and its associate or joint venture
  • IAS 28 Measuring investees at fair value: an investment-by-investment choice or a consistent policy choice?
  • IAS 28 Assesment of significant influence: fund manager acting as agent and holding own investment in the fund
  • IAS 28 Gains or losses on transactions between an entity and its associate or joint venture
  • IAS 29 Applicability of the concept of financial capital maintenance defined in terms of constant purchasing power units
  • IAS 32 Offsetting and cash pooling
  • IAS 32 Classification of a financial instrument that is mandatorily convertible into a variable number of shares upon a contingent ‘nonviability’ event
  • IAS 32 A financial instrument that is mandatorily convertible into a variable number of shares (subject to cap and floor) but gives the issuer the option to settle by delivering the maximum (fixed) number of shares
  • IAS 32 Accounting for a financial instrument that is mandatorily convertible into a variable number of shares subject to cap and floor
  • IAS 32 Classification of financial instruments that give the issuer the contractual right to choose the form of settlement
  • IAS 32 Classification of the puttable instruments criteria for income trust units
  • IAS 32 Put options written on non-controiling interests
  • IAS 32 Tax effect of distribution to holders of equity instruments
  • IAS 32 Classification of the liability for prepaid cards issued by a bank in the bank’s financial statements.
  • IAS 32 Accounting for a written put option over non-controiling interests to be settled by a variable number of the parent’s shares
  • IAS 33 Calculating earnings per share considering non-cumulative preference dividends
  • IAS 34 Condensed statement of cash flows
  • IAS 34 Interim financial reporting and segment information for total assets and liabilities
  • IAS 34 Disclosure of information “elsewhere in the interim financial report”
  • IAS 36 Accounting for impairment testing of goodwill when non-controlling interests are recognised
  • IAS 36 Recoverable amount and carrying amount of a cash-generating unit
  • IAS 36 Recoverable Amounts Disclosures for Non-Financial Assets (replaced: Harmonisation of disclosures for value in use and fair value less costs of disposal)
  • IAS 37 Measurement of liabilities arising from emission trading schemes
  • IAS 39 Novation of derivatives and Continuation of Hedge Accounting (Proposed amendments to IAS 39 and IFRS 9)
  • IAS 39 Classification of a hybrid financial instrument by the holder
  • IAS 39 Holder’s accounting for exchange of equity instruments
  • IAS 39 Accounting for term-structured repo transaction
  • IAS 39 Term-extending in fixed rate-debt instruments
  • IAS 39 Income and expenses arising on financial instruments with a negative yield -presentation in the statement of comprehensive income
  • IAS 39 Accounting for embedded foreign currency derivatives in host contracts
  • IAS 39 Recognition and Measurement-Separation of an embedded floor from a floating rate host contract in a negative interest rate environment
  • IAS 40 Clarifying the interrelationship of IFRS 3 Business Combinations and IAS 40 Investment Property when classifying property as investment property or owner-occupied property
  • IAS 40 Accounting for a structure that appears to lack the physical characteristics of a building
  • IAS 40 Transfers of investment property
  • IAS 41 Valuation of biological assets using a residual method
  • IAS 41 Disclosure of the components of changes in fair value and associated valuation techniques
  • IAS 41 Revenue on sale of agricultural produce

Question 3.
Give the list of Ind AS issued by ICA.
Answer:

  • IAS 1 Disclosures requirements about assessment of going concern
  • IAS 1 Issues related to the application of IAS 1
  • IAS 1 Encouraged versus required disclosures
  • IAS 1 Classification of liabilities
  • IAS 1 Presentation of other OCI arising from equity-accounted investments
  • IAS 1 Clarification of the requirements for comparative information
  • IAS 2 Should interest be accreted on prepayments in long-term supply contracts?
  • IAS 7 Identification of cash equivalents
  • IAS 7 Classification of expenditures in the statement of cash flows
  • IAS 7 Definitions of operating, investing and financing
  • IAS 7 Interest paid that is capitalised
  • IAS 7 Classification of cash payments for deferred and contingent consideration
  • IAS 8 Distinction between a change in an accounting policy and a change in an accounting estimate
  • IAS 10 Reissuing previously issued financial statements
  • IAS 12 Accounting for income tax consequences of interest payments on, and issuing costs of, financial instruments that are classified as equity
  • IAS 12 Recognition of current income tax on uncertain tax position
  • IAS 12 Recognition and measurement of deferred tax assets when an entity is loss-making
  • IAS 12 Recognition of deferred tax for a single asset in a corporate wrapper
  • IAS 12 Impact of an internal reorganisation on deferred tax amounts related to goodwill
  • IAS 12 Recognition of deferred tax assets for unrealised losses
  • IAS 12 Selection of applicable tax rate for measurement of deferred tax relating to investment in associate
  • IAS 12 Draft IFRIC Interpretation-Uncertainty in income taxes
  • IAS 12 Recognition through profit or loss of deferred taxes for the effect of exchange rate changes on the tax basis of non-current assets through profit or loss
  • IAS 12 Expected manner of recovery of indefinite life intangible assets when measuring deferred tax
  • IAS 16 Recognition of compensation when it ‘becomes receivable’
  • IAS 16 Classification of servicing equipment
  • IAS 16 Revaluation method-proportionate restatement of accumulated depreciation
  • IAS 16 Variable payments for the separate acquisition of PPE and intangible assets
  • IAS 16 Accounting for net proceeds and costs of testing for property, plant and equipment
  • IAS 16 Accounting for core inventories
  • IAS 16 Disclosure of carrying amounts under the cost model
  • IAS 16 Clarification of acceptable methods of depreciation and amortisation (Proposed amendments to IAS 16 and IAS 38)
  • IAS 17 Meaning of ‘incremental costs’
  • IAS 19 Actuarial assumptions: Determination of discount rate
  • IAS 19 Pre-tax or post-tax discount rate
  • IAS 19 Employee benefits plans with a guaranteed return on contributions or notional contributions
  • IAS 19 Discount rate: regional market issue
  • IAS 19 Defined Benefit Plans: Employee Contributions (proposed amendments to IAS 19)
  • IAS 19 Remeasurement on a plan amendment, curtailment or settlement
  • IAS 19 Should longevity swaps held under a defined benefit plan be measured at fair value as part of plan assets or on another basis as a qualifying insurance policy?
  • IAS 20 Accounting for recoverable cash payments
  • IAS 21 Foreign exchange restrictions and hyperinflation
  • IAS 21 Draft IFRIC Interpretation Foreign Currency Transactions and Advance Consideration
  • IAS 23 Borrowing costs on completed qualifying assets
  • IAS 24 Key management personnel
  • IAS 24 Definition of close members of the family of a person
  • IAS 27 Contributions to a jointly controlled entity or an associate
  • IAS 28 Associates and common control
  • IAS 28 Purchase in stages-fair value as deemed cost
  • IAS 28 Application of the equity method by a non-investment entity investor to an investment entity investee
  • IAS 28 Equity method: Share of Other Net Asset Changes
  • IAS 28 Elimination of gains or losses arising from transactions between an entity and its associate or joint venture
  • IAS 28 Measuring investees at fair value: an investment-by-investment choice or a consistent policy choice?
  • IAS 28 Assesment of significant influence: fund manager acting as agent and holding own investment in the fund
  • IAS 28 Gains or losses on transactions between an entity and its associate or joint venture
  • IAS 29 Applicability of the concept of financial capital maintenance defined in terms of constant purchasing power units
  • IAS 32 Offsetting and cash pooling
  • IAS 32 Classification of a financial instrument that is mandatorily convertible into a variable number of shares upon a contingent ‘nonviability’ event
  • IAS 32 A Financial instrument that is mandatorily convertible into a variable number of shares (subject to cap and floor) but gives the issuer the option to settle by delivering the maximum (fixed) number of shares
  • IAS 32 Accounting for a financial instrument that is mandatorily con¬vertible into a variable number of shares subject to cap and floor
  • IAS 32 Classification of financial instruments that give the issuer the contractual right to choose the form of settlement
  • IAS 32 Classification of the puttable instruments criteria for income trust units
  • IAS 32 Put options written on non-controlling interests
  • IAS 32 Tax effect of distribution to holders of equity instruments
  • IAS 32 Classification of the liability for prepaid cards issued by a bank in the bank’s financial statements
  • IAS 32 Accounting for a written put option over non-controlling interests to be settled by a variable number of the parent’s shares
  • IAS 33 Calculating earnings per share considering non-cumulative preference dividends
  • IAS 34 Condensed statement of cash flows
  • IAS 34 Interim financial reporting and segment information for total assets and liabilities
  • IAS 34 Disclosure of information “elsewhere in the interim financial report”
  • IAS 36 Accounting for impairment testing of goodwill when non-controlling interests are recognised
  • IAS 36 Recoverable amount and carrying amount of a cash-generating unit
  • IAS 36 Recoverable Amounts Disclosures for Non-Financial Assets (replaced: Harmonisation of disclosures for value in use and fair value less costs of disposal)
  • IAS 37 Measurement of liabilities arising from emission trading schemes
  • IAS 39 Novation of derivatives and Continuation of Hedge Accounting (Proposed amendments to IAS 39 and IFRS 9)
  • IAS 39 Classification of a hybrid financial instrument by the holder
  • IAS 39 Holder’s accounting for exchange of equity instruments
  • IAS 39 Accounting for term-structured repo transaction
  • IAS 39 Term-extending in fixed rate-debt instruments
  • IAS 39 Income and expenses arising on financial instruments with a negative yield -presentation in the statement of comprehensive income
  • IAS 39 Accounting for embedded foreign currency derivatives in host contracts
  • IAS 39 Recognition and Measurement-Separation of an embedded floor from a floating rate host contract in a negative interest rate environment
  • IAS 40 Clarifying the interrelationship of IFRS 3 Business Combinations and IAS 40 Investment Property when classifying property as investment property or owner-occupied property
  • IAS 40 Accounting for a structure that appears to lack the physical characteristics of a building
  • IAS 40 Transfers of investment property
  • IAS 41 Valuation of biological assets using a residual method
  • IAS 41 Disclosure of the components of changes in fair value and associated valuation techniques
  • IAS 41 Revenue on sale of agricultural produce

Question 4.
Give the list of Ind AS issued by MCA.
Answer:

Notifications Description
G.S.R 111(E) dated 16 Feb 2015 The Companies (Indian Accounting Standards) Rules, 2015.
Indian Accounting Standard (Ind AS) 101 First-time Adoption of Indian Accounting Standards
Indian Accounting Standard (Ind AS) 102 Share-based Payment
Indian Accounting Standard (Ind AS) 103 Business Combinations
Indian Accounting Standard (Ind AS) 104 Insurance Contracts
Indian Accounting Standard (Ind AS) 105 Non-current Assets Held for Sale and Discontinued Operations
Indian Accounting Standard (Ind AS) 106 Exploration for and Evaluation of Mineral Resources
Indian Accounting Standard (Ind AS) 107 Financial Instruments: Disclosures
Indian Accounting Standard (Ind AS) 108 Operating Segments
Indian Accounting Standard (Ind AS) 109 Financial Instruments
Indian Accounting Standard (Ind AS) 110 Consolidated Financial Statements
Indian Accounting Standard (Ind AS) 111 Joint Arrangements
Indian Accounting Standard (Ind AS) 112 Disclosure of Interests in Other Entities
Indian Accounting Standard (Ind AS) 113 Fair Value Measurement
Indian Accounting Standard (Ind AS) 114 Regulatory Deferral Accounts
Indian Accounting Standard (Ind AS) 115 Revenue from Contracts with Customers
Indian Accounting Standard (Ind AS) 1 Presentation of Financial Statements
Indian Accounting Standard (Ind AS) 2 Inventories
Indian Accounting Standard (Ind AS) 7 Statement of Cash Flows
Indian Accounting Standard (Ind AS) 8 Accounting Policies, Changes in Accounting Estimates and Errors
Indian Accounting Standard (Ind AS) 10 Events after the Reporting Period
Indian Accounting Standard (Ind AS) 12 Income Taxes
Indian Accounting Standard (Ind AS) 16 Property, Plant and Equipment
Indian Accounting Standard (Ind AS) 17 Leases
Indian Accounting Standard (Ind AS) 19 Employee Benefits
Indian Accounting Standard (Ind AS) 20 Accounting for Government Grants and Disclosure of Government Assistance
Indian Accounting Standard (Ind AS) 21 The Effects of Changes in Foreign Exchange Rates
Indian Accounting Standard (Ind AS) 23 Borrowing Costs
Indian Accounting Standard (Ind AS) 24 Related Party Disclosures
Indian Accounting Standard (Ind AS) 27 Separate Financial Statements
Indian Accounting Standard (Ind AS) 28 Investments in Associates and Joint Ventures
Indian Accounting Standard (Ind AS) 29 Financial Reporting in Hyperinflationary Economies.
Indian Accounting Standard (Ind AS) 32 Financial Instruments: Presentation
Indian Accounting Standard (Ind AS) 33 Earnings per Share
Indian Accounting Standard (Ind AS) 34 Interim Financial Reporting
Indian Accounting Standard (Ind AS) 36 Impairment of Assets
Indian Accounting Standard (Ind AS) 37 Provisions, Contingent Liabilities and Contingent Assets
Indian Accounting Standard (Ind AS) 38 Intangible Assets
Indian Accounting Standard (Ind AS) 40 Investment Property
Indian Accounting Standard (Ind AS) 41 Agriculture

Question 5.
Explain the opportunites from IFRS’s convergence.
Answer:
Opportunities from IFRS’s convergence:
(i) International Opportunity: Indian CAs can take their professional abilities and deep knowledge anywhere around the world.

(ii) Potential Demand of Valuation Experts: As per the IFRSs assets and liabilities are to be recognized at fair values. This fair valuation will require valuers.This is one new area that can be explored by CAs.

(iii) Appointment in Companies as IFRS specialist:Companies would be working along the teams of experts and consultants. CAs would be required for interpreting the various complex issues and preparing financial statements according to the standards.The banking industry in India which is most affected by the implementation of IFRSs will also require these professionals as this industry will have to prepare its financial statements as per the new standards.

The persons with expertise in international accounting standards will also have an edge over others in educational institutes which are running certificate diplomas and training programmes in this area.

(iv) Continuing Professional Education: Intensive IFRS training needs to be imparted to key management personnel of companies. ICAI has taken steps in this regard.

Question 6.
Explain the challenges face by India implementing of IFRS’s convergence.
Answer:
Challenges from IFRS’s convergence
(i) First time Reporting of Financial Statements as per IFRS will be a critical factor. IND-AS 101 has been issued by ICAI in this regard that requires preparation of opening Balance Sheet which requires recognition and reclassification of certain items of assets and liabilities.First time adoption has its own challenges. Quite a few new policies need to adopted and previous policies may need a change. The entity is required to evaluate the impact of all these on its financial in the long term.

(ii) Regrouping / Reclassification: Current items shall have to be regrouped or reclassified to conform to the new method of preparation. Under IND-AS if any reclassification needs to be done the same shall have to be disclosed separately.

(iii) Planning for Effective Transition Audit: The changeover to IFRS poses a fundamental shift in financial reporting. Changes in the application of new policies, the configuration of systems and maintenance of internal controls will all have an effect on audit risk, significantly increasing the risk of misstatements and fraud. In turn, this will have a considerable impact on how audits are conducted. That’s why it’s important to properly plan the engagement – a step that everyone agrees is the key to a successful transition.Planning should focus on two major areas: assessing and updating the knowledge of professionals; and participating in the company’s conversion process.

(iv) Users Concerns and Professional Risks: One thing is certain, the first IFRS financial statements will be closely scrutinized by the various stake¬holders, including financial backers, investors, market analysts and regulators. All the stakeholders will be concerned about the impact, the changes will have and how it will affect them.This issue and its impact on audit engagements will naturally need to be addressed.

(v) High Risks: In their risk assessment, auditors should also consider the possibility of figures being manipulated by management. The changeover is a convenient opportunity to embellish the results and financial position or to conceal previously undetected errors in the opening balance adjustment.Early in the planning process, auditors should identify the files that present the greatest risk, either because of their complexity, major differences between GAAP and IFRS. This will enable them to take the necessary precautions to ensure the audit is properly performed. Obviously, vigilance and professional skepticism should be the key objectives of the auditor.

(vi) Managements’s Transition Plans:-The active involvement of auditors in ail stages of the planning, development and implementation of the company’s conversion process is critical to the engagement and essential to their work and conclusions, given the extent of the change, the high level of professional risk and the potential adverse effects inherent in the process.

(vii) Remaining Independent: Auditor should be free from any bias and prejudice as a matter of his moral code of conduct. To enforce the rules of professional conduct respecting independence and to avoid placing the auditor in a real or perceived conflict of interest situation, both the company and the audit committee will need to put processes in place to define the extent of the auditor’s involvement and collaboration with the management team.