Indian Accounting Standard (Ind AS) 101 Summary
Indian Accounting Standard (Ind AS) 101, First-time Adoption of Indian Accounting Standards is applied by the entity in its first Ind AS financial statements and each interim financial report, if any, that it presents in accordance with Ind AS 34, Interim Financial Reporting, for part of the period covered by its first Ind AS financial statements.
The entity’s first Ind AS financial statements are the first annual financial statements in which the entity adopts Ind AS notified under the Companies Act, 2013 and makes an explicit and unreserved statement in those financial statements of compliance with Ind AS.
Ind AS 101 sets out specific transition requirements and exemptions available on the first-time adoption of Ind AS.
An opening balance sheet is prepared at the date of transition, which is the starting point for accounting in accordance with Ind AS.
The date of transition is the beginning of the earliest comparative period presented on the basis of Ind AS.
At least one year of comparatives is presented on the basis of Ind AS, together with the opening balance sheet.
The transition requirements and exemptions on the first-time adoption of Ind AS apply to both annual and interim financial statements.
Accounting policies are chosen from Ind AS effective at the first annual Ind AS reporting date.
Generally, those accounting policies are applied retrospectively in preparing the opening balance sheet and in all periods presented in the first Ind AS financial statements, unless there is an explicit exemption or option provided under the standard.
Ind AS 101 requires the entity to do the following in the opening Ind AS statement of financial position that it prepares as a starting point for its accounting under Ind AS:
- Recognise all assets and liabilities whose recognition is required by Ind AS
- Not recognise items as assets or liabilities if Ind AS do not permit such recognition
- Reclassify items that it recognised in accordance with previous GAAP (Indian GAAP) as one type of asset, liability or component of equity, but are a different type of asset, liability or component of equity in accordance with Ind AS and
- Apply Ind AS in measuring all recognised assets and liabilities.
This standard grants exemptions (either mandatory or as an option) from the Ind AS requirements in specified areas where the cost of complying with them would be likely to exceed the benefits to users of financial statements.
This Ind AS prohibits retrospective application of some aspects of other Ind AS.
Detailed disclosures on the first-time adoption of Ind AS including reconciliations of equity and profit or loss from previous GAAP (Indian GAAP) to Ind AS will be required in the entity’s annual financial statements as well as some disclosures in its interim financial statements.