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8/20/2019 Ifrs vs Igaap
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IFRS VS. IGAAPC.A. Noopur Jain
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FIXED A SSETS
Requires component
accounting where each
item of fixed assets areseparately depreciated
based on its useful life.
Change in method of
depreciation/ useful lifeis treated as change in
accounting estimates
and hence accounted
prospectively.
No such method. Entireasset is depreciated at aflat rate based on usefullife as decided by Mgmtor Rates prescribed byCompanies Act w.e.higher.
Change in method of
depreciation/ useful lifeis treated as change inaccounting policy andhence accountedretrospectively.
IFRS IGAAP
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BUSINESS COMBINATIONS
Requires looking beyond
the legal form hence all
business combinationsare considered as
acquisitions and
accounted using
purchase method.
Acquisition date is the
date on which acquirer
effectively obtains
control of the acquiree.
Driven by the legal
form hence all
business combinations
are accounted using
pooling of interest (if
meets certain
criteria's) or purchasemethod.
Acquisition date is not
specifically defined.
IFRS IGAAP
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FINANCIAL INSTRUMENTS
Preference shares are
considered as a
financial liability.
Repurchased share
are considered as
treasury stock and
shown as deductionfrom shareholders
equity.
Preference shares are
considered as part of
Shareholders capital.
No specific description
but Repurchase of
own share are
cancelled and cannotbe kept as treasury
stock.
IFRS IGAAP
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FINANCIAL INSTRUMENTS (CONTD.)
Option to classify financialassets in 4 categories: Fair Value through P/L
Held to Maturity Loans and Receivable
Available for Sale
Option to classify financialliabilities in 2 categories: Fair Value through P/L
Others
Changes in fair value of suchinvestments are recognized inincome statement except for
AFS category which is routedthrough equity.
No comprehensive
guidelines but
classification in the saidcategories is
recommended as per AS-
30 but it is not
mandatory
IFRS IGAAP
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STATEMENT OF CHANGES IN EQUITY
Mandatory to preparestatement of changes inequity showing: Total Comprehensive
income
Transactions with owners
Reconciliation betweenopening and closing balance
of each component of equity. Retrospective application/
restatement of eachcomponent of equity.
A statement of changes
in equity is not required.
Movements in sharecapital, retained
earnings, reserves etc. is
presented as a schedule
to financial statements.
IFRS IGAAP
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FOREIGN CURRENCY TRANSLATION
Mandatory to determinefunctional currency andpresentation currency.
Functional currency hasdirect impact on treatmentof exchange gains/losses.
Exchange gains/losses frommonetary assets/liabilities
are recognized immediatelyin P/L a/c (except to theextent of borrowing cost).
No concept of functionalcurrency and presentationcurrency. Reporting currency
is currency in which it isdomiciled.
If long term foreign currencyitem relates to acquisition ofdepreciable assets, exchangediff can be adjusted in such
capital asset. But if it relatesto other than acquisition ofdepreciable assets, entity hasan option to accumulate suchdiff in “Foreign currencyMonetary Reserve”
IFRS IGAAP
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SHARE BASED PAYMENT TRANSACTIONS
Requires an entity to
recognize share based
payment transactions
in its financial
statements, including
transactions with
employees or others tobe settled in
cash/other assets/
equities at Fair Value.
No such specific
standard but
accounted based on
guidance note of
SEBI/ ICAI for listed
entities and applies to
employees. Intrinsic Value Method is used
for ESOP.
IFRS IGAAP
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SEGMENT REPORTING
Operating segmentsare identifies based on
financial informationevaluated by CFO/Decision maker
2 or more segmentscan be aggregated into1 operating segmentif such aggregation isconsistent with thecore principal of IFRS.
Entity has to identify
2 sets of segments i.e.
Business andGeographical, using
risks and rewards
approach.
No specific guidancein this regards.
IFRS IGAAP
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RELATED P ARTY DISCLOSURES
Covers close members ofthe family of keymanagement personnel
(KMP) or a party whoexercises control orsignificant influence.
Covers executive as well asnon – executive directors inKMP. Also covers KMP of
entity and its parent. Post-employment benefit
plan of entity or anyrelated party of entity isalso related party.
Covers only relatives ofkey managementpersonnel (KMP).
Does not cover non-executive directors in KMPunless they have authorityand responsibility forplanning, directing and
controlling activities. Does not specifically
identify employee benefittrusts as related party.
IFRS IGAAP
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CONSOLIDATED FINANCIAL STATEMENTS
Non-controlling Interest(NCI) are presented ascomponent of Equity.
Losses incurred bysubsidiary have to beallocated to NCI even if itresults in deficit balance ofNCI.
SPE shall be consolidated if
relation indicates that SPEis controlled by the entity.
Interest in JV is accountedusing proportionateconsideration method orequity method
Minority Interests (MI)represented separatelyfrom liabilities and Equity.
Losses exceeding MI inequity of the subs has to beadjusted in MI, except toextent MI is able to makegood the losses.
No such provision.
Interest in JV is accountedonly using proportionateconsideration method .
IFRS IGAAP
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INTANGIBLE A SSETS
Capitalize the asset
Amortized over useful
life (but if indefiniteuseful life then no
Amortization butreviewed annually forimpairment).
Revaluation arepermitted in rarecircumstances.
Capitalize the asset
Amortized over useful
life but with
rebuttable
presumption of not
exceeding 10 yrs.
Revaluation are not
permitted.
IFRS IGAAP
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DEBTS
Convertible debt has
to be split between
liability and equityportion and recorded
accordingly.
Debt
issuance/originationcost shall form part of
the value of debt and
shall be amortized.
Convertible debt is
recognized as liability
and no split shall berequired.
Debt
issuance/origination
cost shall be chargedto Profit and loss a/c
as and when incurred.
IFRS IGAAP
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MISCELLANEOUS
Preliminary Expensesshall be charged toIncome statement.
Leasehold Land istreated as prepaidassets
Deferred Tax are drivenby temporary
differences and recordedusing full provisionmethod. But recognizedeferred tax asset only ifrecovery is probable.
Preliminary Expenses
shall be deferred and w/off
over period of 5yrs. Leasehold Land is treated
as fixed assets.
Deferred Tax assets and
liabilities should be
recognized for all timing differences but subject to
consideration of prudence
for deferred tax assets
IFRS IGAAP
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