October 20 To October 26, 2018 u Taxmann’s Corporate Professionals Today u Vol. 43 u (^37395)
IND-AS 20 now stands amended and
an alternative accounting option is
provided of accounting for both the
asset and grant at nominal value.
(b) Presentation of grants related to assets-
The extant version of the standard
required grants related to assets to be
presented in the IND-AS balance sheet
by setting up the same as deferred
income. The grant set up as deferred
income being recognized in the state-
ment of profit and loss on a systematic
basis over the useful life of the asset.
A second method of accounting for such
grants has now been permitted under
the notified amendment: the accounting
for the grant by deducting the same
from the carrying amount of the related
asset.
It may be noted that grants related to
assets are grants whose primary con-
dition is that an entity qualifying for
the same should purchase, construct
or otherwise acquire long-term assets.
(c) Consequential amendment to accounting topic
of repayment of government grants - Since
a second alternative for accounting
for grants related to assets has been
provided, the amendment requires the
repayment of a grant related to an
asset to be recognized by increasing
the carrying amount of the asset or
reducing the deferred income balance by
the amount repayable. The cumulative
additional depreciation that would have
been recognized in the absence of the
grant should be recognized immediately
in the Statement of Profit and Loss.
(d) Consequential amendments to other 3 standards :
IND-AS Amendment
- IND-AS 12 u No deferred tax asset to be created for non-taxable Government grant even when
accounted under the option now introduced (Deducting grant from carrying
amount of asset). - IND-AS 38 u For intangible assets acquired free of charge or for nominal amount (by way of
Government grant) can now be accounted either at fair value or nominal value
(plus expenditure directly attributable to preparing the asset for its intended
use).
u The revaluation model can be applied to intangible assets (received by way of
Government grant) recognized initially at nominal amount. - IND-AS 16 u The carrying amount of an item of PPE may be reduced by Government grants
related to assets. This was not permitted earlier.
Impact of Impending Change to Lease
Accounting under IND-AS
- IND-AS 116-Leases is proposed to be applicable
under the Indian Accounting Standards (IND-
AS) framework for annual periods commencing
on or after April 1, 2019. This new standard
is based on the corresponding IFRS 16 issued
by the International Accounting Standards
Board (IASB).
IND-AS 116 defines lease as “a contract is,
or contains a lease if it conveys the right to
control the use of an identified asset for a
period of time in exchange for consideration”.
Assets and liabilities arising from a lease are
initially required to be measured by the lessee
on a present value basis. The measurement
includes non-cancellable lease payments
including inflation-linked payments and also
includes payments to be made in optional
periods if the lessee is reasonably certain to
exercise an option to extend the lease, or not
to exercise an option to terminate the lease.laTesT ind-as uPdaTes – an analysis