Friday, December 28, 2012

Ind AS 10, Events after the Reporting Period and existing AS 4, Contingencies and Events occurring after the Balance Sheet Date

(i)             In Ind AS 10, material non-adjusting events are required to be disclosed in the financial statements, whereas the existing AS 4 requires the same to be disclosed in the report of approving authority.

(ii)             As per Ind AS 10 dividend proposed or declared after the reporting period, can not be recognised as a liability in the financial statements because it dose not meet the criteria of a present obligation as per Ind AS 37. Such dividend is required to be

disclosed in the notes in the financial statements as per Ind AS 1,whereas as per the existing AS 4 the same is required to be adjusted in financial statements because of the requirements prescribed in the Schedule VI to the Companies Act, 1956.

(iii)          If after the reporting date, it is determined that the fundamental accounting assumption of going concern is no longer appropriate, Ind AS 10 requires a fundamental change in the basis of accounting. Whereas existing AS 4 requires assets and liabilities to be adjusted for events occurring after the balance sheet date that indicate that the fundamental accounting assumption of going concern is not appropriate.

In this regard, Ind AS 10 refers to Ind AS 1, which requires an entity to make the following disclosures:

>        disclose the fact that the financial statements are not prepared on a going concern basis together with the basis on which the financial statements are prepared

>          state the reason why the entity is not regarded as a going concern.

Existing AS 4 does not require any such disclosure, However, existing AS 1 requires the disclosure of the fact in case going concern assumption is not followed.

(iv)         Ind AS 10 includes an Appendix Distribution of Non-cash Assets to Owners which deals , inter alia, with when to recognise dividends payable to its owners. 
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