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Companies (Indian Accounting Standards) Second Amendment Rules, 2019
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.... "39AD * 39AE * 39AF Appendix C, Uncertainty over Income Tax Treatments, to Ind AS 12 added paragraph E8. An entity shall apply that amendment when it applies Appendix C to Ind AS 12."; (ii) In Appendix E, the following paragraphs shall be inserted, namely:- "E1 * E2 * E3 * E4 * E5 * E6 * E7 * Uncertainty over income tax treatments E8 A first-time adopter whose date of transition to Ind ASs is before the date of notification of this Appendix may elect not to reflect the application of the Appendix C, Uncertainty over Income Tax Treatments, to Ind AS 12, Income Taxes, in comparative information in its first Ind AS financial statements. An entity that makes that election shall recognise the cumulative effect of applying Appendix C to Ind AS 12 as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at the beginning of its first Ind AS reporting period."; (iii) In Appendix 1, (a) for paragraph 9, the following paragraph shall be substituted, namely:- "9. Paragraphs E1-E2 of Appendix E of IFRS 1 provides 'Short-t....
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.... been included since it refers to amendments due to issuance of IFRS 17, Insurance Contracts, for which corresponding Ind AS is under formulation. However, in order to maintain consistency with paragraph numbers of IFRS 3, these paragraph numbers are retained in Ind AS 103.". III. in "Indian Accounting Standard (Ind AS) 109", - (i) after paragraph 7.1.5, the following paragraphs shall be inserted, namely:- "7.1.6 * 7.1.7 Prepayment Features with Negative Compensation (Amendments to Ind AS 109), added paragraphs 7.2.1-7.2.34 and B4.1.12A and amended paragraphs B4.1.11(b) and B4.1.12(b). An entity shall apply these amendments for annual periods beginning on or after 1 April, 2019. 7.2 Transition^1 7.2.1 An entity shall apply this Standard retrospectively, in accordance with Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors, except as specified in paragraphs 7.2.4-7.2.14. This Standard shall not be applied to items that have already been derecognised at the date of initial application. 7.2.2 * Transition for classification and measurement (Chapters 4 and 5) 7.2.3 At the date of initial applica....
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.... (b) may revoke its previous designation of a financial asset as measured at fair value through profit or loss if that financial asset meets the condition in paragraph 4.1.5. Such a revocation shall be made on the basis of the facts and circumstances that exist at the date of initial application. That classification shall be applied retrospectively. 7.2.10 At the date of initial application, an entity: (a) may designate a financial liability as measured at fair value through profit or loss in accordance with paragraph 4.2.2(a). (b) shall revoke its previous designation of a financial liability as measured at fair value through profit or loss if such designation was made at initial recognition in accordance with the condition now in paragraph 4.2.2(a) and such designation does not satisfy that condition at the date of initial application. (c) may revoke its previous designation of a financial liability as measured at fair value through profit or loss if such designation was made at initial recognition in accordance with the condition now in paragraph 4.2.2(a) and such designation satisfies that condition at the date of initial applicat....
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....he beginning of the reporting period in which an entity first applies these amendments (date of initial application of these amendments). 7.2.32 With regard to designating a financial asset or financial liability as measured at fair value through profit or loss, an entity: (a) shall revoke its previous designation of a financial asset as measured at fair value through profit or loss if that designation was previously made in accordance with the condition in paragraph 4.1.5 but that condition is no longer satisfied as a result of the application of these amendments; (b) may designate a financial asset as measured at fair value through profit or loss if that designation would not have previously satisfied the condition in paragraph 4.1.5 but that condition is now satisfied as a result of the application of these amendments; (c) shall revoke its previous designation of a financial liability as measured at fair value through profit or loss if that designation was previously made in accordance with the condition in paragraph 4.2.2(a) but that condition is no longer satisfied as a result of the application of these amendments; and (d) may desi....
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....debt instrument back to the issuer before maturity and the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable compensation for the early termination of the contract; and"; (b) in paragraph B4.1.12, for item (b), the following item shall be substituted, namely:- "(b) the prepayment amount substantially represents the contractual par amount and accrued (but unpaid) contractual interest, which may include reasonable compensation for the early termination of the contract; and"; (c) after paragraph B4.1.12, the following paragraph shall be inserted, namely:- "B4.1.12A For the purpose of applying paragraphs B4.1.11(b) and B4.1.12(b), irrespective of the event or circumstance that causes the early termination of the contract, a party may pay or receive reasonable compensation for that early termination. For example, a party may pay or receive reasonable compensation when it chooses to terminate the contract early (or otherwise causes the early termination to occur)."; (iii) In Appendix 1, (a) for paragraph 3, the following paragraph shall be su....
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....al provisions wherever considered appropriate have been included in Ind AS 101, First-time Adoption of Indian Accounting Standards, corresponding to IFRS 1, First-time Adoption of International Financial Reporting Standards. However, in order to maintain consistency with paragraph numbers of IFRS 11, the paragraph numbers are retained in Ind AS 111.". V. in "Indian Accounting Standard (Ind AS) 12", - (i) paragraph 52B shall be omitted; (ii) after paragraph 52B, for the words and numbers, "Example illustrating paragraphs 52A and 52B", the following words and numbers shall be substituted, namely;- "Example illustrating paragraphs 52A and 57A"; (iii) after paragraph 57, the following paragraph shall be inserted, namely:- "57A An entity shall recognise the income tax consequences of dividends as defined in Ind AS 109 when it recognises a liability to pay a dividend. The income tax consequences of dividends are linked more directly to past transactions or events that generated distributable profits than to distributions to owners. Therefore, an entity shall recognise the income tax consequences of dividends in profit or loss, other comprehensive income or e....
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.... credits and tax rates determined applying this Appendix. Issues 5. When there is uncertainty over income tax treatments, this Appendix addresses: (a) whether an entity considers uncertain tax treatments separately; (b) the assumptions an entity makes about the examination of tax treatments by taxation authorities; (c) how an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates; and (d) how an entity considers changes in facts and circumstances. Accounting Principles Whether an entity considers uncertain tax treatments separately 6. An entity shall determine whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments based on which approach better predicts the resolution of the uncertainty. In determining the approach that better predicts the resolution of the uncertainty, an entity might consider, for example, (a) how it prepares its income tax filings and supports tax treatments; or (b) how the entity expects the taxation authority to make its examination and resolve issues that might ar....
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....e, if it affects both taxable profit used to determine current tax and tax bases used to determine deferred tax), an entity shall make consistent judgements and estimates for both current tax and deferred tax. Changes in facts and circumstances 13. An entity shall reassess a judgement or estimate required by this Appendix if the facts and circumstances on which the judgement or estimate was based change or as a result of new information that affects the judgement or estimate. For example, a change in facts and circumstances might change an entity's conclusions about the acceptability of a tax treatment or the entity's estimate of the effect of uncertainty, or both. Paragraphs A1-A3 set out guidance on changes in facts and circumstances. 14. An entity shall reflect the effect of a change in facts and circumstances or of new information as a change in accounting estimate applying Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors. An entity shall apply Ind AS 10, Events after the Reporting Period, to determine whether a change that occurs after the reporting period is an adjusting or non-adjusting event. Application Guidance Thi....
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....ertainty as a tax-related contingency applying paragraph 88 of Ind AS 12. Effective date and transition This Section is an integral part of Appendix C and has the same authority as the other parts of the Appendix C. Effective date B1 An entity shall apply this Appendix for annual reporting periods beginning on or after April 1, 2019. Transition B2 On initial application, an entity shall apply this Appendix either: (a) retrospectively applying Ind AS 8, if that is possible without the use of hindsight; or (b) retrospectively with the cumulative effect of initially applying the Appendix recognised at the date of initial application. If an entity selects this transition approach, it shall not restate comparative information. Instead, the entity shall recognise the cumulative effect of initially applying the Appendix as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate). The date of initial application is the beginning of the annual reporting period in which an entity first applies this Appendix."; (vi) in Appendix 1,- (a) in the related Note, after the words "Income Taxes," and before....
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....st using actuarial assumptions determined at the start of the annual reporting period. However, if an entity remeasures the net defined benefit liability (asset) in accordance with paragraph 99, it shall determine current service cost for the remainder of the annual reporting period after the plan amendment, curtailment or settlement using the actuarial assumptions used to remeasure the net defined benefit liability (asset) in accordance with paragraph 99(b)."; (vi) for paragraph 123, the following paragraph shall be substituted, namely:- "123 An entity shall determine net interest on the net defined benefit liability (asset) by multiplying the net defined benefit liability (asset) by the discount rate specified in paragraph 83."; (vii) after paragraph 123, the following paragraph shall be inserted, namely:- "123A To determine net interest in accordance with paragraph 123, an entity shall use the net defined benefit liability (asset) and the discount rate determined at the start of the annual reporting period. However, if an entity remeasures the net defined benefit liability (asset) in accordance with paragraph 99, the entity shall determine net interest fo....
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....he asset ceiling determined in accordance with paragraph 101A. The difference between interest on the effect of the asset ceiling and the total change in the effect of the asset ceiling is included in the remeasurement of the net defined benefit liability (asset)."; (x) in paragraph 156, for item (a), the following item shall be substituted, namely:- "(a) service cost (see paragraphs 66-112 and paragraph 122A);"; (xi) after paragraph 171, the following paragraphs shall be inserted, namely:- "Transition and effective date 172 * 173 * 174 * 175 * 176 * 177 * 178 * 179 Plan Amendment, Curtailment or Settlement (Amendments to Ind AS 19), added paragraphs 101A, 122A and 123A, and amended paragraphs 57, 99, 120, 123, 125, 126 and 156. An entity shall apply these amendments to plan amendments, curtailments or settlements occurring on or after the beginning of the first annual reporting period that begins on or after 1 April, 2019."; (xii) in Appendix 1, after paragraph 5, the following paragraph shall be inserted, namely:- "6 Paragraphs 172 to 177 of IAS 19 have not been included as....
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.... in an associate or joint venture (see paragraph 38). An entity applies Ind AS 109 to such long-term interests before it applies paragraph 38 and paragraphs 40-43 of this Standard. In applying Ind AS 109, the entity does not take account of any adjustments to the carrying amount of long-term interests that arise from applying this Standard."; (ii) paragraph 41 shall be omitted; (iii) after paragraph 45E, the following paragraphs shall be inserted, namely:- "45F * 45G Long-term Interests in Associates and Joint Ventures, added paragraph 14A and deleted paragraph 41. An entity shall apply those amendments retrospectively in accordance with Ind AS 8 for annual reporting periods beginning on or after 1 April, 2019, except as specified in paragraphs 45H-K 45H An entity that first applies the amendments in paragraph 45G at the same time it first applies Ind AS 109 shall apply the transition requirements in Ind AS 109 to the long-term interests described in paragraph 14A. 45I An entity that first applies the amendments in paragraph 45G after it first applies Ind AS 109 shall apply the transition requirements in Ind AS 109 necessary for applying th....
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....n effective interest rate of 5% a year. The associate makes interest-only payments to the investor each year. The LT Loan is the most senior of the three interests. The LT Loan is not an originated credit-impaired loan. Throughout the years illustrated, there has not been any objective evidence that the net investment in the associate is impaired applying Ind AS 28, nor does the LT Loan become credit-impaired applying Ind AS 109. The associate does not have any outstanding cumulative preference shares classified as equity, as described in paragraph 37 of Ind AS 28. Throughout the years illustrated, the associate neither declares nor pays dividends on O Shares or P Shares. The investor has not incurred any legal or constructive obligations, nor made payments on behalf of the associate, as described in paragraph 39 of Ind AS 28. Accordingly, the investor does not recognise its share of the associate's losses once the carrying amount of its net investment in the associate is reduced to zero. The amount of the investor's initial investment in O Shares is Rs. 200, in P Shares is Rs. 100 and in the LT Loan is Rs. 100. On acquisition of the investment, the co....
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....oan (net of loss allowance) is Rs. 70. Year 3 Applying paragraph 14A of Ind AS 28, the investor applies Ind AS 109 to P Shares and the LT Loan before it applies paragraph 38 of Ind AS 28. Accordingly, the investor recognises the following in Year 3: DR. Profit or loss Rs. 40 CR. P Shares Rs. 40 To recognise the change in fair value (Rs. 50 − Rs. 90) DR. Profit or loss Rs. 20 CR. Loss allowance (LT Loan) Rs. 20 To recognise an increase in the loss allowance (Rs. 50 - Rs. 70) DR. Profit or loss Rs. 200 CR. O Shares Rs. 140 CR. P Shares Rs. 50 CR. LT Loan Rs. 10 To recognise the investor's share of the associate's loss in reverse order of seniority as specified in paragraph 38 of Ind AS 28 (Rs. 500 x 40%) At the end of Year 3, the carrying amount of O Shares is zero, P Shares is zero and the LT Loan (net of loss allowance) is Rs. 40. Year 4 Applying Ind AS 109 to its interests in the associate, the investor recognises the following in Year 4: DR. Profit or loss Rs. 10 CR. P Shares &nb....
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....r loss Rs. 20 To recognise the change in fair value (Rs. 80 − Rs. 60) DR. Loss allowance (LT Loan) Rs. 10 CR. Profit or loss Rs. 10 To recognise a decrease in the loss allowance (Rs. 70 - Rs. 60) The investor allocates the associate's profit to each interest in the order of seniority. The investor limits the amount of the associate's profit it allocates to P Shares and the LT Loan to the amount of equity method losses previously allocated to those interests, which in this example is Rs. 60 for both interests. DR. O Shares Rs. 80 DR. P Shares Rs. 60 DR. LT Loan Rs. 60 CR. Profit or loss Rs. 200 To recognise the investor's share of the associate's profit (Rs. 500 x 40%) At the end of Year 6, the carrying amount of O Shares is Rs. 80, P Shares is Rs. 80 and the LT Loan (net of loss allowance) is Rs. 70. Year 7 The investor recognises the following in Year 7: DR. P Shares Rs. 30 CR. Profit or loss Rs. 30 To recognise the change in fair value (Rs. 110 − Rs. 80) DR. Loss allowance (LT Loan) Rs. 2....