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Companies (Indian Accounting Standards) Amendment Rules, 2020
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....ich requires that the assets acquired and liabilities assumed constitute a business. If the assets acquired are not a business, the reporting entity shall account for the transaction or other event as an asset acquisition. Paragraphs B5-B12D provide guidance on identifying a business combination and the definition of a business."; (ii) after paragraph 64O, the following shall be inserted, namely:- "64P Definition of a Business (Amendments to Ind AS 103), added paragraphs B7A-B7C, B8A and B12A-B12D, amended the definition of the term ‗business' in Appendix A, amended paragraphs 3, B7-B9, B11 and B12 and deleted paragraph B10. An entity shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after the 1st April, 2020 and to asset acquisitions that occur on or after the beginning of that period."; (iii) in Appendix A, for definition of the term "business", the following definition shall be substituted, namely:- "business An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing goods or services to cus....
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.... (b) if the concentration test is not met, or if the entity elects not to apply the test, the entity shall then perform the assessment set out in paragraphs B8-B12D. B7B The concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. For the concentration test: (a) gross assets acquired shall exclude cash and cash equivalents, deferred tax assets, and goodwill resulting from the effects of deferred tax liabilities; (b) the fair value of the gross assets acquired shall include any consideration transferred (plus the fair value of any non-controlling interest and the fair value of any previously held interest) in excess of the fair value of net identifiable assets acquired. The fair value of the gross assets acquired may normally be determined as the total obtained by adding the fair value of the consideration transferred (plus the fair value of any non-controlling interest and the fair value of any previously held interest) to the fair value of the liabilities assumed (other than deferred tax liabilities), and then excluding the items identified in sub-par....
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....s two essential elements-inputs and processes applied to those inputs. A business need not include all of the inputs or processes that the seller used in operating that business. However, to be considered a business, an integrated set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. Paragraphs B12-B12D specify how to assess whether a process is substantive."; (IV) after paragraph B8, the following shall be inserted, namely:- "B8A If an acquired set of activities and assets has outputs, continuation of revenue does not on its own indicate that both an input and a substantive process have been acquired."; (V) for paragraph B9, the following shall be substituted, namely:- "B9 The nature of the elements of a business varies by industry and by the structure of an entity's operations (activities), including the entity's stage of development. Established businesses often have many different types of inputs, processes and outputs, whereas new businesses often have few inputs and processes and sometimes only a single output (product). Nearly all businesses also have liabili....
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....that enable the creation of future outputs. Examples of the inputs mentioned in subparagraphs (b)(i)-(iii) include technology, in-process research and development projects, real estate and mineral interests. B12C If a set of activities and assets has outputs at the acquisition date, an acquired process (or group of processes) shall be considered substantive if, when applied to an acquired input or inputs, it- (a) is critical to the ability to continue producing outputs, and the inputs acquired include an organised workforce with the necessary skills, knowledge, or experience to perform that process (or group of processes); or (b) significantly contributes to the ability to continue producing outputs and- (i) is considered unique or scarce; or (ii) cannot be replaced without significant cost, effort, or delay in the ability to continue producing outputs. B12D The following additional discussion supports both paragraphs B12B and B12C: (a) an acquired contract is an input and not a substantive process. Nevertheless, an acquired contract, for example, a contract for outsourced property management or outsourced asset management, may give access to an organised workforce.....
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....s Interest Rate Benchmark Reform, an entity is not required to present the quantitative information required by paragraph 28(f) of Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors." (iii) in Appendix 1, for paragraph 5, the following shall be substituted, namely:- "5 Paragraphs 42I-42S of IFRS 7 have not been included in Ind AS 107 as these paragraphs relate to initial application of IFRS 9 which are not relevant in Indian context. Paragraphs 43-44BB related to effective date and transition given in IFRS 7 have not been given in Ind AS 107 since it is not relevant in Indian context. However, in order to maintain consistency with paragraph numbers of IFRS 7, these paragraph numbers are retained in Ind AS 107. Paragraph 44DD relates to IFRS 17, Insurance Contracts, for which corresponding Ind AS is under formulation."; (C) in "Indian Accounting Standard (Ind AS) 109", - (i) after paragraph 6.7.4, the following shall be inserted, namely:- "6.8 Temporary exceptions from applying specific hedge accounting requirements 6.8.1 An entity shall apply paragraphs 6.8.4-6.8.12 and paragraphs 7.1.8 and 7.2.26(d) to all hedging relationships directly affected b....
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....edging instrument are based, is not altered as a result of interest rate benchmark reform. Designating a component of an item as a hedged item 6.8.7 Unless paragraph 6.8.8 applies, for a hedge of a non-contractually specified benchmark component of interest rate risk, an entity shall apply the requirement in paragraphs 6.3.7(a) and B6.3.8-that the risk component shall be separately identifiable-only at the inception of the hedging relationship. 6.8.8 When an entity, consistent with its hedge documentation, frequently resets (i.e, discontinues and restarts) a hedging relationship because both the hedging instrument and the hedged item frequently change (i.e, the entity uses a dynamic process in which both the hedged items and the hedging instruments used to manage that exposure do not remain the same for long), the entity shall apply the requirement in paragraphs 6.3.7(a) and B6.3.8-that the risk component is separately identifiable-only when it initially designates a hedged item in that hedging relationship. A hedged item that has been assessed at the time of its initial designation in the hedging relationship, whether it was at the time of the hedge inception or subsequently....
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....t."; (ii) after paragraph 7.1.7, the following shall be inserted, namely:- "7.1.8 Interest Rate Benchmark Reform (amendments to Ind AS 109 and Ind AS 107), added Section 6.8 and amended paragraph 7.2.26. An entity shall apply these amendments for annual periods beginning on or after the 1st April, 2020."; (iii) after paragraph 7.2.20, the following heading shall be inserted, namely:- "Transition for hedge accounting (Chapter 6)"; (iv) for paragraph 7.2.26, the following shall be substituted, namely:- "7.2.26 As an exception to prospective application of the hedge accounting requirements of this Standard, an entity- (a)-(c) [Refer Appendix 1] (d) shall apply the requirements in Section 6.8 retrospectively. This retrospective application applies only to those hedging relationships that existed at the beginning of the reporting period in which an entity first applies those requirements or were designated thereafter, and to the amount accumulated in the cash flow hedge reserve that existed at the beginning of the reporting period in which an entity first applies those requirements."; (v) in Appendix 1, for paragraph 4, the following shall be substituted, namely:- "4....
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....) in Appendix C, (a) after paragraph C1, the following paragraph shall be inserted, namely:- "C1A Covid-19-Related Rent Concessions, added paragraphs 46A, 46B, 60A, C20A and C20B. A lessee shall apply that amendment for annual reporting periods beginning on or after the April 1st, 2020. In case a lessee has not yet approved the financial statements for issue before the issuance of this amendment, then the same may be applied for annual reporting periods beginning on or after the April 1st, 2019."; (b) after paragraph C20, the following shall be inserted, namely:- "Covid-19-related rent concessions for lessees C20A A lessee shall apply Covid-19-Related Rent Concessions (see paragraph C1A) retrospectively, recognising the cumulative effect of initially applying that amendment as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at the beginning of the annual reporting period in which the lessee first applies the amendment. C20B In the reporting period in which a lessee first applies Covid-19-Related Rent Concessions, a lessee is not required to disclose the information required by paragraph 28(f) of Ind AS 8."; (E) i....
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....f business and economic activities and who review and analyse the information diligently. At times, even wellinformed and diligent users may need to seek the aid of an adviser to understand information about complex economic phenomena."; (ii) after paragraph 139Q, the following shall be inserted, namely:- "139R-139S [Refer Appendix 1] 139T Definition of Material (Amendments to Ind AS 1 and Ind AS 8) amended paragraph 7 of Ind AS 1 and paragraph 5 of Ind AS 8, and deleted paragraph 6 of Ind AS 8. An entity shall apply those amendments prospectively for annual periods beginning on or after the 1st April, 2020."; (iii) in Appendix 1, for paragraph 10, the following shall be substituted, namely:- "10. Paragraphs 139 to 139M and 139O-139P related to Transition and Effective Date have not been included in Ind AS 1 as these are not relevant in Indian context. Paragraph 139R relates to IFRS 17, Insurance Contracts, for which corresponding Ind AS is under formulation. Paragraph 139S is not included since it relates to amendments due to Conceptual Framework for Financial Reporting under IFRS Standards for which corresponding Conceptual Framework for Financial Reporting under Indian....
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....ct, or a statement that such an estimate cannot be made."; (ii) after paragraph 22, the following shall be inserted, namely:- "Effective date 23-23B [Refer Appendix 1] 23C Definition of Material (Amendments to Ind AS 1 and Ind AS 8), amended paragraph 21. An entity shall apply those amendments when it applies the amendments to the definition of material in paragraph 7 of Ind AS 1 and paragraphs 5 and 6 of Ind AS 8." (iii) in Appendix 1, after paragraph 2, the following shall be inserted, namely:- "3 Paragraphs 23-23B of IAS 10 related to Effective Date have not been included in Ind AS 10 as these are not relevant in Indian context. However, in order to maintain consistency with paragraph numbers of IAS 10, these paragraph numbers are retained in Ind AS 10."; (H) in "Indian Accounting Standard (Ind AS) 34", - (i) for paragraph 24, the following shall be substituted, namely:- "24 Ind AS 1 defines material information and requires separate disclosure of material items, including (for example) discontinued operations, and Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors requires disclosure of changes in accounting estimates, errors, and changes....