KEY DIFFERENCES – IFRS and Indian GAAP

(As on July 24, 2007)

IFRS Indian GAAP

Presentation & IAS 1 prescribes minimum structure of financial There is no separate standard for disclosure. For Companies, format and disclosure
Disclosures statements and contains guidance on disclosures. requirements are set out under Schedule VI to the Companies Act. Similarly, for
banking and insurance entities, format and disclosure requirements are set out under
the laws/ regulations governing those entities.
IAS 1 requires disclosure of critical judgments made No such requirement under Indian GAAP.
by management in applying accounting policies and
key sources of estimation uncertainty that have a
significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the
next financial year.
IAS requires disclosure of information that enables No such requirement under Indian GAAP.
users of its financial statements to evaluate the entity’s
objectives, policies and processes for managing capital.
IAS 1 prohibits any items to be disclosed as extra- AS 5 specifically requires disclosure of certain items as Extra-ordinary items.
ordinary items.

IAS 1 requires a “Statement of Changes in Equity” Under Indian GAAP, this is typically spread over several captions such as share
which comprises all transactions with equity holders. capital, reserves and surplus, P&L debit balance, etc.
True & In extremely rare circumstances the true and fair True and fair override is not permitted under Indian GAAP. However, in terms of
Fair override is allowed, viz., when management concludes hierarchy, local legislations are superior to Accounting Standards. The Accounting
Override that compliance with a requirement in an IFRS or an Standards by their very nature cannot and do not override the local regulations which
Interpretation of a Standard would be so misleading govern the preparation and presentation of financial statements in the country.
that it would conflict with the objective of financial However, ICAI requires disclosure of such departures to be made in the financial
statements set out in the Framework, and therefore that statements.
departure from a requirement is necessary to achieve a
fair presentation. However appropriate disclosures are
required under these circumstances.
Small and Medium Standard is under formulation. There is no separate standard for SMEs. However, exemptions/ relaxations have
Sized Enterprises been provided from applicability of certain specific requirements of accounting
standards to SMEs.
Inventories IAS 2 prescribes same cost formula to be used for all AS 2 requires that the formula used in determining the cost of an item of inventory
inventories having a similar nature and use to the needs to be selected with a view to providing the fairest possible approximation to
entity. the cost incurred in bringing the item to its present location and condition. However,
there is no stipulation for use of same cost formula in AS 2 unlike IFRS.

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 IFRS Indian GAAP

There are certain additional requirement in IAS 2 Even though AS 2 does not provide any guidance with respect to treatment of
which are not contained in AS 2 which are as under: exchange differences in inventory valuation, the accounting practice in Indian GAAP
1. Purchase of inventory on deferred settlement terms is similar to IFRS.
– excess over normal price is to be accounted as
interest over the period of financing. AS 2 does not apply to valuation of work in progress arising in the ordinary course of
2. Measurement criteria are not applicable to business of service providers.
commodity broker-traders.
3. Exchange differences are not includible in inventory
valuation.
4. Detail guidance is given for inventory valuation of
service providers
Cash Flow Statements No exemption Exemption for SMEs
Bank overdrafts that are repayable on demand and that AS 3 is silent
form an integral part of an entity’s cash management
are to be treated as a component of cash/cash
equivalents under IAS 7.
In case of entities whose principal activities is not In case of entities whose principal activities are not financing, AS 3 mandates
financing, IAS 7 allows interest and dividend received disclosure of interest and dividend received under Investing Activities only. AS 3
to be classified either under Operating Activities or mandates disclosure of interest paid under Financing Activities only.
Investing Activities. IAS 7 allows interest paid to be
classified either under Operating Activities or
Financing Activities.
IAS 7 prohibits separate disclosure of items as AS 3 requires disclosure of extraordinary items.
extraordinary items in Cash Flow Statements.
IAS 7 deals with cash flows of consolidated financial AS 3 does not deal with cash flows relating to consolidated financial statements.
statements.
IAS 7 requires further disclosure on cash and cash No such requirement under AS 3.
equivalents of acquired subsidiary and all other assets
acquired.
Proposed IAS 10 provides that proposed dividend should not be The companies are required to make provision for proposed dividend, even-though
Dividends shown as a liability when proposed or declared after the same is declared after the balance sheet date.
the balance sheet date.
Prior Period Items and An entity shall account for a change in accounting No specific guidance given except for change in method of depreciation should be
Changes in policy resulting from the initial application of a considered as change in accounting policy and is accounted retrospectively. The
Accounting Policies Standard or an Interpretation in accordance with the effect of changes in accounting policies are reflected in the current year P&L. Any
specific transitional provisions, if any, in that Standard change in an accounting policy which has a material effect should be disclosed.
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 IFRS Indian GAAP

or Interpretation; and when an entity changes an

accounting policy upon initial application of a Standard
or an Interpretation that does not include specific
transitional provisions applying to that change, or
changes an accounting policy voluntarily, IAS 8
requires retrospective effect to be given. For this, IAS
8 requires (i) restatement of comparative information
presented in the financial statements in the year of
change, unless it is impractical to do so; and (ii) the
effect of earlier years to be adjusted to the opening
retained earnings. Change in method of depreciation is
regarded as a change in accounting estimate and hence
the effect is given prospectively.
The definition of prior period items is broader under AS 5 covers only incomes and expenses in the definition of prior period items.
IAS 8 as compared to AS 5 since IAS 8 covers all the
items in the financial statements including balance
sheet items.

IAS 8 specifically provides that financial statements do No such specific requirement under AS 5.
not comply with IFRSs if they contain either material
errors or immaterial errors made intentionally to
achieve a particular presentation of an entity’s financial
position, financial performance or cash flows.
IAS 8 requires that except when it is impractical to do AS 5 requires prior period items to be included in the determination of net profit or
so, an entity shall correct material prior period errors loss for the current period.
retrospectively in the first set of financial statements
authorised for issue after their discovery by (i) restating
the comparative amounts for the prior period(s)
presented in which the error occurred; or (ii) if the
error occurred before the earliest prior period
presented, restating the opening balances of assets,
liabilities and equity for the earliest prior period
presented.
Revenue Recognition In case of revenue from rendering of services, IAS 18 AS 9 allows completed service contract method or proportionate completion method.
allows only percentage of completion method.
IAS 18 requires effective interest method to be AS 9 requires interest income to be recognised on a time proportion basis.
followed for interest income recognition.
Deals with accounting of barter transactions. No guidance on barter transactions.
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 IFRS Indian GAAP

IFRS provides more detailed guidance in respect of Detailed guidance is available for real estate sales, dot-com companies and oil and
real estate sales, financial service fees, franchise fees, gas producing companies.
licence fees, etc
Revenue should be measured at the fair value of the Revenue is measured by the charges made to the customers or clients for goods
consideration received or receivable. Where the inflow supplied or services rendered by them and by the charges and rewards arising from
of cash or cash equivalents is deferred, discounting to a the use of resources by them. Where the inflow of cash or cash equivalents is
present value is required to be done. deferred, discounting to a present value is not permitted except in case of installment
sales, where discounting would be required (see annexure to AS-9).
Fixed Assets & IAS-16 mandates component accounting. AS 10 recommends but does not force component accounting.
Depreciation
Depreciation is based on useful life. Depreciation is based on higher of useful life or Schedule XIV rates. In practice
most companies use Schedule XIV rates.
Major repairs and overhaul expenditure are capitalized Major repair and overhaul expenditure are expensed.
as replacement if it satisfies recognition criteria.
Under IAS 16, if subsequent costs are incurred for AS 10 provides that only that expenditure which increases the future benefits from
replacement of a part of an item of fixed assets, such the existing asset beyond its previously assessed standard of performance is included
costs are required to be capitalized and simultaneously in the gross book value, e.g. an increase in capacity. There is no requirement as such
the replaced part has to be de-capitalized regardless of for decapitalising the carrying amount of the replaced part under AS 10.
whether the replaced part had been depreciated
separately.
Estimates of useful life and residual value need to be There is no need for an annual review of estimates of useful life and residual value.
reviewed at least at each financial year-end. An entity may review the same periodically.

IAS 16 requires an entity to choose either the cost Similar to IFRS except that when revaluations do not cover all the assets of the given
model or the revaluation model as its accounting policy class, it is appropriate that the selection of the asset to be revalued be made on
and to apply that policy to an entire class of property systematic basis. For e.g., an enterprise may revalue a whole class of assets within a
plant and equipment. It requires that under revaluation unit. Also, no need to update revaluation regularly.
model, revaluation be made with reference to the fair
value of items of property plant and equipment. It also
requires that revaluations should be made with
sufficient regularity to ensure that the carrying amount
does not differ materially from that which would be
determined using fair value at the balance sheet date.
Depreciation on revaluation portion cannot be Depreciation on revaluation portion can be recouped out of revaluation reserve.
recouped out of revaluation reserve and will have to be
charged to the P&L account.
Provision on site-restoration and dismantling is No guidance in the standard. However, guidance note on oil and gas issued by ICAI,
mandatory. To the extent it relates to the fixed asset, requires capitalization of site restoration cost. Discounting is prohibited under Indian
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 IFRS Indian GAAP

the changes are added/deducted (after discounting) GAAP.

from the asset in the relevant period.
A variety of depreciation methods can be used to Permitted method of depreciation is SLM and WDV.
allocate the depreciable amount of an asset on a
systematic basis over its useful life.  These methods
include the straight-line method, the diminishing
balance method and the units of production method. 
If payment is deferred beyond normal credit terms, the No specific requirement under AS 10.
difference between the cash price equivalent and the
total payment is recognised as interest over the period
of credit.
Foreign Exchange There is no distinction being made between integral & AS-11 is based on the concept of integral and non-integral operations. It therefore
non-integral foreign operation as per the revised IAS provides guidance on what operations are integral and what are not in respect of an
21. IAS-21 is based on the concept of functional enterprise.
currency and presentation currency. It therefore
provides guidance on what should be the functional
currency of an entity.

Government Grants In case of non-monetary assets acquired at AS 12 requires accounting at acquisition cost.
nominal/concessional rate, IAS 20 permits accounting
either at fair value or at acquisition cost.
In respect of grant related to a specific fixed asset AS 12 requires enterprise to compute depreciation prospectively as a result of which
becoming refundable, IAS 20 requires retrospective re- the revised book value is depreciated over the residual useful life.
computation of depreciation and prescribes charging
off the deficit in the period in which such grant
becomes refundable.

IAS 20 requires separate disclosure of unfulfilled AS 12 has no such disclosure requirement.

conditions and other contingencies if grant has been
recognised.

Recognition of government grants in equity is not Government grants of the nature of promoters' contribution should be credited to
permitted.  capital reserve and treated as a part of shareholders' funds.
Business Business combinations are dealt with under IFRS-3 Business combinations are dealt with under various standards such as AS-14, AS-21,
Combinations AS-23, AS-27 and AS-10.
Use of pooling of interest is prohibited. IFRS 3 allows AS 14 allows both Pooling of Interest Method and Purchase Method. Pooling of

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 IFRS Indian GAAP

only purchase method. interest method can be applied only if specified conditions are complied.

IFRS 3 requires valuation of acquiree’s identifiable AS 14 requires recognition at carrying value in the case of pooling of interests
assets & liabilities at fair value. Even contingent method. In the case of purchase method either carrying value or fair value may be
liabilities are fair valued. used. Contingent liabilities are not fair valued.

The acquirer shall, at the acquisition date, recognise Treatment of goodwill differs in different accounting standards. In some cases,
goodwill acquired in a business combination as an goodwill is computed based on fair values (i.e. AS-10 and AS-14). However, in most
asset; and initially measure that goodwill at its cost, cases goodwill is based on carrying values (i.e. AS-14, AS-21, AS-23 and AS-27).
being the excess of the cost of the business
combination over the acquirer’s interest in the net fair
value of the identifiable assets, liabilities and
contingent liabilities recognised.

IFRS 3 requires goodwill to be tested for impairment. AS 14 requires amortization of goodwill. AS-21, AS-23 and AS-27 are silent. AS-10
Amortisation of goodwill is not allowed. also recommends amortization of goodwill. AS 28 requires goodwill to be tested for
impairment.
If negative goodwill arises, IFRS 3 requires the AS 14 requires negative goodwill to be credited to Capital Reserve.
acquirer to reassess the identification and measurement
of the acquiree’s identifiable assets, liabilities and
contingent liabilities and the measurement of the cost
of the combination; and recognition immediately in the
income statement of any negative goodwill remaining
after that reassessment.

IFRS 3: Acquisition accounting is based on substance. Acquisition accounting is based on form. AS 14 does not deal with reverse
Reverse Acquisition is accounted assuming legal acquisition.
acquirer is the acquiree.

Under IFRS 3, provisional values can be used provided Indian GAAP contains no such similar provision, except for certain deferred tax
they are updated retrospectively within 12 months with adjustment.
actual values.
Employee Benefits: IAS 19 provides options to recognise actuarial gains AS 15 (revised) requires all actuarial gains and losses to be recognised immediately
and losses as follows: in the profit and loss account.
 all actuarial gains and losses can be recognised
immediately in the income statement
 all actuarial gains and losses can be recognized
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 IFRS Indian GAAP

immediately in SORIE
 actuarial gains and losses below the 10% of the
present value of the defined benefit obligation at
that date (before deducting plan assets) and fair
value of plan assets at that date (referred to as
“corridor”) need not be recognized and above the
10% corridor can be deferred over the remaining
service period of employees or on accelerated basis.
Under IAS 19, the discount rate used to discount post- AS 15 (revised) allows discount rate to be used for determining defined benefit
employment defined benefit obligations should be obligation only by reference to market yields at the balance sheet date on Govt.
determined by reference to market yields at the balance bonds.
sheet date on high quality corporate bonds or, in case
there is no deep market in such bonds, on the basis of
market yields on Govt. bonds of a currency and term
consistent with the currency and term of the post-
employment benefit obligations.
Under IAS 19, the liability for termination benefits has Termination benefits are dealt with under AS-15 (revised), which are required to be
to be recognized based on constructive obligation i.e. recognized based on legal obligation rather than constructive obligation i.e. only
based on the demonstrable commitment by the entity, when employee accepts VRS scheme.
for e.g. Announcement of a formal plan.

In IFRS there is no concept of deferral for termination VRS expenditure can be deferred under Indian GAAP over 3-5 years. However, the
benefits. expenditure cannot be carried forward to accounting periods commencing on or after
1st April, 2010.
Borrowing Costs IAS 23 prescribes borrowing costs to be recognised as AS 16 mandates capitalisation of borrowing costs that are directly attributable to the
an expense as a benchmark treatment. It, however, acquisition, construction or production of a qualifying asset.
allows capitalisation as an allowed alternative.

On 29 March 2007, the IASB issued a revised version

of IAS 23, Borrowing Costs. The main change in the
revised IAS 23 from the previous version is the
removal of the option to immediately recognise as an
expense of borrowing costs that relate to assets that
take a substantial period of time to get ready for use or
sale. The revised standard requires mandatory
capitalisation of borrowing costs to the extent that they
are directly attributable to the construction, production
or acquisition of a qualifying asset. The revised
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 IFRS Indian GAAP

standard applies to borrowing costs relating to

qualifying assets for which the commencement date for
capitalisation is on or after 1 January 2009. Earlier
application is permitted
IAS 23 requires disclosure of capitalisation rate used to AS 16 does not require such disclosure.
determine the amount of borrowing costs.
Segment Reporting IAS 14 encourages voluntary reporting of vertically AS 17 does not make any distinction between vertically integrated segment and other
integrated activities as separate segments but does not segments. Therefore, under AS 17 vertical segments are required to be disclosed.
mandate the disclosure.
Under IAS 14, if a reportable segment ceases to meet Under AS 17, this is mandatory. Option of the judgment of management is not
threshold requirements, then also it remains reportable available.
for one year if the management judges the segment to
be of continuing significance.
Under IAS 14, for changes in segment accounting Under AS 17, for change in segment accounting policies disclosure of the impact
policies, prior period segment information is required arising out of the change is required to be made as is the case for changes in
to be restated, unless impracticable to do so. accounting policies relating to the enterprise as a whole.
IASB has recently issued IFRS 8, Operating Segments ICAI has not revised AS 17 so far to bring it in line with IFRS 8.
which would supersede IAS 14 on which AS 17 is
based. IFRS 8 would be applicable for accounting
periods on or after 1 January 2009. Earlier application
is permitted
Related Party The definition of related party under IAS 24 includes AS 18 does not include this relationship.
Disclosures post employment benefit plans (e.g. gratuity fund,
pension fund) of the entity or of any other entity, which
is a related party of the entity.
The definition of Key Management Personnel (KMPs) AS 18 read with ASI-18 excludes non-executive directors from the definition of key
under IAS 24 includes any director whether executive management personnel (KMPs).
or otherwise i.e. Non-executive directors are also
related parties. Further, under IAS 24, if any person has
indirect authority and responsibility for planning,
directing and controlling the activities of the entity, he
will be treated as a KMP.
The definition of related party under IAS 24 includes AS 18 covers relatives of KMPs. The relatives include only defined relationships.
close members of the families of KMPs as related party
as well as of persons who exercise control or
significant influence.
IAS 24 requires compensation to KMPs to be disclosed AS 18 read with ASI 23 requires disclosure of remuneration paid to KMPs but does
category-wise including share-based payments. not mandate break-up of compensation cost to be disclosed.
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 IFRS Indian GAAP

IAS 24 mandates that no disclosure should be made to AS 18 contains no such stipulations

the effect that related party transactions were made on
arm’s length basis unless terms of the related party
transaction can be substantiated.
No concession is provided under IAS 24 where AS 18 provides exemption from disclosure in such cases.
disclosure of information would conflict with the duties
of confidentiality in terms of statute or regulating
authority.
Under IAS 24, the definition of “control” is restrictive Under AS 18, the definition is wider as it refers to power to govern the financial
as it requires power to govern the financial and and/or operating policies of the management.
operating policies of the management of the entity.
IAS 24 requires disclosure of terms and conditions of No such disclosure requirement is contained in AS 18.
outstanding items pertaining to related parties.
IAS 24 does not prescribe a rebuttable presumption of AS 18 prescribe a rebuttable presumption of significant influence if 20% or more of
significant influence. the voting power is held by any party.
No exemption. Transactions between state controlled enterprises are not required to be disclosed
under AS-18.
10% materiality provision does not exist. For the purposes of giving aggregated disclosures rather than detailed disclosures the
10% materiality rule would apply.
Leases Under IAS 17 it has been clarified that in composite AS 19, Leases” does not deal with lease agreements to use lands (and therefore
leases, elements of a lease of land and buildings need composite leases). Leasehold land is classified as fixed asset and is amortised over
to be considered separately. The land element is the period of lease.
normally an operating lease unless title passes to the
lessee at the end of the lease term. The buildings
element is classified as an operating or finance lease by
applying the classification criteria.
The definition of residual value is not included in IAS AS 19 defines residual value. AS 19 permits only downward revision in value of un-
17. IAS 17 does not prohibit upward revision in value guaranteed residual value during the lease term.
of un-guaranteed residual value during the lease term.
IAS 17 specifically excludes lease accounting for There is no such exclusion under AS 19.
investment property and biological assets.
In case of sale and lease back which results in finance AS 19 requires excess or deficiency both to be deferred and amortised over the lease
lease, IAS 17 requires excess of sale proceeds over the term in proportion to the depreciation of the leased asset.
carrying amount to be deferred and amortised over the
lease term.
IAS 17 does not require any separate disclosure for Schedule VI mandates separate disclosure of leaseholds.
assets acquired under finance lease segregated from
assets owned.
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 IFRS Indian GAAP

IAS 17 prescribes initial direct cost incurred in AS 19 requires initial direct cost incurred by lessor to be either charged off at the
originating a new lease by other than manufacturer or time of incurrence or to be amortised over the lease period and requires disclosure for
dealer lessors to be included in lease receivable amount accounting policy relating thereto in the financial statements of the lessor.
in case of finance lease and in the carrying amount of
the asset in case of operating lease and does not
mandate any accounting policy related disclosure.
IAS 17 requires assets given on operating leases to be AS 19 requires assets given on operating lease to be presented in the balance sheet
presented in the balance sheet according to the nature under Fixed Assets.
of the asset.
IAS 17, read with IFRIC 4, requires an entity to There is no such requirement under Indian GAAP.
determine whether an arrangement, comprising a
transaction or a series of related transactions, that does
not take the legal form of a lease but conveys a right to
use an asset in return for a payment or series of
payments is a lease. As per IFRIC 4, such
determination shall be based on the substance of the
arrangement.
Earnings per share IAS 33 shall be applied by entities whose ordinary Every company who are required to give information under Part IV of schedule VI is
shares or potential ordinary shares are publicly traded required to disclose and calculate earning per share in accordance with AS-20. In
and by entities that are in the process of issuing other words, all companies are required to disclose EPS. However, small and
ordinary shares or potential ordinary shares in public medium-sized companies (SMCs) have been exempted from disclosure of Diluted
markets. EPS.
IAS 33 requires separate disclosure of basic and diluted AS 20 does not require any such separate computation or disclosure.
EPS for continuing operations and discontinued
operations.
IAS 33 prescribes that contracts that require an entity AS 20 is silent on this aspect.
to repurchase its own shares, such as written put
options and forward purchase contracts, are reflected in
the calculation of diluted earnings per share if the
effect is dilutive. 
IAS 33 requires effects of changes in accounting policy Since under Indian GAAP retrospective restatement is not permitted for changes in
and errors to be given retrospective effect for accounting policies and prior period items, the effect of these items are felt in the
computing EPS, which means EPS to be adjusted for EPS of current period.
prior periods presented.
IAS 33 does not require disclosure of EPS with and AS 20 requires EPS/diluted EPS with and without extra-ordinary items to be
without extra-ordinary item. disclosed separately.
IAS 33 does not deal with the treatment of application Under AS 20, application money held pending allotment or any advance share
money held pending allotment. Guidance given in application money as at the balance sheet date should be included in the computation
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 IFRS Indian GAAP

Indian GAAP can also be applied in IFRS. of diluted EPS.

IAS 33 requires disclosure of anti-dilutive instruments AS 20 does not mandate such disclosure.
even though they are ignored for the purpose of
computing dilutive EPS.

IAS 33 does not require disclosure of face value of Disclosure of face value is required under AS 20.
share.
Consolidated Financial Under IAS 27, it is mandatory to prepare CFS except Under AS 21, it is not mandatory to prepare CFS. However, listed companies are
Statements by the parent which satisfies certain conditions. An mandatorily required by the terms of listing agreement of SEBI to prepare and
entity should prepare separate financial statements in present CFS. The enterprises are required to prepare separate financial statements as
addition to CFS only if local regulations so require. per statute.
Under IAS 27, CFS includes all subsidiaries. Under AS 21, a subsidiary can be excluded from consolidation if (1) the control over
subsidiary is likely to be temporary; (2) the subsidiary operates under severe long
term restrictions significantly impairing its ability to transfer funds to parent.
Under IAS 27 while determining whether entity has AS 21 is silent. As per ASI-18, potential voting rights are not considered for
power to govern financial and operating policies of determining significant influence in the case of an associate. An analogy can be
another entity, potential voting rights currently drawn from this accounting that they are not to be considered for determining control
exercisable should be considered. as well, in the case of a subsidiary.

Under IAS 27, the definition of “control” requires Control means the ownership, directly or indirectly through subsidiary(ies), of more
power to govern the financial and operating policies of than one-half of the voting power of an enterprise; or control over composition of
an entity so as to obtain benefits from its activities. board of directors in the case of a company or of the composition of the
corresponding governing body in case of any other enterprise for obtaining economic
benefits over its activities.
Use of uniform accounting policies for like transactions AS 21 gives exemption from following uniform accounting policies if the same is not
while preparing CFS is mandatory under IAS 27. practicable. In such case that fact should be disclosed together with the proportions of
the items in the CFS to which the different accounting policies have been applied.
Under IAS 27, minority interest has to be disclosed Under AS 21, minority interest has to be separately disclosed from liability and
within equity but separate from parent shareholders equity of parent shareholder.
equity.
Under IFRS-3, goodwill/capital reserve on Under AS 21, goodwill/capital reserve on consolidation is computed on the basis of
consolidation is computed on fair values of assets / carrying value of assets/liabilities.
liabilities.
Under IAS 27, maximum three months’ time gap is Under AS 21, maximum six months time gap is allowed.
permitted between balance sheet dates of financial
statements of a subsidiary and parent.
IAS 27 prescribes that deferred tax adjustment as per No deferred tax is to be created on elimination of intra-group transactions.
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 IFRS Indian GAAP

IAS 12 should be made in respect of timing difference

arising out of elimination of intra-group transactions.
Acquisition accounting requires drawing up of Under AS 21, for computing parent’s portion of equity in a subsidiary at the date on
financial statements as on the date of acquisition for which investment is made, the financial statements of immediately preceding period
computing parent’s portion of equity in a subsidiary. can be used as a basis of consolidation if it is impracticable to draw financial
statement of the subsidiary as on the date of investment. Adjustments are made to
these financial statements for the effects of significant transactions or other events
that occur between the date of such financial statements and the date of investment in
the subsidiary.

SIC-12 requires consolidation of SPEs when certain No such guidance under AS-21. Under IFRS, an entity could be consolidated even if
criteria are met. the controlling entity does not hold a single share in the controlled entity. Instances
of consolidation, under such circumstances are rare under Indian GAAP.

IAS 27 requires that a parent’s investment in a Under AS 21, in a parent’s separate financial statements, investments in subsidiary
subsidiary be accounted for in the parent’s separate should be accounted for in accordance with AS 13, Accounting for Investments,
financial statements (a) at cost, or (b) as available-for- which is at cost as adjusted for any diminution other than temporary in value of those
sale financial assets as described in IAS 39. investments.

Accounting for Taxes on IAS 12 is based on Balance Sheet Liability Approach AS 22 is based on income statement approach or the timing difference approach.
Income or the temporary difference approach.

Deferred taxes are also recognised on temporary Deferred taxes are not determined on such differences since these are not timing
differences such as differences.
a) Revaluation of fixed assets
b) Business combinations
c) Consolidation adjustments
d) Undistributed profits

When an entity has a history of recent losses, deferred In the case of unabsorbed depreciation or carry forward of losses under tax laws, all
tax asset is recognised if there is convincing evidence deferred tax assets are recognised only to the extent that there is virtual certainty
of future taxable profits. supported by convincing evidence that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
Fringe benefit tax (FBT) is included as part of the FBT is included as a part of tax expenses. It is disclosed as a separate line item under
related expense which gave rise to FBT. the head “tax expense” on the face of the P&L.

Accounting for Associate Equity accounting applied except when: Equity accounting is not applied when:
in Consolidated  investments in associate held for sale is accounted  the investment is acquired and held with a view to its subsequent disposal in the
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 IFRS Indian GAAP

Financial Statements in accordance with IFRS 5 near future, or

 the reporting entity is also a parent and is exempt  the associate operates under severe long term restrictions which significantly
from preparing CFS under IAS 27 impair its ability to transfer funds to the investor.
 where reporting entity is not a parent, and (a) the
investor is a wholly owned subsidiary itself or a
partially owned subsidiary, and its other owners,
including those not entitled to vote, have been
informed about and do not object to the investor not
applying the equity method (b) the investors
debt/equity are not publicly traded (c) the investor is
not planning a public issue of any of its securities
(d) the ultimate or immediate parent of the investor
produces CFS available for public and comply with
IFRS.

Under IAS 28, potential voting rights currently Under ASI 18 potential voting rights are not considered for determining voting power
exercisable are to be considered in assessing significant in assessing significant influence.
influence.
As per IAS 28, difference between balance sheet date Under AS 23, no period is specified. Only consistency is mandated.
of investor and associate can not be more than three
months.
In case uniform accounting policies are not followed Under AS 23, if it is not practicable to make such adjustments, exemption is given;
by investor & investee, necessary adjustments have to but appropriate disclosures are made.
be made while preparing consolidated financial
statements of investor.
The investor must account for the difference, on AS 23 prescribes goodwill determination based on book values rather than fair values
acquisition of the investment, between the cost of the of the investee.
acquisition and investor’s share of identifiable assets,
liabilities and contingent liabilities in accordance with
IFRS 3 as goodwill or negative goodwill. As per IFRS
3, values of identifiable assets and liabilities are
determined based on fair value.
Under IFRS, an entity cannot be subsidiary of two As per ASI 24, in a rare situation, when an enterprise is controlled by two enterprises
entities. as per the definition of ‘control’ under AS 21, the first mentioned enterprise will be
considered as subsidiary of both the controlling enterprises within the meaning of AS
21 and, therefore, both the enterprises should consolidate the financial statements of
that enterprise as per the requirements of AS 21.
In separate financial statements, investments are In separate financial statements, investments are carried at cost less impairment.
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 IFRS Indian GAAP

carried at cost or in accordance with IAS 39.

Interim Financial IAS 34 does not mandate which entities should be SEBI requires listed companies to publish their interim financial results on quarterly
Reporting required to publish interim financial reports, how basis.
frequently, or how soon after the end of an interim
period.
If an entity publishes a set of condensed financial Clause 41 of the listing agreement prescribes specific format in which all listed
statements in its interim financial report, those companies should publish their quarterly results.
condensed statements shall include, at a minimum,
each of the headings and subtotals that were included
in its most recent annual financial statements and the
selected explanatory notes as required by this Standard.
Under IAS 34, Interim Financial Report includes No such disclosure is required under AS 25, since the concept of SOCIE does not
Statement showing changes in Equity. prevail under Indian GAAP.
A change in accounting policy, other than one for In the case of listed companies SEBI clause 41 would apply, which requires
which the transition is specified by a new Standard or retroactive restatement not only for all interim periods of the current year but also
Interpretation, shall be reflected by previous year. However, the actual accounting for changes in accounting policies
 restating the financial statements of prior interim would be based on AS 5.
periods of the current financial year and the
comparable interim periods of any prior financial In the case of unlisted companies, AS-25 requires retroactive restatement only for all
years that will be restated in the annual financial interim periods of the current year.
statements in accordance with IAS 8; or
 when it is impracticable to determine the cumulative
effect at the beginning of the financial year of
applying a new accounting policy to all prior
periods, adjusting the financial statements of prior
interim periods of the current financial year, and
comparable interim periods of prior financial years
to apply the new accounting policy prospectively
from the earliest date practicable.
Under IAS 34, separate guidance is available for AS 25 does not address these issues specifically.
treatment of Provision for Leave encashment and
Interim Period Manufacturing Cost Variances.
Intangible Assets An entity shall assess whether the useful life of an Under AS 26, there is a rebuttable presumption that the useful life of intangible assets
intangible asset is finite or indefinite and, if finite, the will not exceed 10 years.
length of, or number of production or similar units that
would constitute useful life.
Under IAS 38, intangible assets having “indefinite There is no concept of indefinite useful life in AS 26. Theoretically, even for such
useful life” cannot be amortized. Indefinite useful life assets, amortisation would be mandatory, though the threshold period could exceed
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 IFRS Indian GAAP

means where, based on analysis, there is no foreseeable beyond 10 years.

limit to the period over which the asset is expected to
generate net cash inflow for the entity. Indefinite is not
equal to infinite. Such assets should be tested for
impairment at each balance sheet date and separately
disclosed.
An intangible asset with an indefinite useful life and AS 26 requires test of impairment to be applied even if there is no indication of that
which is not yet available for use should be tested for asset being impaired for following assets:
impairment annually and whenever there is an - Intangible asset not yet available for use
indication that the intangible asset may be impaired. - Intangible asset amortised over the period exceeding 10 years

Under IAS 38, if intangible asset is ‘held for sale’ then There is no such stipulation under AS 26.
amortisation should be stopped.
In accordance with IFRS 3 Business Combinations, if If an intangible asset is acquired in an amalgamation in the nature of purchase, the
an intangible asset is acquired in a business same should be accounted at cost or fair value if the cost/fair value can be reliably
combination, the cost of that intangible asset is its fair measured. Intangible assets acquired in an amalgamation in the nature of merger, or
value at the acquisition date. acquisition of a subsidiary are recorded at book values, which means that if the
intangible asset was not recognized by the acquiree, the acquirer would not be able to
record the same.
Under IAS 38, revaluation model is allowed for AS 26 does not permit revaluation model.
accounting for an intangible asset provided active
market exists.
Financial Reporting of IAS 31 prescribes proportionate consolidation method AS 27 permits only proportionate consolidation method.
Interests in Joint for recognising interest in a jointly controlled entity in
Ventures CFS. It, however, also allows the use of equity method
of accounting as an alternate to proportionate
consolidation. Equity method prescribed in IAS 31 is
similar to that prescribed in IAS 28. However,
proportionate method of accounting is the more
recommended.
Exceptions to proportionate consolidation or equity Exceptions to proportionate consolidation:
accounting:  JCE is acquired and held exclusively with a view to its subsequent disposal
 investments in JCE held for sale is accounted in in the near future
accordance with IFRS 5  Operates under severe long term restrictions which significantly impair its
 the reporting entity is also a parent and is exempt ability to transfer fund to the investor.
from preparing CFS under IAS 27
 where reporting entity is not a parent, and (a) the
investor is a wholly owned subsidiary itself or a
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 IFRS Indian GAAP

partially owned subsidiary, and its other owners,

including those not entitled to vote, have been
informed about and do not object to the investor not
applying the equity method (b) the investors
debt/equity are not publicly traded (c) the investor is
not planning a public issue of any of its securities
(d) the ultimate or immediate parent of the investor
produces CFS available for public and comply with
IFRS.
Accounting for subsidiary where joint control is Accounting for subsidiary where joint control is established through contractual
established through contractual agreement should be agreement should be done as subsidiary – i.e., full consolidation.
done as joint venture, i.e., either proportionate
consolidation or equity accounting as the case may be.
In separate financial statements, JCE are accounted at In separate financial statements, JCE are accounted at cost less impairment.
cost or in accordance with IAS 39.
Impairment of Assets Impairment losses on goodwill are not subsequently Impairment losses on goodwill are subsequently reversed only if the external event
reversed. that caused impairment of goodwill no longer exists and is not expected to recur.

For the purpose of impairment testing, goodwill Goodwill is allocated to CGU based on bottom-up approach, i.e. identify whether
acquired in a business combination shall, from the allocated to a particular CGU on consistent and reasonable basis and then, compare
acquisition date, be allocated to each of the acquirer’s the recoverable amount of the cash-generating unit under review to its carrying
cash-generating units, or groups of cash-generating amount and recognize impairment loss. However, if none of the carrying amount of
units, that are expected to benefit from the synergies of goodwill can be allocated on a reasonable and consistent basis to the cash-generating
the combination, irrespective of whether other assets or unit under review; and if, in performing the 'bottom-up' test, the enterprise could not
liabilities of the acquiree are assigned to those units or allocate the carrying amount of goodwill on a reasonable and consistent basis to the
groups of units.  Each unit or group of units to which cash-generating unit under review, the enterprise should also perform a 'top-down'
the goodwill is so allocated shall represent the lowest test, that is, the enterprise should identify the smallest cash-generating unit that
level within the entity at which the goodwill is includes the cash-generating unit under review and to which the carrying amount of
monitored for internal management purposes; and not goodwill can be allocated on a reasonable and consistent basis (the 'larger' cash-
be larger than a segment based on either the entity’s generating unit); and then, compare the recoverable amount of the larger cash-
primary or the entity’s secondary reporting format generating unit to its carrying amount and recognize impairment loss.
determined in accordance with IAS 14 Segment
Reporting. 

In testing a CGU for impairment, an entity shall As regards corporate assets, both bottom-up and top-down approach is required to be
identify all the corporate assets that relate to the CGU followed.
under review. If a portion of the carrying amount of a
corporate asset:
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 IFRS Indian GAAP

(a) can be allocated on a reasonable and consistent

basis to that CGU, the entity shall compare the
carrying amount of the CGU, including the portion
of the carrying amount of the corporate asset
allocated to the CGU, with its recoverable amount.
(b) cannot be allocated on a reasonable and consistent
basis to that CGU, the entity shall:
(i) compare the carrying amount of the CGU,
excluding the corporate asset, with its
recoverable amount and recognise any
impairment loss;
(ii) identify the smallest group of CGUs that
includes the CGU under review and to which a
portion of the carrying amount of the corporate
asset can be allocated on a reasonable and
consistent basis; and
(iii) compare the carrying amount of that group of
CGUs, including the portion of the carrying
amount of the corporate asset allocated to that
group of CGUs, with the recoverable amount of
the group of CGUs.
Under IFRS non-current assets held for sale are Non-current assets held for sale are valued at lower of cost and NRV.
measured at lower of carrying amount and fair value
less cost to sell.
Provisions, Contingent IAS 37 requires discounting of provisions where the AS 29 prohibits discounting.
Assets and Contingent effect of the time value of money is material.
Liabilities
IAS 37 requires provisioning on the basis of AS 29 requires recognition based on legal obligation.
constructive obligation on restructuring costs.
IAS 37 requires disclosure of contingent assets in AS 29 prohibits it.
financial statements where an inflow of economic
benefits is probable.
IAS 37 provides certain basis and statistical methods to AS 29 does not contain any such guidance and relies on judgment of management.
be followed for arriving at the best estimate of the
expenditure for which provision is recognised.
Financial Instruments IAS 32 and 39 deal with financial instruments and No equivalent standard. AS-13 deals with investment in a limited manner. Foreign
entity’s own equity in detail including matters relating exchange hedging is covered by AS-11. ICAI has issued exposure drafts of proposed
to hedging. accounting standards of financial instruments which are based on IAS 32 and 39.
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IFRS Indian GAAP

The issuer of a financial instrument shall classify the No specific standard on financial instrument. Classification based on form rather
instrument, or its component parts, on initial than substance. Preference shares are treated as capital, even though in many case in
recognition as a financial liability, a financial asset or substance it may be a liability.
an equity instrument in accordance with the substance
of the contractual arrangement and the definitions of a
financial liability, a financial asset and an equity
instrument.
Compound financial instruments are subjected to split No split accounting is done.
accounting whereby liability and equity component is
recorded separately.
If an entity reacquires its own equity instruments, those When an entity’s own shares are repurchased, the shares are cancelled and shown as
instruments (‘treasury shares’) shall be deducted from a deduction from shareholders’ equity (they cannot be held as treasury stock and
equity.  No gain or loss shall be recognised in profit or cannot be re-issued). If the buy back is funded through free reserves, amount
loss on the purchase, sale, issue or cancellation of an equivalent to buy-back should be credited to Capital Redemption Reserve. No
entity’s own equity instruments. guidance available for accounting for premium payable on buy-back. Various
alternatives available – adjusting the same against securities premium, etc.
Financial asset is classified in four categories: financial AS 13 classifies investment into long-term and current investment.
asset at fair value through profit and loss (which
includes held for trading), held to maturity, loans and
receivables and available for sale.
Initial measurement of held-to-maturity financial assets As per AS-13, HTM investments are recognised at cost and interest is based on time
(HTM) is at fair value plus transaction cost. proportion basis.
Subsequent measurement is at amortised cost using
effective interest method.
Initial measurement of loans and receivables is at fair Loans and receivables are stated at cost. Interest income on loans is recognised based
value plus transaction cost. Subsequent measurement is on time-proportion basis as per the rates mentioned in the loan agreement.
at amortised cost using effective interest method.
Reclassifications between categories are relatively Where long-term investments are reclassified as current investments, transfers are
uncommon under IFRS and are prohibited into and out made at the lower of cost and carrying amount at the date of transfer. Where
of the fair value through profit or loss category. investments are reclassified from current to long-term, transfers are made at the lower
of cost and fair value at the date of transfer.
IFRS requires changes in value of AFS debt securities, On long term investments, diminution other than temporary is provided for. AS-13
identified as reversals of previous impairment, to be does not however lay down impairment indicators. The diminution is adjusted for
recognised in the income statement. IFRS prohibits increase/decrease, with the effect being taken to the income statement.
reversal of impairment of AFS equity securities.

An entity shall derecognise a financial asset when, (a) Guidance Note on Accounting for Securitisation requires derecognition of financial
the contractual rights to the cash flows from the asset if the originator loses control of the contractual rights that comprise the
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 IFRS Indian GAAP

financial asset expire; or (b) when the entity has securitised assets.
transferred substantially all risks and rewards from the
financial assets; or (c) when the entity has (1) neither
transferred substantially all, nor retained substantially
all, the risks and rewards from the financial asset but
(2) at the same time has assumed an obligation to pay
those cash flows to one or more entities.

Derivatives are initially recognised at fair value. After No specific standard on financial instruments. Accounting for forward contracts is
initial recognition, an entity shall measure derivatives based on AS 11. Premium on forward exchange contract entered for hedging
that are at their fair values, without any deduction for purposes is recognized over the period of the contract. Exchange gain or loss is
transaction costs. Changes in fair value are recognised recognized in the period in which it incurs. Forward exchange contract entered for
in income statement unless it satisfies hedge criteria. speculation purposes are marked to market with changes in fair value recognized in
Embedded derivatives need to be separated and fair profit and loss contract.
valued. IAS 39 prescribes detailed guidance on hedge
accounting.

Share based Payments IFRS-2 covers share based payments both for The ICAI guidance note deals with only employee share based payments. According
employees and non-employees. An entity shall to it, ESOP/ESPP can be accounted for either through intrinsic value method or fair
recognise the goods or services received or acquired in value method. When intrinsic method is applied, disclosures would be made in the
a share-based payment transaction when it obtains the notes to account relating to the fair value.
goods or as the services are received.   The entity shall
recognise a corresponding increase in equity if the
goods or services were received in an equity-settled
share-based payment transaction, or a liability if the
goods or services were acquired in a cash-settled share-
based payment transaction. When the goods or services
received or acquired in a share-based payment
transaction do not qualify for recognition as assets,
they shall be recognised as expenses. Share based
payments needs to be accounted as per fair value
method.

Investment Property IAS 40 deals with accounting for various aspects of AS 13 deals with Investment Property in a limited manner. It requires the same to be
investment property in a comprehensive manner. treated in the same manner as long-term investment.
Agriculture IAS 41 deal with accounting treatment and disclosures No such standard.
related to agricultural activity.
Non-current Assets Held IFRS 5 sets out requirements for the classification, AS 24 sets out certain disclosure requirements for discontinuing operations. This
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 IFRS Indian GAAP

for Sale and measurement and presentation of non-current assets Standard is based on old IAS 35 which has been superseded by IFRS 5.
Discontinued Operations held for sale and discontinued operations.
Additional Standards Under IFRS, there are specific Standards on the There are no Standards/ Pronouncements on these subjects.
under IFRS following subjects:

IFRS 1, First-time Adoption of International Financial

Reporting Standards

IFRS 4, Insurance Contracts

IFRS 7, Financial Instruments: Diosclosures

IAS 26, Accounting and Reporting by Retirement

Benefit Plans

IAS 29, Financial Reporting in Hyper-inflationary

Economies

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