Objective
This Standard prescribes the basis for presentation of general
purpose financial statements. It provides guidelines for their structure and
minimum requirements for their content so that the financial statements of an
entity is comparable with
- Its own financial statements for previous periods, and
- Financial statements of other entities
Scope
- This standard provides guidelines for Preparation and Presentation of general purpose financial statements
- Other standards provide guidelines for recognition, measurement and disclosure requirements for specific transactions
- This standard does not apply to condensed interim financial statements
- Terminologies used in this standard are suitable for profit- oriented entities (Public and Private both). A not-for-profit entity may need to amend some of the description for particular line items while applying this standard
Definitions
General purpose financial
statements – These statements are
intended for users who cannot get specific reports tailored as per their needs
Material Omissions or
misstatements of items – any omission or misstatements
are material if they could influence economic decisions that an user makes on
the basis of financial statements. However as per paragraph 25 ‘users are assumed
to have a reasonable knowledge of business and economic activities and
accounting and a willingness to study the information with reasonable diligence.
Notes contain information
- In addition to the information presented in Balance sheet, Statement of Profit and Loss and Statement of Cash flows
- It is descriptive in nature and about items that do not qualify for recognition in above statements.
Other comprehensive income comprises items of income and expense that are not recognized
in profit or loss as required or permitted by other Ind ASs.
Reclassification adjustments are amounts reclassified to profit or loss in the current
period that were recognized in other comprehensive income in the current or
previous periods
Total comprehensive income
- Is the change in equity during a period resulting from transactions and other events, other than those changes resulting from transactions with owners in their capacity as owners.
- Comprises all components of ‘profit or loss’ and of ‘other comprehensive income’.
Financial statements
The objective of financial statements is to provide information
about the
- financial position (Balance Sheet)
- financial performance (Profit and Loss) and
- cash flows (Statement of cash flow)
of an entity that is useful to a wide range of users in making
economic decisions
Complete set of financial statements
A complete set of financial statements comprises:
- a balance sheet as at the end of the period
- a statement of profit and loss for the period
- statement of cash flows for the period
- notes, comprising a summary of significant accounting policies and other explanatory information; and
- a balance sheet as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements.
General features
Financial statements shall give true and fair view of all
transactions and events of the entity. The application of Ind ASs, with
additional disclosure when necessary, is presumed to result in financial
statements that present a true and fair view
When compliance with the specific requirements in Ind ASs is
insufficient to enable users to understand the impact of particular
transactions, other events and conditions on the entity’s financial position and
financial performance an entity should provide additional disclosure
The entity shall depart from Ind AS when management concludes
that compliance with a requirement in an Ind AS would be so misleading that it
would conflict with the objective of financial statements.
In such case an entity shall disclose
- Reason for deviation
- Title of the Ind AS which the entity has departed
- For each period, financial effect of the departure on each line item
Going concern
Financial statements shall be prepared on a going concern basis unless
management either intends to liquidate the entity or to cease trading, or has
no realistic alternative but to do so. However when there is doubt about the
going concern of the entity and financial statements are not prepared on going
concern basis, the management shall disclose
- The fact that statements are not prepared on going concern basis
- Those uncertainties which are impacting going concern assumption
- The basis on which financial statements are prepared
Accrual basis of accounting
Accrual basis of accounting should be used for preparing
financial statements except for cash flow statement
Materiality
Each material item shall be presented separately
Offsetting
An entity shall not offset assets and liabilities or income and
expenses, unless required or permitted by an Ind AS
Frequency of reporting
An entity shall present a complete set of financial statements (including
comparative information) at least annually. Whenever there is change in
reporting period the entity shall disclose
- The reason for changing the period, and
- The fact that amounts presented are not entirely comparable
