Integrated Business Solutions (Multidisciplinary Case Study with Strategic Management) · Financial Reporting

Presentation and Disclosure Standards (Ind AS 1, 7, 8, 10, 24, 33, 34, 108) for CA Final

Updated 5 October 2026 · Fact-checked

Presentation and disclosure standards tell you how to present financial statements and what to disclose: Ind AS 1 (presentation), 7 (cash flows), 8 (policies, estimates, errors), 10 (events after the reporting period), 24 (related parties), 33 (EPS), 34 (interim reporting) and 108 (segments). Identify the standard, apply its recognition or classification rule to the facts, compute, then state the disclosure.

Understand Presentation and Disclosure Standards

These eight standards do not decide how to measure an asset or recognise revenue. They decide how results are shown and what a reader must be told. In case studies, they are the layer that turns correct numbers into correct financial statements.

Ind AS 1 sets the structure: a complete set has a balance sheet, statement of profit and loss (with other comprehensive income), statement of changes in equity, cash flow statement, and notes. It rests on going concern, accrual, consistency, materiality, and no offsetting unless an Ind AS requires it. Ind AS 1 requires current and non-current classification. Schedule III (Division II) gives the format for Ind AS companies.

Ind AS 7 splits cash flows into operating, investing and financing. Operating cash flows can be shown by the direct or the indirect method. The indirect method starts with profit before tax and adjusts for non-cash items and working capital changes. For non-financial entities, interest and dividends paid are classified as financing, and interest and dividends received as investing. Whichever classification is chosen must be followed consistently from period to period. Financial entities may classify these items differently, for example as operating. Cash equivalents are short-term, highly liquid investments with insignificant risk of change in value.

Ind AS 8 deals with change. A change in accounting policy is applied retrospectively, as if always followed, unless impracticable or a standard's transition says otherwise. A change in accounting estimate is applied prospectively. A prior period error is corrected retrospectively by restating comparatives. Ind AS 10 separates adjusting events (evidence of conditions existing at the reporting date) from non-adjusting events (conditions arising after). Dividends declared after the reporting period are not recognised as a liability at the reporting date.

Ind AS 24 requires disclosure of related party relationships, transactions, outstanding balances and key managerial personnel compensation, because such dealings may not be at arm's length. Ind AS 33 reports earnings per share, basic and diluted. Ind AS 34 sets the minimum content of interim financial reports and requires the same accounting policies as the annual statements. Ind AS 108 requires segment information based on how the chief operating decision maker reviews the business. It applies to entities whose debt or equity instruments are traded in a public market, or that file financial statements with a regulator to issue any class of instruments in a public market.

Key rules to remember

Basic EPS: Basic EPS = (Profit attributable to ordinary equity holders of parent) ÷ (Weighted average number of ordinary shares outstanding); Deduct preference dividends for the period from profit: cumulative ones whether or not declared, and non-cumulative ones only when declared in respect of the period. Weight new shares from the date consideration is receivable.
Weighted average shares: Σ (shares outstanding × months outstanding ÷ 12); Bonus issue and share split are applied to all periods presented as if they occurred at the start of the earliest period. They have no weighting by date.
Diluted EPS (basic idea): Diluted EPS = (Adjusted profit) ÷ (Weighted average shares + dilutive potential ordinary shares); Add back after-tax interest on convertible debt and preference dividends saved. Include only potential shares that reduce EPS from continuing operations (dilutive).
Options and warrants (treasury share method): Incremental shares = Options × (Average market price − Exercise price) ÷ Average market price; Options are dilutive only when the exercise price is below the average market price.
Rights issue bonus element: Adjustment factor = Fair value per share before exercise of rights ÷ Theoretical ex-rights fair value per share; Multiply shares outstanding before the rights issue by this factor. Theoretical ex-rights value = (Total fair value before + Proceeds) ÷ (Shares before + New shares).
Indirect method of operating cash flow: Operating cash flow = Profit before tax + Depreciation and other non-cash charges + Finance costs − Investment income ± Working capital changes − Income tax paid; Finance costs and investment income are removed only if classified under financing or investing. For non-financial entities, interest and dividends paid are financing and interest and dividends received are investing, applied consistently each period. Tax paid is operating unless specifically linked to investing or financing.
Ind AS 8 treatment: Policy change: retrospective. Estimate change: prospective. Error: retrospective restatement.; Retrospective application of policy change is subject to impracticability and specific transitional provisions in a standard.
Ind AS 10 test: Adjusting event = evidence of a condition that existed at the end of the reporting period; Non-adjusting events are disclosed (nature and estimated financial effect) if material. If management determines after the reporting period that it intends to liquidate the entity or cease trading, the financial statements are not prepared on a going-concern basis. This is a change in the basis of accounting, not an adjusting event.
Ind AS 108 quantitative thresholds: Reportable if revenue (incl. inter-segment), or absolute profit or loss, or assets is 10% or more of the combined total; Profit test compares with the greater of combined profit of profit-making segments and combined loss of loss-making segments (absolute). Reported segments should generally cover at least 75% of external revenue.

How to solve Presentation and Disclosure Standards questions

Use this sequence for any case question on these standards. It stops you from mixing up recognition, calculation and disclosure.

1Name the standard from the facts. Words like 'restated', 'discovered error' point to Ind AS 8; 'after the reporting date' to Ind AS 10; 'director's relative' to Ind AS 24; 'convertible' or 'options' to Ind AS 33.
2Write the rule in one line with its condition (for example, adjusting only if the condition existed at the reporting date).
3Apply it to the facts. Mark the dates, amounts and who the parties are.
4Compute if needed. For EPS, build a table of shares by date. For cash flows, build a working note for each line before the statement, and classify interest and dividends paid as financing and received as investing (non-financial entities), consistently.
5Decide the presentation: which statement or line item, current or non-current, which cash flow category, which segment.
6State the disclosure the standard requires: nature, amount, basis and effect.
7End with a one-line conclusion using the numbers, and mention Ind AS 1 or Schedule III if classification is asked.

Quickest way: Ten-second standard match, then compute

When to use it: Use in the 30% MCQ section of Papers 1 to 5, and when a Paper 6 case study mixes several standards and you must find the one being tested.

Underline the trigger words in the case and match them to a standard before reading the options.
For Ind AS 10, ask one question: did the condition exist at the reporting date? Yes means adjust.
For Ind AS 8, ask: policy, estimate or error? Then pick retrospective, prospective or restate.
For EPS, make a quick time-weighted share table and then test each convertible for dilution by comparing its incremental EPS with basic EPS.
For Ind AS 7, classify each item by nature (operating, investing, financing) and check that non-cash transactions are excluded.
Cross-check the answer against the arithmetic: dilutive EPS must be lower than basic EPS.

Common mistakes in Presentation and Disclosure Standards

Treating every post-balance-sheet event as adjusting, or none as adjusting
Students focus on the date of the event rather than the date of the underlying condition.
Fix: Ask whether the event confirms a condition existing at the reporting date. A customer's insolvency confirming a receivable that was doubtful is adjusting. A fire after year end is non-adjusting.
Applying a change in estimate retrospectively
Students confuse it with a policy change or an error correction.
Fix: Change in estimate (useful life, residual value, provisions) goes in profit or loss of the current and future periods. Change of depreciation method is also treated as a change in estimate.
Weighting bonus shares from the date of issue in EPS
Students apply the rule for fresh issues of shares for cash.
Fix: Bonus shares are adjusted as if issued at the start of the earliest period presented. Restate comparative EPS too.
Including anti-dilutive instruments in diluted EPS
Students include all convertibles automatically.
Fix: Compute incremental EPS per instrument (after-tax interest saved ÷ incremental shares). Rank from lowest and include only while diluted EPS keeps falling.
Showing non-cash items inside the cash flow statement
Students copy balance sheet movements directly.
Fix: Exclude transactions such as acquiring assets by issuing shares or by a finance arrangement without cash. Disclose them in the notes.
Listing only the transaction amount for related parties
Students stop once they spot the relationship.
Fix: Disclose the relationship, the transaction amount, outstanding balances, terms and conditions, guarantees, and any expense for bad or doubtful debts. Show key managerial personnel compensation by category.

Worked examples

Example 1

Case: Meru Ltd has profit after tax of ₹12,00,000 for the year ended 31 March 2027 and a preference dividend (non-cumulative, declared) of ₹1,00,000. It had 2,00,000 equity shares on 1 April 2026. On 1 October 2026 it issued 60,000 shares for cash. On 1 January 2027 it made a 1-for-4 bonus issue, based on shares then outstanding. Calculate basic EPS.

Show the solution

Earnings for equity holders = ₹12,00,000 − ₹1,00,000 = ₹11,00,000.
Shares before the cash issue: 2,00,000 for 6 months (April to September).
After the cash issue: 2,60,000 for the remaining 6 months.
Bonus issue = 2,60,000 ÷ 4 = 65,000 shares. Apply it as if issued from the start of the year, so it applies to all shares outstanding before it.
Weighted average before bonus = (2,00,000 × 6/12) + (2,60,000 × 6/12) = 1,00,000 + 1,30,000 = 2,30,000.
Adjusted for bonus: 2,30,000 × (5/4) = 2,87,500 shares.
Basic EPS = ₹11,00,000 ÷ 2,87,500 = ₹3.826, about ₹3.83.

Answer: Basic EPS is about ₹3.83 per share.

Example 2

Case: Tara Ltd's reporting date is 31 March 2027. Financial statements were approved on 20 May 2027. (a) On 10 April 2027, a customer owing ₹8,00,000 was declared insolvent; the debt was outstanding at 31 March and was not provided for. (b) On 5 May 2027, the board proposed a dividend of ₹2 per share on 5,00,000 shares. (c) On 12 May 2027, a warehouse was destroyed by fire; the loss is material. State the treatment of each under Ind AS 10.

Show the solution

(a) The insolvency confirms the customer's poor financial condition that existed at the reporting date. It is an adjusting event. Recognise an impairment or loss on the ₹8,00,000 receivable to the extent it is not recoverable.
(b) Dividends declared after the reporting period are not recognised as a liability at that date, because no present obligation exists then. This is a non-adjusting matter. Disclose the dividend in the notes: ₹2 × 5,00,000 = ₹10,00,000.
(c) The fire occurred after the reporting date and does not relate to a condition then existing. It is non-adjusting. Disclose its nature and an estimate of the financial effect, since it is material.

Answer: (a) Adjust the receivable. (b) Do not recognise the ₹10,00,000 dividend as a liability; disclose it. (c) Disclose the fire loss; do not adjust.

Exam tips

In case studies, the standard is rarely named. Train yourself to map trigger words to the standard before reading the question.
For EPS, always show the weighted-average share table as a working note. Marks are given for the method even when the final number is off.
Write Ind AS 8 and Ind AS 10 answers in provision, facts, conclusion form, and add the disclosure required. Examiners reward the disclosure line.
In Paper 6, an Ind AS 24 or Ind AS 108 point often links to audit or SEBI LODR. State the Ind AS disclosure, then connect it to the other subject briefly.
Check the date of approval of the financial statements in Ind AS 10 questions. Events are considered up to that date.

Practice questions from Financial Reporting

Presentation and Disclosure Standards in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Presentation and Disclosure Standards: frequently asked questions

How do I treat convertible debentures in diluted EPS?

Assume conversion at the start of the period, or at issue if later. Add back the after-tax interest to profit and add the shares to the denominator. Include them only if they reduce EPS.

Is a change in depreciation method a change in policy?

Under Ind AS 8, a change in depreciation method is treated as a change in accounting estimate, so it is applied prospectively. A change in the measurement basis, such as cost model to revaluation model, follows its own standard's rules.

Who are related parties under Ind AS 24?

They include entities in the same group, associates and joint ventures, key managerial personnel and their close family members, post-employment benefit plans, and entities controlled or jointly controlled by such persons. Always test control, joint control and significant influence.

Does Ind AS 34 allow different policies in interim reports?

No. The same accounting policies as the latest annual statements are used, except for changes made after the last annual statements. Interim reports are condensed, so they require fewer notes.