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CA Final · Financial Reporting · Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors

Anaya Renewables Ltd enters into a novel transaction for which no Ind AS specifically applies, and no Ind AS deals with similar issues. Management must develop an accounting policy. In line with Ind AS 8 as modified from IAS 8 for India, what may management first consider in this absence of an Ind AS?

Management may first consider the most recent pronouncements of the International Accounting Standards Board. The Ind AS 8 text, as compared with IAS 8, states this for situations where no Ind AS applies. Tax minimisation, competitor behaviour or earlier Indian GAAP are not the stated first reference.

  1. AThe most recent pronouncements of the International Accounting Standards BoardCorrect
  2. BOnly the accounting treatment followed by the entity in the previous year under the earlier Indian GAAP
  3. CThe treatment that gives the lowest taxable income under the Income-tax Act
  4. DThe practice followed by the largest competitor in the same industry, regardless of any pronouncements

Explanation

The Ind AS 8 comparison with IAS 8 notes that, in the absence of an Ind AS, management may first consider the most recent pronouncements of the International Accounting Standards Board. Tax-driven treatment, a competitor's practice, or earlier GAAP are not the starting reference stated in the text.

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