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

Arjun Steels Ltd prepares Ind AS financial statements. For a transaction on which no Ind AS specifically applies, management is selecting an accounting policy. According to the comparison with IAS 8 in Appendix 1 of Ind AS 8, which statement is correct for such a situation?

Management may first consider the most recent pronouncements of the International Accounting Standards Board when no Ind AS applies. This is permissive, not a prohibition or an absolute mandate, and it does not justify leaving the transaction unrecognised.

  1. AManagement is prohibited from referring to any pronouncements of the IASB
  2. BManagement may first consider the most recent pronouncements of the International Accounting Standards BoardCorrect
  3. CManagement must apply the latest IASB pronouncement as mandatory without exercising judgement
  4. DManagement should leave the transaction unrecognised until an Ind AS is notified

Explanation

Appendix 1 notes that paragraph 12 of Ind AS 8 says that, in the absence of an Ind AS, management may first consider the most recent pronouncements of the IASB. It is permissive, not mandatory, and does not bar recognition. Hence the second option is correct.

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