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CA Final · Financial Reporting · Ind AS 1 Presentation of Financial Statements

Kaveri Engineering Ltd, an Indian company, is drafting the title of its primary financial statement that shows profit or loss and other comprehensive income. Management wants to call it 'Statement of profit or loss and other comprehensive income' as in IAS 1. How does Ind AS 1 treat the terminology?

Ind AS 1 prescribes one terminology for all entities: 'balance sheet' and 'Statement of Profit and Loss'. It removes the IAS 1 option allowing different titles, so Kaveri Engineering must use 'Statement of Profit and Loss' rather than the IAS 1 wording.

  1. AInd AS 1 lets each entity choose its own titles for the financial statements
  2. BInd AS 1 uses the term 'Statement of Profit and Loss' for all entities and removes the alternative titlesCorrect
  3. CInd AS 1 requires the title 'Statement of financial position' for the balance sheet and 'Income statement' for profit or loss
  4. DInd AS 1 requires two separate statements, titled 'Profit and Loss Account' and 'Statement of Comprehensive Income'

Explanation

Ind AS 1 removes the IAS 1 option for entities to follow different titles and gives one terminology for all. It uses 'balance sheet' instead of 'statement of financial position' and 'Statement of Profit and Loss' instead of 'statement of profit and loss and other comprehensive income'. Free choice of titles is therefore wrong.

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