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CA Final · Financial Reporting · Ind AS 34 Interim Financial Reporting

Kaveri Foods Ltd reports half-yearly. Its management wants to apply, for interim reports, a simpler inventory costing method than the one in its annual financial statements, arguing that half-yearly reporting is only indicative. Based on the Ind AS 34 requirement on accounting policies, what is the correct position?

The entity must apply the same accounting policies in its interim financial statements as in its annual financial statements. Condensed format or half-yearly frequency does not permit a simpler inventory costing method, and disclosing the difference would not make it acceptable.

  1. AA simpler method is allowed because interim reports are condensed
  2. BThe same accounting policies as in the annual financial statements must be applied in the interim financial statementsCorrect
  3. CPolicies may differ if the difference is disclosed in the notes
  4. DPolicies may differ in the first and third quarters only

Explanation

Ind AS 34 requires an entity to apply the same accounting policies in its interim financial statements as are applied in its annual financial statements. Condensed presentation or the frequency of reporting does not allow a different policy. Disclosure of a difference does not cure it.

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