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CA Final · Financial Reporting · Ind AS 116 Leases

Kaveri Pharma Ltd, a lessee, has a lease whose payments are indexed to a benchmark rate affected by interest rate benchmark reform. The ICAI compendium notes that Interest Rate Benchmark Reform Phase 2 amended Ind AS 116 by adding paragraphs 104-106 and C20C-C20D. From which date must an entity apply these amendments?

The Interest Rate Benchmark Reform Phase 2 amendments to Ind AS 116 apply to annual reporting periods beginning on or after 1 April 2021. This is the effective date given in the Ind AS 116 transition text, notified by G.S.R. 419(E) dated 18 June 2021.

  1. AAnnual reporting periods beginning on or after 1 April 2021Correct
  2. BAnnual reporting periods beginning on or after 1 April 2020
  3. CAnnual reporting periods ending on or after 31 March 2021
  4. DAnnual reporting periods beginning on or after 1 January 2022

Explanation

The text states that an entity shall apply the Phase 2 amendments for annual reporting periods beginning on or after 1 April 2021, inserted by Notification G.S.R. 419(E) dated 18 June 2021. The options with 2020 or period-end tests misstate the rule. The 1 January 2022 date is not stated.

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