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CA Final · Financial Reporting · Ind AS 101 First-time Adoption of Ind AS

Kaveri Pharma Ltd is a first-time adopter of Ind AS. Its employees hold stock options granted and fully vested before the date of transition, and the fair value of these options was disclosed publicly at the measurement date. Which statement is correct under Ind AS 101?

Kaveri Pharma is encouraged but not required to apply Ind AS 102 to equity instruments that vested before the transition date. Since the fair value was disclosed publicly at the measurement date, it may elect to apply Ind AS 102, but retrospective application is not mandatory.

  1. AKaveri Pharma is encouraged but not required to apply Ind AS 102 to these vested equity instruments, and may do so because the fair value was publicly disclosedCorrect
  2. BKaveri Pharma must apply Ind AS 102 retrospectively to all vested equity instruments
  3. CKaveri Pharma is prohibited from applying Ind AS 102 to equity instruments vested before transition
  4. DKaveri Pharma must apply Ind AS 102 only if the options are still unexercised at the reporting date

Explanation

Ind AS 101 encourages but does not require application of Ind AS 102 to equity instruments vested before the date of transition. The election is available only if the fair value was publicly disclosed at the measurement date, which is true here. Mandatory retrospective application is wrong, and the application is not prohibited.

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