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

Kaveri Pharma Ltd prepares Ind AS financial statements. While dealing with a transaction, no Ind AS specifically applies, and management must develop an accounting policy. In line with the Ind AS 8 comparison with IAS 8, which statement is correct about the sources management may first consider?

In the absence of a specific Ind AS, paragraph 12 of Ind AS 8 allows management to first consider the most recent pronouncements of the International Accounting Standards Board. It does not require waiting for a notified standard or limiting reference only to Ind AS.

  1. AManagement may first consider the most recent pronouncements of the International Accounting Standards BoardCorrect
  2. BManagement must first apply the Companies Act, 1956 accounting provisions only
  3. CManagement may not refer to any pronouncement outside Ind AS
  4. DManagement must wait for a notified Ind AS before recognising the transaction

Explanation

As noted in the comparison with IAS 8, paragraph 12 of Ind AS 8 states that in the absence of an Ind AS, management may first consider the most recent pronouncements of the International Accounting Standards Board. The other options impose restrictions or delays that Ind AS 8 does not state.

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