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

Meghna Textiles Ltd, an Indian company, has so far prepared financial statements under the notified Accounting Standards (Indian GAAP) for its reporting requirement in India. It now adopts Ind AS for the first time. Under Ind AS 101, how is 'previous GAAP' defined for Meghna Textiles Ltd?

Under Ind AS 101, previous GAAP is the basis of accounting the entity used for its reporting requirement in India immediately before adopting Ind AS. So Meghna's financial statements under the notified Indian accounting standards are its previous GAAP, not any foreign-parent reporting basis.

  1. AThe basis of accounting it used for its reporting requirement in India immediately before adopting Ind ASCorrect
  2. BAny basis of accounting it used for group reporting to a foreign parent immediately before adopting Ind AS
  3. CIFRS as issued by the IASB, because Ind AS is converged with IFRS
  4. DThe basis of accounting it expects to use in its next three annual reporting periods

Explanation

Ind AS 101 defines previous GAAP as the basis of accounting used for the entity's reporting requirement in India immediately before adopting Ind AS. This differs from IFRS 1, which refers simply to the basis used immediately before adopting IFRS. Thus the notified Indian standards applicable to the entity are its previous GAAP; a foreign-parent reporting basis is not.

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