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

Mehta Textiles Ltd, an Indian company, has always prepared its financial statements under the notified Accounting Standards in India and now adopts Ind AS for the first time. Which basis of accounting does Ind AS 101 treat as the entity's 'previous GAAP'?

Previous GAAP under Ind AS 101 is the basis of accounting the entity used for its reporting requirement in India immediately before adopting Ind AS. Mehta Textiles therefore treats its financials under the notified Accounting Standards as previous GAAP, not any overseas or voluntary reporting basis.

  1. AThe basis of accounting the entity used for its reporting requirement in India immediately before adopting Ind ASCorrect
  2. BAny basis of accounting the entity chooses, including IFRS, for voluntary reporting to foreign investors
  3. CThe basis of accounting used for the entity's group reporting to an overseas parent
  4. DThe basis of accounting that will be used after the first Ind AS financial statements are issued

Explanation

Ind AS 101 differs from IFRS 1 by defining previous GAAP as the basis used for the entity's reporting requirement in India immediately before adopting Ind AS. So Mehta Textiles must treat its notified Accounting Standards financials as previous GAAP. Overseas or voluntary reporting bases are not previous GAAP, so those options are wrong.

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