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CA Final · Financial Reporting · Ind AS 116 Leases

Nirmal Pharma Ltd has a floating-rate lease liability whose payments were linked to an interbank benchmark rate. Following Interest Rate Benchmark Reform, the benchmark is replaced on an economically equivalent basis. Nirmal's CFO states four views about the amendments to Ind AS 116 made by 'Interest Rate Benchmark Reform—Phase 2'. Which view is correct on the application date as notified?

The Phase 2 benchmark reform amendments, which also amended Ind AS 116, apply to annual reporting periods beginning on or after 1st April 2021. They added paragraphs 104-106 and C20C-C20D, and were inserted by notification dated 18th June 2021.

  1. AThe amendments apply for annual reporting periods beginning on or after 1st April 2021, and added paragraphs 104-106 and C20C-C20DCorrect
  2. BThe amendments apply only to annual periods beginning on or after 1st April 2023, and affect only Ind AS 109
  3. CThe amendments apply retrospectively to all periods from 1st April 2015 and added only paragraph 96
  4. DThe amendments are an Appendix 1 comparison note with no effective date and are not part of the standard

Explanation

Paragraph C1B states that Phase 2 amendments, which amended Ind AS 109, 107, 104 and 116, added paragraphs 104-106 and C20C-C20D, apply for annual reporting periods beginning on or after 1st April 2021. Other options misstate the date, scope or paragraphs; Appendix 1 is a separate comparison note unrelated to this effective date.

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