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

Rohan Textiles Ltd, an Indian company, has always prepared its statutory financial statements under the Accounting Standards notified under the Companies Act. It now adopts Ind AS for the first time. Which basis of accounting is treated as its 'previous GAAP' 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. For Rohan Textiles this is the notified Indian Accounting Standards applicable to it, not IFRS or a tax basis, because Ind AS 101 ties the definition to Indian reporting.

  1. AIFRS as issued by the IASB, because Ind AS is converged with it
  2. BThe basis of accounting used for its reporting requirement in India immediately before adopting Ind ASCorrect
  3. CAny accounting basis the entity chooses from earlier years
  4. DThe tax accounting basis used for its income-tax returns

Explanation

Ind AS 101 defines previous GAAP as the basis of accounting a first-time adopter used for its reporting requirement in India immediately before adopting Ind AS. So the existing notified Indian accounting standards applicable to Rohan Textiles are its previous GAAP. IFRS is wrong because the Indian definition is tied to Indian reporting requirements, unlike IFRS 1.

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