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

Sagar Textiles Ltd, an Indian company, has always prepared its statutory financial statements under the Accounting Standards notified under the Companies Act, 2013 (Indian GAAP). It now adopts Ind AS for the first time. Under Ind AS 101, how is 'previous GAAP' defined for Sagar Textiles?

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. For Sagar Textiles, the notified Indian accounting standards it applied earlier are previous GAAP, not any overseas reporting basis or IFRS.

  1. AThe basis of accounting used for its reporting requirement in India immediately before adopting Ind ASCorrect
  2. BThe basis of accounting used for any overseas reporting, such as group reporting to a foreign parent, before adopting Ind AS
  3. CThe basis of accounting that the entity considers most appropriate and chooses at the transition date
  4. DInternational Financial Reporting Standards as issued by the IASB

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. This differs from IFRS 1, which refers to the basis used immediately before adopting IFRS. Hence for Sagar Textiles the notified Indian accounting standards are previous GAAP; overseas reporting bases are not relevant.

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