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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 (Accounting Standards) Rules. It now adopts Ind AS for the first time. For the purposes of Ind AS 101, what is its 'previous GAAP'?

Previous GAAP is the basis of accounting the entity used for its reporting requirement in India immediately before adopting Ind AS. For Sagar Textiles that means the notified Accounting Standards, not an IFRS package prepared for a foreign parent or the tax basis.

  1. AThe IFRS-based reporting package it prepared for its foreign parent's consolidation
  2. BThe basis of accounting used for its reporting requirement in India immediately before adopting Ind AS, i.e. the notified Accounting StandardsCorrect
  3. CAny basis of accounting the entity chooses from those it has ever used
  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. This makes the notified Accounting Standards the previous GAAP. The IFRS package for the parent is not the Indian reporting requirement, so it is wrong.

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