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

Sagar Textiles Ltd, an Indian company, has so far prepared its statutory financial statements under the notified Accounting Standards (AS) under the Companies Act and now adopts Ind AS for the first time. Which of the following correctly identifies its 'previous GAAP' for Ind AS 101 purposes?

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. Ind AS 101 makes this mandatory, unlike IFRS 1, so overseas or tax bases cannot be chosen.

  1. AThe notified Indian accounting standards (AS) applicable to it for its reporting requirement in India immediately before adopting Ind ASCorrect
  2. BIFRS as issued by the IASB, because Ind AS is converged with IFRS
  3. CAny basis of accounting the company chooses among those it has used in the past, including tax accounting
  4. DThe basis used for any overseas reporting to a foreign parent, if that is more detailed

Explanation

Ind AS 101 defines previous GAAP as the basis of accounting used for the entity's reporting requirement in India immediately before adopting Ind AS. This differs from IFRS 1, which refers only to the basis used immediately before IFRS. So for an Indian entity the financial statements under the notified AS must be treated as previous GAAP, not an overseas or tax basis.

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