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CA Final · Financial Reporting · Conceptual Framework for Financial Reporting under Indian Accounting Standards (Ind AS)

Sundaram Textiles Ltd's accountant argues that a treatment in the Conceptual Framework for Financial Reporting under Ind AS should be followed even though a specific Ind AS requires a different treatment for the same transaction. Which statement is correct?

The specific Ind AS requirement prevails. The Conceptual Framework is not itself an Ind AS, and nothing in it overrides any Ind AS or any requirement within an Ind AS, so the accountant must follow the standard.

  1. AThe Conceptual Framework prevails, because it sets the concepts on which every Ind AS is built
  2. BThe Ind AS requirement prevails, because the Conceptual Framework is not an Ind AS and nothing in it overrides any Ind AS or its requirementsCorrect
  3. CThe company may choose either, provided the choice is disclosed in the notes
  4. DThe Conceptual Framework prevails if the transaction is material to the financial statements

Explanation

The Conceptual Framework states that it is not an Ind AS and that nothing in it overrides any Ind AS or any requirement in an Ind AS. Option A reverses this hierarchy. Materiality and disclosure do not change the hierarchy.

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