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

Veda Textiles Ltd, an Indian company, has so far prepared its statutory financial statements under the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006. It now adopts Ind AS for the first time. Under Ind AS 101, what is treated as the entity's 'previous GAAP'?

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 Veda Textiles, this means the notified Indian accounting standards it applied earlier, not IFRS, internal management accounts or tax accounting.

  1. AIFRS as issued by the IASB, because Ind AS is converged with IFRS
  2. BThe basis of accounting used for its reporting requirement in India immediately before adopting Ind ASCorrect
  3. CAny basis of accounting the entity chooses, including management accounts prepared for internal use
  4. DThe tax accounting basis used for computing income under the Income-tax Act

Explanation

Ind AS 101 defines previous GAAP as the basis of accounting the first-time adopter used for its reporting requirement in India immediately before adopting Ind AS. Hence the notified Indian accounting standards applicable to Veda Textiles are its previous GAAP. Option A reflects the IFRS 1 style definition, which is not the Ind AS 101 definition.

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