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CA Final · Financial Reporting · Introduction to Indian Accounting Standards

Vindhya Steels Ltd is a listed company that follows Ind AS from 1 April 2023 as its first Ind AS year, with a transition date of 1 April 2022. Its financial statements for the year ended 31 March 2024 are the first Ind AS financial statements. Its previous GAAP accounts were prepared under Accounting Standards. The CFO states four points. Which one is correct under the Ind AS framework?

The company needs an opening Ind AS balance sheet at 1 April 2022, the transition date, and must restate 2022-23 comparatives to Ind AS. The transition date is the start of the earliest comparative period, so previous GAAP comparatives or a reconciliation alone are insufficient.

  1. AComparative figures for 2022-23 may be presented under previous GAAP, since only the current year needs Ind AS
  2. BAn opening Ind AS balance sheet is required as at 1 April 2022, and comparatives for 2022-23 must be restated to Ind ASCorrect
  3. CThe opening Ind AS balance sheet is required as at 1 April 2023, the start of the current year
  4. DNo opening balance sheet is needed if a reconciliation of equity is given

Explanation

The transition date is the beginning of the earliest comparative period, here 1 April 2022. An opening Ind AS balance sheet is prepared at that date and the comparative year 2022-23 is restated under Ind AS. Options with 1 April 2023 use the wrong date; previous GAAP comparatives and reconciliation-only approaches are not allowed substitutes.

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