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CA Final · Financial Reporting · Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors

Vrindavan Pharma Ltd has no Ind AS that specifically applies to a transaction involving a novel licensing arrangement. Its management must develop an accounting policy. According to Ind AS 8, what is the position regarding the most recent pronouncements of the International Accounting Standards Board (IASB)?

When no Ind AS applies to a transaction, Ind AS 8 says management may first consider the most recent pronouncements of the International Accounting Standards Board. This is a permitted starting point, not a compulsion, and reference to the IASB is not prohibited under Ind AS.

  1. AManagement must apply IASB pronouncements in all cases because Ind AS is identical to IFRS
  2. BManagement may first consider the most recent pronouncements of the IASB when no Ind AS appliesCorrect
  3. CIASB pronouncements may never be referred to under Ind AS
  4. DManagement must ignore the IASB and apply only the Companies Act, 2013 provisions

Explanation

The Ind AS 8 text states that in the absence of an Ind AS, management may first consider the most recent pronouncements of the IASB. This is permissive, not mandatory, so the option stating it must always apply is wrong. It is also not prohibited, so the option disallowing reference is wrong.

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