Skip to content

IAI Actuarial Core Principles · Business Finance · Regulation of financial reporting of incorporated entities

Which feature is a reason why Ind AS financial statements typically show more volatility in reported profit than statements under the older Indian GAAP?

Ind AS requires many financial instruments and derivatives to be measured at fair value through profit or loss, so market price movements flow straight into reported earnings. That adds volatility compared with older Indian GAAP, which relied more on cost-based measurement.

  1. AInd AS prohibits any depreciation of property, plant and equipment
  2. BInd AS requires all expenses to be deferred to later years
  3. CInd AS requires many financial instruments to be measured at fair value through profit or lossCorrect
  4. DInd AS allows the use of only historical cost for every asset
  5. Ind AS excludes derivatives from the accounts

Explanation

Ind AS 109 requires many financial assets and derivatives to be measured at fair value with changes in profit or loss, so market movements flow into earnings. Depreciation is still required, expenses are not deferred, and derivatives are recognised.

Did you get it right without looking?

One question tells you little. A timed set on Regulation of financial reporting of incorporated entities shows your real accuracy, how long you take and where you lose marks.

Practise Regulation of financial reporting of incorporated entitiesFree diagnostic mock

More Regulation of financial reporting of incorporated entities questions