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

Which statement about the first-time adoption of Ind AS by an Indian company is correct?

Under Ind AS 101, the company prepares an opening Ind AS balance sheet at the transition date and applies Ind AS retrospectively, subject to specified mandatory exceptions and optional exemptions. It cannot apply Ind AS only prospectively or choose individual standards to follow.

  1. AThe company applies Ind AS prospectively only, with no restated comparatives
  2. BThe company prepares an opening Ind AS balance sheet at the transition date and generally applies Ind AS retrospectively, subject to specified exceptions and exemptions under Ind AS 101Correct
  3. CThe company must restate all past years back to incorporation without any exemptions
  4. DThe company continues previous GAAP for comparatives and Ind AS only for the current year
  5. The company chooses which Ind AS to apply individually

Explanation

Ind AS 101 requires an opening balance sheet at the transition date, generally retrospective application of Ind AS in force, and provides mandatory exceptions and optional exemptions. Prospective-only application and unlimited restatement with no exemptions both contradict this. Entities cannot cherry-pick standards.

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