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CA Final · Financial Reporting · Conceptual Framework for Financial Reporting under Indian Accounting Standards (Ind AS)

Zenith Polymers Ltd is preparing its financial statements and finds that no Ind AS applies to a specific transaction it has entered into. The CFO says the Conceptual Framework for Financial Reporting under Ind AS may be used. Which statement best reflects the status of the Conceptual Framework?

The Conceptual Framework is not an Ind AS and does not override any Ind AS requirement. Its purposes include helping preparers develop consistent accounting policies when no Ind AS applies to a transaction or when an Ind AS allows a choice of policy, so Zenith may use it for this transaction.

  1. AIt is itself an Ind AS and overrides any Ind AS that conflicts with it
  2. BIt is not an Ind AS, and it helps preparers develop consistent accounting policies where no Ind AS applies to a transactionCorrect
  3. CIt applies only to the ICAI when it formulates standards and has no use for preparers
  4. DIt replaces the requirements of an Ind AS whenever the company believes the Framework gives a fairer view

Explanation

The Conceptual Framework is not an Ind AS and nothing in it overrides any Ind AS. One of its purposes is to help preparers develop consistent accounting policies when no Ind AS applies to a transaction. The option claiming it overrides Ind AS contradicts the stated status.

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