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Ind AS -1: “Presentation of Financial Statements”


Ind AS -1: “Presentation of Financial Statements

It provides guidance on the structure, content, and presentation of General Purpose financial statements. The standard outlines the following key aspects:

  1. Objective of the Standard:
    • to ensure comparability with previous period record and with other entities Financial Statement.
    • to set out overall requirements for the presentation of Financial Statement, guideline for their structure and minimum requirement for their content.
  2. Purpose and Objective of The Financial Statement: The standard defines the objective of financial statements, which is to provide information about the company’s financial position(Balance sheet), performance(Income Statement), and cash flows that are useful for economic decision-making.
  3. Complete set of Financial Statements: The standard specifies the components that should be included in a complete set of financial statements, which typically consist of
    • Balance sheet
    • Statement of Profit and Loss,
    • Statement of changes in equity,
    • Statement of cash flows, and
    • Significant Accounting Policy and other explanatory notes to the financial statements.
    • Comparative information in respect of the preceding period
    • Balance sheet as at the beginning of the Earliest Comparative period when entity applies an accounting policy retrospectively
  4. General Features of Financial Statement: Ind AS 1 sets out the overall requirements for the presentation of financial statements, including the use of :
    • Fair presentation of financial information.
      • Financial statement shall present true and fair view of the financial position and cash flow of an entity. Application of Indian ASs with additional disclosure when necessary, is presumed to result in financial statements that present it to end and fair view.
      • any entity whose financial statements comply with Indian ASs Shall Make an explicit and unreserved statement of such compliances in the notes. An entity shall not describe Financial Statements as complying with Indian AS unless they comply with all the requirements of Indian ASs.
      • An entity cannot rectify inappropriate accounting policies either by the disclosure of the accounting policies used or by notes or explanatory material.
      • In extremely rare circumstances if compliance would be misleading and therefore departure from and Indian AS is necessary for true and fair presentation, the entity can depart from the requirement of an Ind AS provided it makes the following disclosures:
        • the management has concluded that financial statements present true and fair view of the the entity financial position performance and cash flows,
        • it has complied with applicable Ind AS except that it has Departed from a particular requirement, to present true and fair view,
        • title of the Ind AS which the entity has departed, the nature of the departure, including the treatment that the Ind AS would require , the reason why that treatment would be so misleading and the treatment adopted.
    • Going Concern:
      • Management shall make and assessment of an entities ability to continue as a Going Concern basis.
      • Entity shall prepare financial statement on Going Concern basis unless management either intend to liquidate the entity or ceases trading or has no realistic alternative but to do so or, on assessment get aware about uncertainty related to events or conditions that may cast significant doubt upon the ability to continue as going concern,
      • When an entity does not prepare financial statement on Going Concern basis it shall disclose fact with reason.
    • Accrual basis accounting :An entity shall prepare its financial statements except for cash flow information, using the accrual basis of accounting.
    • Materiality and Aggregation: An entity shall present separately each material class of similar item. An entity shall present separately items of a dissimilar nature of function unless they are immaterial except when required by law.
    • Offsetting: An entity shall not offset Assets and liabilities or income and expenses unless required or permitted by an Ind AS.
    • Frequency of Reporting: An entity cell present a complete set of financial statements at least annually otherwise it shall disclose the reason and fact that the financial statements are not entirely comparable,
    • Comparative Statement: Comparative information and reclassification of items
      • An entity shall present comparative information in respect of the preceding period for all amounts reported in the current period financial statements and entity Shall present  a minimum of two balance Sheet, two statement of profit and loss statement , two cash flows and two statement of changes in equity and related notes.
      • However and entity present third balance sheet as at the beginning of the the preceding period in addition to the minimum comparative financial statements if:
        • if it applies -an accounting policy retrospectively, makes a retrospective reassessment  of item in its financial statement or reclassifies items in its financial statements ,and
        • the retrospective application, retrospective restatement or the reclassification has a material effects on the information in the balance sheet at the beginning of the preceding period.
      • if an entity change the presentation or classification of item in the financial statement it shall reclassified comparative amounts as well unless it is impracticable. When and entity reclassified comparative amounts it shall disclose :
        • (a) the nature of the reclassification
        • (b) the amount of each item or class of items that is reclassified; and
        • (c) the reason for the reclassification
      • When it is impracticable to classify comparative amounts, an entity shall disclose:
        • the reason for not reclassifying the amounts; and
        • the nature of the adjustment that would have been made If the amount has had been reclassified
    • Consistency : entity should retain their presentation and classification of items from one period to the next unless
      • change would result in more appropriate presentation, or
      • is required by and Ind AS.
  5. Structure and Format: Ind AS 1 provides guidance on the structure and format of financial statements, including the order of presentation of different elements, headings, subtotals, and comparative information. Refer Schedule III 
  6. Disclosures: The standard requires companies to provide relevant disclosures in the financial statements to enhance the understandability and usefulness of the information. These disclosures cover areas such as
    • Accounting policies regarding Revenue Recognition, Capitalization of Borrowing Costs, Investment Properties, Property, Plant and Equipment, Employees Benefits, Inventories, Taxes, Leases, Depreciation/Amortizations, 
    • Significant judgments and estimates,
    • Related party transactions,
    • Contingencies, and
    • Other relevant information.

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