The Institute of Chartered Accountants of India (ICAI) has issued the Exposure Drafts of amendments to Ind AS 1 and Ind AS 116 for comments from the member Chartered Accountants.
“As you are kindly aware that the Indian Accounting Standards (Ind AS) are based on the IFRS Standards issued by the International Accounting Standards Board (IASB). In this regard, it may be noted that IFRS Standards are being issued/revised by the IASB from time to time. As a part of convergence with IFRS Standards, the Ind AS may be issued/revised corresponding to the IFRS Standards. Accordingly, whenever any amendments are made or new IFRS Standard/IFRIC is issued by the IASB, the Accounting Standards Board (ASB) of the ICAI considers those amendments and other related aspects for amending the corresponding Ind AS,” ICAI said in a statement.
While considering the aforesaid amendments to Ind AS 1, the ASB also considered the related aspect of classification of a long-term arrangement where breach of a material provision has taken place on or before the end of the reporting period but the lender agreed, after the reporting period and before the approval of the financial statements for issue, not to demand payment because of the condonation of the breach.
Under Ind AS 1, a carve-out was made in paragraph 74 of Ind AS 1 prescribing that an entity does not classify such a liability as current. As compared to this, IAS 1 requires such a liability to be classified as current because, at the end of the reporting period, the entity does not have the right to defer its settlement for at least twelve months after that date.
The Exposure Draft proposes adding paragraph 102A to prescribe subsequent measurement requirements for sale and leaseback transactions particularly in a leaseback that includes variable lease payments that do not depend on an index or rate—because these payments are excluded from ‘lease payments’ as defined in Appendix A.
The amendments require a sellerlessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognise any amount of the gain or loss that relates to the right of use it retains. The ASB invites comments on any aspect of this Exposure Draft. Comments are most helpful if they contain a clear rationale and, where applicable, provide suggestions for alternative wording.
The Accounting Standards Board has issued the Exposure Drafts for public comments with the last date of comments being January 30, 2023.
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