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IFRS
 Lecture Outcomes
• Describe the concept of IFRS,
• Apprehend the features and elements of
financial statements
• Compare and contrast between IFRS and
GAAP
 What is it???

Masaa' alkhayr
 It means-

Good morning
• It is an Arabian language which you find
difficult in understanding but Good
morning you easily understood.

Why?????
• Because you have the knowledge of
English language.
• Similarly, Accounting is the language of
business.
• You should have knowledge of this
business language to understand it.
• There are certain rules which is to be
followed in a particular language. For e.g :
In case of english, is/am is used with
singular and are is used with plural.

• Similarly, Accounting also has certain

certain rules which is required to be
followed.
 GAAP-Introduction

• Accounting is the language of business. It

communicates the results and state of
affairs.
• This language follows some accounting
principles.
Set of
• Accounting principles are accepted
worldwide or by different countries, are
known as GAAP
 New
New
version of version of
AS IAS
 IFRS-Introduction
 is a set of accounting standards developed
by an independent, not-for-profit
organization called the International
Accounting Standards Board (IASB).

 It provides general guidance for the

preparation of financial statements, rather
than setting rules for industry-specific
reporting. 
 NEED OF ADOPTING IFRS
 Globalization
 International Acquisitions
 100% Uniformity
 Attract International Investment
 IFRS COMPLIANT
1. IFRS adopt: countries are adopting IFRS
as it is.
2. IFRS converge: countries are preparing
own standards but in line with IFRS.
3. On 16th Feb, 2015, MCA notified
Companies Rules 2015 which are in line
with IFRS
4. Date of applicability of IND-AS

MANDATORY
VOLUNTARY
ADOPTION----
ADOPTION----
PHASE I…1-4-2016
1-4-2015
PHASE II…1-4-2017
 VOLUNTARY ADOPTION
• IND AS was voluntary adopted by
companies w.e.f. 1-4-2015
• Companies could opt in but couldn’t opt
out
• If a company opts for IND AS w.e.f. 1-4-
2015, its holding, subsidiary, associate
and joint venture will have to mandatorily
follow IND AS
 INDIAN COMPANIES
(CONVERGED)
 IT Sector……….INFOSYS, WIPRO, NIIT
 Auto Sector……MAHINDRA &
MAHINDRA, TATA MOTORS
 Textile………BOMBAY DYEING
 Pharma……..Dr. REDDY’s LAB
 Telecom……..BHARTI AIRTEL
• Comparative financial statement
Particulars Current year (CY) Previous year (PY)

2015-16 2014-15

IND AS Will have to apply IND AS

for PY or for comparison
MANDATORY ADOPTION
 PHASE I
• All the companies (whether listed or unlisted
at any stock exchange) having net worth of
Rs.500 crore or more, should adopt IND
AS in this phase.

• If IND AS is applied on any company, then

its holding, subsidiary etc. have to
mandatorily be adopted irrespective of its
net worth.
• Comparative financial statement
Particulars Current year (CY) Previous year (PY)

2016-17 2015-16

IND AS Will have to apply IND AS

for PY or for comparison
 PHASE II
• All listed companies having net worth less
than 500 crores and,
• All unlisted companies having net worth
greater than 250 crores, should adopt IND
AS
• If IND AS is applied on any of the
company then its holding, subsidiary etc.
will have to mandatorily adopt it.
• Comparative financial statement
Particulars Current year (CY) Previous year (PY)

2017-18 2016-17

IND AS Will have to apply IND AS

for this year or for
comparison
 ADVANTAGES OF
CONVERTING TO IFRS

1. It allows for greater comparability

2. It is beneficial to international investors.

3. Companies may also benefit by using

IFRS if they wish to raise capital abroad.
 Cont….
4. By adopting IFRS, a business can present
its financial statements on the same basis
as its foreign competitors, making
comparisons easier.

5. Furthermore, companies with subsidiaries

in countries that require or permit IFRS may
be able to use one accounting language
company-wide.
 DISADVANTAGES OF
ADOPTING IFRS
1. It requires high costs.

2. It is prone to manipulation.

3. It is not accepted by all the countries.

COMPARISON BETWEEN
INDIAN GAAP AND IFRS
BASIS INDIAN GAAP(AS) IFRS

COMPONENTS OF  Balance Sheet  Statement of

FINANCIAL  Statement of Profit financial position
STATEMENT and Loss  Statement of
 Cash Flow comprehensive
statement income
 Notes to accounts  Statement of
change in equity
 Statement of cash
flow

PRESENTATION AND  The Companies Act,  There is no

PREPARATION 1956prescribed format prescribed rigid
of Balance format
Sheet(Schedule VI)
BASIS INDIAN GAAP(AS) IFRS

PARENT COMPANY  Any company  Any company

holding 51% or more having control on
share of subsidiary decision making or
control on the
ownership of other
company

PROPOSED DIVIDEND  The companies are  IAS 10 provides that

required to make proposed dividend
provision for should not be shown
proposed dividend as a liability when
proposed or declared
after the balance
sheet date.
CONVERTIBLE  Long term debt  Shareholder’s fund
DEBENTURES
 Which company from textile
industry has converged to
IFRS?
A. Vardhman
B. JCT Mills
C. Bombay dying
D. Fab India ltd
• C
 There were ____ phases in
convergence to IFRS
A. 2
B. 3
C. 4
D. 1
• A
 According to IFRS, income
Statement is known as
A. Statement of comprehensive income
B. Income Statement
C. Profit and loss account
D. Statement of changes in equity
• A
Which additional statement is
prepared as per IFRS???
• Statement of change in equity