Unit 4

Unit 4
Provisions under accounting standards for items that do not appear in

financial statements
Related Party Disclosure:

Introduction:
IND AS 24 is about related party disclosure. This disclosure is about the
transactions & outstanding balances about the entities related parties,
Meaning of related parties: Related persons or parties are the entities that is
related to an entity which conducts the business & prepares financial statements
like shareholders, creditors, suppliers, customers, government, financial
institutions, insurance companies etc.
Objectives:
1. To ensure that an entity's financial statement contains the necessary
information
2. To identify information
3. To identify outstanding balances
4. To know the commitments between an entity & its parties
5. To know the items to be disclosed
6. To show all the items in consolidated & separate financial statements
Scope
1. This standard is applied in identifying related parties relationship &
transactions
2. Identifying outstanding balances, commitments between the entitles its
related parties
3. Identifying the circumstances, where the disclosure is necessary
4. This standard is also applicable to the individual's financial statement.
Disclosure:
1. Relationship between parent & its subsidiaries:
The relationship between the parent & its subsidiaries shall be disclosed irrespective of
whether they have any transactions between them. The name, controlling party should be
disclosed in the financial statement
2. Management Compensation: An entity shall disclose key management
personnel
compensation in total:
→Short term employee benefits
→ Post-employment benefit
→ Other long term benefits
→Termination benefits
→Share based payments
3. Any transaction with the third party
4. The amount of outstanding balances including commitment [terms &
conditions,
guarantee or received]
5. Provision for doubtful debts related to the amount of outstanding balances
6. Any expenses recognized in relation to the related party
Related Party
A related party is a person or entity that is related to the entity that is preparing
its financial statements
(a) A person or a close member of that person's family is related to a reporting
entity if that person:
(1) Has control or joint control of the reporting entity:
(ii) Has significant influence over the reporting entity; or
(iii) Is a member of the key management personnel of the reporting entity or of
a parent of the reporting entity?
(b). An entity is related to a reporting entity if any of the following conditions
applies:
(1) The entity and the reporting entity are members of the same group (which
means that each parent, subsidiary and fellow subsidiary is related to others).
(ii) One entity is an associate or joint venture of the other entity (or an associate
or joint venture of a member of a group of which the other entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an
associate of the third entity
(v) The entity is a post-employment benefit plan for the benefit of employees of
either the reporting entity or an entity related to the reporting entity. If the
reporting entity is itself such a plan, the sponsoring employers are also related to
the reporting entity.
(vi) The entity is controlled or jointly controlled by a person identified in (a).
(vii) A person identified in (a)(i) has significant influence over the entity or is a
member of the key management personnel of the entity (or of a parent of the
entity).
Related Party Transaction

A related party transaction is a transfer of resources, services or obligations
between a reporting entity and a related party, regardless of whether a price is
charged.
Close Member of the family

Close members of the family of a person are those family members who may be
expected influence, or be influenced by, that person in their dealings with the
entity
including:
(a) That person's children, spouse or domestic partner, brother, sister, father and
(b) Children of that person's spouse or domestic partner; and
(c) Dependants of that person or that person's spouse or domestic partner
INTERIM FINANCIAL REPORTING (IND AS 34)

Introduction: IND AS 34 interim financial reporting is applied when an entity
prepares an interim financial report without mandating In this report less
information has been reported when compared to annual financial statement.
This standard outlines the recognition, measurement & disclosure requirements
for interim report.
Meaning: Interim financial statements are financial statements that cover the
information for a period less than 1 year. This report can be prepared quarterly
or half yearly by public companies.
Contents of Interim Financial Reporting

IND AS 34 defines a complete set of financial statement. They are:
1. Balance Sheet
2. Income Statement
3. Statement showing change in equity
4. Cash flow statement
5. Accounting policies & explanatory notes
Minimum Content:
1. A Condensed balance sheet
2. Condensed statement of comprehensive income
3. Condensed statement of change in equity
4. Condensed statement of cash flow
5. Selected explanatory notes
Objectives: The objective of this standard is to prescribe the minimum content,

principles for recognition & measurement in financial statements presented for
an interim period.
Accounting Policy: The same accounting policy/Policies should be applied for

interim reporting as are applied in the entity's annual financial Statement
Measurement: Measurement for interim reporting purpose should be made on a
year to- date basis so that the frequency of the entity's reporting does not get
disturbed. Disclosures in annual financial statement: Disclosure which are given
in the interim report should be carried forward to the annual financial statements
with few changes
Operating Segments: [IND AS 108] (IFRS 08)

Introduction:
The operating segments standard discloses information about operating
segments, products & services, geographical area, major customers etc. The
information is based on internal management report i.e., engaged in
Meaning: An Operating Segment is a component of an entity i.e., engaged in
business activity for the purpose of earning revenue.
Scope:
This standard is applicable to the separate or individual financial statement of an
entity:
1. Whose equity instruments are traded in public market
2. Whose financial statements are filed in regulatory organisations
Disclosure Requirements:
1. General Information
a. Factors used to identify the undertaking reportable segments (basic
information)
b. Types of products & services which the operating segment is producing
2. Specific information An entity shall disclose the following for each period in
the income statement
a. General information
b. Recantation of totals of revenue, profits/loss, assets & liabilities.
3. Information about certain specific revenues & expenses
4. Information about assets & liabilities
5. Other material information -The information about profit & assets &
liabilities are:
a. Revenue from external customers
b. Revenue from transactions
c. Interest revenue
d. Expenses
e. Depreciation & amortisation
f. Income tax expenses
g. Material non-cash items
EVENTS OCCURING AFTER THE REPORTING PERIOD:

According to IAS 10, Events after the reporting period are those events
favourable and unfavorable that occur between the statement of financial
position date and the date when the financial statements are authorized for the
issue.
Recognition criteria:
Adjust financial statements only for adjusting events i.e events after the balance
sheet that provides further evidence of conditions that existed at the end of the
reporting period. Do not adjust for non - adjusting events
Non-adjusting events after the reporting period

An entity shall not adjust the amounts recognised in its financial statements to
reflect non-adjusting events after the reporting period. An example of a non-
adjusting event after the reporting period is a decline in market value of
investments between the end of the reporting period and the date when the
financial statements are approved for issue.
Objectives
The objective of this Standard is to prescribe:
(a) When an entity should adjust its financial statements for events after the
reporting period, and
(b) The disclosures that an entity should give about the date when the financial
statements were approved for issue and about events after the reporting period.
This Standard shall be applied in the accounting for, and disclosure of, events
after the period reporting

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Unit 4

Provisions under accounting standards for items that do not appear in

Related Party Disclosure:

Related Party Transaction

Close Member of the family

INTERIM FINANCIAL REPORTING (IND AS 34)

Contents of Interim Financial Reporting

Objectives: The objective of this standard is to prescribe the minimum content,

Accounting Policy: The same accounting policy/Policies should be applied for

Operating Segments: [IND AS 108] (IFRS 08)

EVENTS OCCURING AFTER THE REPORTING PERIOD:

Non-adjusting events after the reporting period

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