Newsflash: Ind AS Transition Facilitation Group (ITFG) issues Clarifications – Bulletin 6

We summarise the ICAI’s ITFG clarifications on Ind AS applicability

Ind AS Transition Facilitation Group (ITFG) formed by ICAI has issued Bulletin 6 that provides the following clarifications on Ind AS applicability:

  • Net worth criterion: Once applicable, no escape

Once Ind AS is applicable to a company on the basis of net worth criteria, Ind AS is applicable to it forever, i.e. even if the net worth subsequently falls below the applicability threshold.

  • Dual financials for Non-NBFC subsidiary of a NBFC parent

In case of a non-NBFC subsidiary (Ind AS applicable FY 2017-18 onwards) of a NBFC parent (Ind AS applicable FY 2019-20 onwards)

  • each company prepares its individual financial statement as per respective applicable GAAP (Ind AS /Indian GAAP)
  • the subsidiary will also continue to prepare Indian GAAP financial statements to facilitate group consolidation until FY 2019-20, in addition to its individual Ind AS financial statements
  • Government grants in the nature of promoter’s contribution included for testing Ind AS applicability

Capital reserve arising from government grant in the nature of promoter’s contribution is included in calculation of net worth when determining applicability of Ind AS

  • Charitable companies under section 8 of Companies Act, 2013 are covered under Ind AS, if they meet the Ind AS applicability criteria

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