MCA issues amendments to Ind AS 102 and Ind AS 7

MCA issues amendments to Ind AS 102 and Ind AS 7

The Ministry of Corporate Affairs (MCA), through its notification dated 16 February 2015, issued the Indian Accounting Standards (Ind AS), which are converged with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).

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Background

The Ministry of Corporate Affairs (MCA), through its notification dated 16 February 2015, issued the Indian Accounting Standards (Ind AS), which are converged with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).

The IASB had issued amendments to IFRS 2, Share-based Payment on 20 June 2016 on completion of its project on classification and measurement of share-based payment transactions. The objective of these amendments is to clarify three issues relating to cash-settled share-based payment transactions.

In January 2016, IAS 7, Statement of Cash Flows had been amended as part of the IASB’s broader disclosure initiative to improve presentation and disclosure in financial statements. For some time, investors have been calling for more disclosures on net debt, a term not defined in IFRS. The IASB has responded by requiring disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash-flow and non-cash changes.

New development

With Ind AS being applicable to large Indian corporates from 1 April 2016, there is a need to keep Ind AS updated with revisions made to IFRS in order to maintain convergence. The amendments to Ind AS 102, Share-based Payment and Ind AS 7, Statement of Cash Flows notified by the MCA on 17 March 2017 are therefore in accordance with recent amendments to IFRS as issued by the IASB.

The amendments made to Ind AS 102 cover three accounting areas:

  • Measurement of cash-settled share-based payments
  • Classification of share-based payments settled net of tax withholdings and
  • Accounting for a modification of a share-based payment from cash-settled to equity-settled.

These amendments could affect the classification and/or measurement of the share-based payment arrangements and potentially the timing and amount of expense recognised for new and outstanding awards.

The amendments made to Ind AS 7 require certain additional disclosures to be made for changes in liabilities arising from financing activities on account of non-cash transactions to improve information provided to users of financial statements about an entity’s financing activities.

This issue of IFRS notes provides an overview of these amendments.
To access the text of the Companies (Indian Accounting Standards) Rules, 2017 issued by MCA, please click here.
 

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