CA Final Paper 4 key terms

Indian Accounting Standards converged with IFRS, notified under the Companies (Indian Accounting Standards) Rules and applicable to specified classes of companies for preparing general purpose financial statements.

A deliberate modification made by Indian standard-setters to an IFRS requirement when notifying the corresponding Ind AS, usually to preserve a tax, legal or regulatory position under Indian law.

The process by which an entity moves to Ind AS for the first time, requiring an opening Ind AS balance sheet at the date of transition and retrospective application subject to mandatory and optional exemptions.

An amount used as a substitute for original cost at the date of transition, typically fair value or a previous GAAP carrying amount, permitted under specified optional exemptions on first-time adoption.

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, viewed from a market perspective.

The five-step model requiring identification of a contract with a customer, identification of performance obligations, determination of transaction price, allocation of that price, and recognition when obligations are satisfied.

A promise in a contract with a customer to transfer a distinct good or service, or a series of distinct goods or services that are substantially the same and transferred similarly.

The amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services, adjusted for variable consideration, financing, non-cash consideration and payable to customer.

An entity's right to consideration in exchange for goods or services already transferred, where that right is conditional on something other than the passage of time, such as future performance.

The non-cancellable period of a lease, together with periods covered by an extension option reasonably certain to be exercised and periods covered by a termination option reasonably certain not to be exercised.

An asset representing a lessee's right to use an underlying asset for the lease term, measured initially at the lease liability plus initial direct costs, prepayments and estimated restoration obligations.

The present value of lease payments not yet paid, discounted using the interest rate implicit in the lease or, if not readily determinable, the lessee's incremental borrowing rate.

A probability-weighted estimate of credit losses over the expected life of a financial instrument, reflecting reasonable and supportable information about past events and forecast conditions.

The amount initially recognised less principal repayments, adjusted for cumulative amortisation of the difference between initial and maturity amounts using the effective interest method, and reduced for impairment.

The rate that exactly discounts estimated future cash payments or receipts through the expected life of a financial instrument to the gross carrying amount of the asset or amortised cost of the liability.

A reduction in the recoverable amount of an asset below its carrying amount, recognised in profit or loss unless a revaluation surplus exists, and reversed only where the relevant standard permits.

The higher of an asset's fair value less costs of disposal and its value in use, used to test whether the carrying amount of an asset or cash-generating unit is impaired.

The smallest identifiable group of assets that generates cash inflows largely independent of the cash inflows from other assets or groups of assets, used as the level for impairment testing.

The process of combining the financial statements of a parent and its subsidiaries into a single set, eliminating intra-group balances, income, expenses and unrealised profits.

The situation where an investor has power over the investee, exposure or rights to variable returns from involvement, and the ability to use its power to affect those returns.

The equity in a subsidiary not attributable, directly or indirectly, to the parent, presented separately within consolidated equity and measured at fair value or proportionate share on acquisition.

An asset representing future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognised, measured as residual consideration transferred.

A business combination in which the net of identifiable assets acquired and liabilities assumed exceeds the consideration transferred, with the resulting gain recognised in profit or loss after reassessment.

A transaction in which goods or services are settled in equity instruments or cash based on the entity's share price, measured at grant-date fair value for equity-settled awards.

The period during which specified vesting conditions must be satisfied for an employee to become unconditionally entitled to a share-based award, over which expense is recognised.

The tax effect of temporary differences between the carrying amount of an asset or liability and its tax base, and of unused tax losses and credits, recognised as deferred tax asset or liability.

The difference between the carrying amount of an asset or liability in the balance sheet and its tax base, which may be taxable or deductible and gives rise to deferred tax.

The amount attributed to an asset or liability for tax purposes, determined under the applicable tax law and used to compute temporary differences for deferred tax recognition.

The threshold at which omissions or misstatements could reasonably be expected to influence economic decisions of users, judged in the context of the financial statements as a whole.

An attitude of questioning and critical assessment of audit evidence, remaining alert to conditions indicating possible misstatement due to error or fraud, and not assuming management is dishonest.

The risk that the auditor expresses an inappropriate opinion when the financial statements are materially misstated, comprising inherent risk, control risk and detection risk.

Information used by the auditor in arriving at conclusions on which the audit opinion is based, obtained through risk assessment procedures, substantive procedures and tests of controls.

Those matters that, in the auditor's professional judgement, were of most significance in the audit of the current period, selected from matters communicated with those charged with governance.

The principles governing a chartered accountant's conduct, including integrity, objectivity, confidentiality, professional competence and due care, and professional behaviour, supported by independence requirements.

Freedom from relationships and influences that could compromise, or appear to compromise, the objectivity of an assurance engagement, assessed in fact and in appearance.

A situation where an accountant's or firm's interests, or duties to one party, could improperly influence judgement affecting another party, requiring identification, disclosure and safeguards.

A company's obligation under Indian company law, for companies meeting specified size thresholds, to spend at least two per cent of average net profits on specified social activities, with reporting and disclosure requirements.