Preparation and Presentation of Financial Statements
The statements
An Ind AS entity presents a balance sheet, a statement of profit and loss (with other comprehensive income), a statement of changes in equity, a cash flow statement and notes. Schedule III Division II prescribes line items; Ind AS 1 prescribes structure and minimum content.
Presentation rules that carry marks
- Current/non-current split based on the twelve-month operating cycle or an unconditional right to defer settlement.
- OCI grouped into items that will and will not be reclassified to profit or loss, with tax and reclassification adjustments shown.
- Material items disclosed separately; extraordinary items are not permitted under Ind AS.
- Discontinued operations, EPS, segment information and related-party disclosures sit in the notes.
- Comparatives, consistency and a statement of compliance with Ind AS.
Worked example
Profit before tax ₹50 lakh; revaluation gain on a building ₹8 lakh (never reclassified); effective portion of a cash flow hedge gain ₹2 lakh (reclassified when the hedged item affects profit). Tax at 25%. OCI not reclassified: ₹8 lakh less ₹2 lakh tax = ₹6 lakh. OCI to be reclassified: ₹2 lakh less ₹0.5 lakh tax = ₹1.5 lakh. Profit for the year ₹37.5 lakh plus OCI ₹7.5 lakh gives total comprehensive income of ₹45 lakh. Merging both OCI blocks into one line destroys the reclassification distinction.
Traps
- Netting OCI items against each other or omitting their tax.
- Treating a change in estimate as a prior-period adjustment.
- Routing dividends paid through the statement of profit and loss.