Main difference in IAS (IFRS) and Indian AS – Part I

Topic	IFRS	Indian AS
Presentation	Specific requirement for all items, do not have any impact on accounting.	In most cases Schedule VI has overriding requirements.
Inventories	Inventory held by broker trader is exempted from IAS.
	Interest for period of deferred settlement period is treated as interest exp.	Added to cost of material unless interest is specified in contract sales
	Net realisable value is calculated in every year. Increase in value of inventory is permitted.	Increase in value of inventory held from previous year can be done through prior period changes only.
Cash Flow statements	All cash and equivalents  are integral part of cash management	Bank overdrafts are considered as financing activities.
	Cash flow from extra ordinary item is not permitted.
Changes in accounting policies	Retrospective application of changes. Opening balances are changed as if new accounting policies had always been applied.	Disclosure of material effect in financial statements, material effect on later period is also require disclosure.
Changes in accounting estimates and Errors	Same as above	Disclosure in statement in such a manner that impact can be perceived.
Dividends	Liability is created in the period when it is declared.	Recorded as liability before approval of financial statements
Deferred Tax	Computed for temporary difference between carrying amount in statement and tax base. (Some exemptions on business combinations)	Computed for timing difference P/L for financial purpose and for income tax purpose.
Fringe Benefit tax	Does not meet definition of income tax, added in cost.	Disclosed after P/L as separate item.
Replacement cost of fixed assets.	Capitalise if meets recognition criteria	Expensed when occurred
P&M – Compensation for impairment.	Recognised in P/L when it become receivable	Offset against replaced P &M.
P&M residual value, Life and Depreciation	Annual Assessment is required	No annual assessment
Lease – interest in leasehold land	Recognised as operating expense unless land is classified as investment	Leasehold land is classified as fixed asset.
Initial direct cost other than dealer or manufacturer in financial lease	Recognised as financial lease receivable and reduced from amount recognised over lease term.	Immediately in P/L
Initial direct cost of dealer or manufacturer in financial lease	As expense when selling profit is recognised	As expense at the inception of lease.
Determining of arrangements	Can be considered as lease on the basis of use of asset and right to use of asset	No provision, treated as expense only.
Lease incentive	Treated as reduction of rental income / Cost.	No provision
Concessions arrangements – Recognition	On the basis of nature of transaction, treated as operating or financial lease	No provision
Revenue	Amount collected from third party is not included at all.	Amount collected for third party i.e. Excise are shown as reduction
Revenue Measurement	Net of interest, calculated for deferred sale	Calculated as nominal amount.
Exchange transaction	Gain or loss is recognised in case of exchange of dissimilar assets.	No provision
Employees benefit – Actuarial valuation	Valuation at the end of each period	Valuation is carried out once in three year
Actuarial Gain or Losses	Optional to deferred gain above 10% of total value.	No option available.
Employee Benefit – Discount Rate	Market yields on high quality corporate bonds.	Market yields on government bonds.
Effects of change in foreign exchange rate on monetary items	Recognised as gain or loss immediately.	Foreign currency translation reserve is created.
Translation in the consolidated financial statements	Non – integral approach is available	Integral approach is additional