Exposure Draft
Amendments to Indian Accounting Standards
(Corresponding to Annual Improvements to IFRS 2010-2012 Cycle)
(Last date for Comments: June 10, 2014)
Issued by
Accounting Standards Board
The Institute of Chartered Accountants of India
1
CONTENTS
AMENDMENT TO Ind AS 102 SHARE-BASED PAYMENT
AMENDMENT TO Ind AS 103 BUSINESS COMBINATIONS
AMENDMENTS TO Ind AS 108 OPERATING SEGMENTS
AMENDMENT TO Ind AS 16 PROPERTY, PLANT AND EQUIPMENT
AMENDMENT TO Ind AS 24 RELATED PARTY DISCLOSURES
AMENDMENT TO Ind AS 38 INTANGIBLE ASSETS
2
Ind ASs addressed
The following table shows the topics addressed by these amendments.
Indian Accounting Standards Subject of amendment
Ind AS 102 Share-based Payment Definition of vesting condition
Ind AS 103 Business Combinations Accounting for contingent consideration in
a business combination
Ind AS 108 Operating Segments Aggregation of operating segments
Reconciliation of the total of the reportable
segments' assets to the entity's assets
Ind AS 113 Fair Value Measurement Short-term receivables and payables
Ind AS 16 Property, Plant and Equipment Revaluation method--proportionate
restatement of accumulated depreciation
Ind AS 24 Related Party Disclosures Key management personnel
Ind AS 38 Intangible Assets Revaluation method--proportionate
restatement of accumulated amortisation
3
Exposure Draft
Amendments to Indian Accounting Standards
Following is the Exposure Draft of the Amendments to the following Indian Accounting
Standards (Ind AS) (Corresponding to Annual Improvements to IFRS 2010-2012 Cycle) issued
by the Accounting Standards Board of the Institute of Chartered Accountants of India, for
comments:
i) Ind AS 102 Share-based Payment
ii) Ind AS 103 Business Combinations
iii) Ind AS 108 Operating Segments
iv) Ind AS 113 Fair Value Measurement
v) Ind AS 16 Property, Plant and Equipment
vi) Ind AS24 Related Party Disclosures
vii) Ind AS 38 Intangible Assets
The Board invites comments on any aspect of this Exposure Draft. Comments are most helpful
if they indicate the specific paragraph or group of paragraphs to which they relate, contain a
clear rationale and, where applicable, provide a suggestion for alternative wording.
Comments should be submitted in writing to the Secretary, Accounting Standards Board. The
Institute of Chartered Accountants of India, ICAI Bhawan, Post Box No. 7100, Indraprastha
Marg, New Delhi 110 002, so as to be received not later than June 10, 2014 . Comments can
also be sent by e-mail at commentsasb@icai.in or asb@icai.in.
(This Exposure Draft of the Indian Accounting Standard includes paragraphs set in bold type
and plain type, which have equal authority. Paragraphs in bold type indicate the main
principles. This Exposure Draft of the Indian Accounting Standard should be read in the
context of its objective and the Preface to the Statements of Accounting Standards1)
Amendment to Ind AS 102 Share-based Payment
Paragraphs 15 and 19 were amended. New text is underlined and deleted text is struck
through.
Transactions in which services are received
...
15 If the equity instruments granted do not vest until the counterparty completes a specified
period of service, the entity shall presume that the services to be rendered by the
1
Attention is specifically drawn to paragraph 4.3 of the Preface, according to which accounting
standards are intended to apply only to items which are material.
4
counterparty as consideration for those equity instruments will be received in the future,
during the vesting period. The entity shall account for those services as they are rendered
by the counterparty during the vesting period, with a corresponding increase in equity. For
example:
(a) ...
(b) if an employee is granted share options conditional upon the achievement of a
performance condition performance condition and remaining in the entity's employ
until that performance condition is satisfied, and the length of the vesting period varies
depending on when that performance condition is satisfied, the entity shall presume
that the services to be rendered by the employee as consideration for the share options
will be received in the future, over the expected vesting period.
...
Treatment of vesting conditions
19 A grant of equity instruments might be conditional upon satisfying specified vesting
conditions vesting conditions. For example, a grant of shares or share options to an
employee is typically conditional on the employee remaining in the entity's employ for a
specified period of time. There might be performance conditions that must be satisfied,
such as the entity achieving a specified growth in profit or a specified increase in the
entity's share price. Vesting conditions, other than market conditions, shall not be taken
into account when estimating the fair value of the shares or share options at the
measurement date. Instead, vesting conditions shall be taken into account by adjusting the
number of equity instruments included in the measurement of the transaction amount so
that, ultimately, the amount recognised for goods or services received as consideration for
the equity instruments granted shall be based on the number of equity instruments that
eventually vest. Hence, on a cumulative basis, no amount is recognised for goods or
services received if the equity instruments granted do not vest because of failure to satisfy
a vesting condition vesting condition, eg the counterparty fails to complete a specified
service period, or a performance condition is not satisfied, subject to the requirements of
paragraph 21.
...
5
In Appendix A, the definitions of `market condition' and `vesting conditions' are amended
and the definitions of `performance condition' and `service condition' are added. New text
is underlined and deleted text is struck through.
Appendix A
Defined terms
This appendix is an integral part of the Ind AS.
...
market A performance condition condition upon which the exercise price,
condition vesting or exercisability of an equity instrument depends that is
related to the market price (or value) of the entity's equity instruments
(or the equity instruments of another entity in the same group), such as:
(a) attaining a specified share price or a specified amount of intrinsic
value of a share option,; or
(b) achieving a specified target that is based on the market price (or
value) of the entity's equity instruments (or the equity
instruments of another entity in the same group) relative to an
index of market prices of equity instruments of other entities.
A market condition requires the counterparty to complete a specified
period of service (ie a service condition); the service requirement can
be explicit or implicit.
performance A vesting condition that requires:
condition
(a) the counterparty to complete a specified period of service (ie a
service condition); the service requirement can be explicit or
implicit; and
(b) specified performance target(s) to be met while the counterparty is
rendering the service required in (a).
The period of achieving the performance target(s):
(a) shall not extend beyond the end of the service period; and
(b) may start before the service period on the condition that the
commencement date of the performance target is not substantially
before the commencement of the service period.
A performance target is defined by reference to:
6
(a) the entity's own operations (or activities) or the operations or
activities of another entity in the same group (ie a non-market
condition); or
(b) the price (or value) of the entity's equity instruments or the equity
instruments of another entity in the same group (including shares
and share options) (ie a market condition).
A performance target might relate either to the performance of the
entity as a whole or to some part of the entity (or part of the group),
such as a division or an individual employee.
...
service A vesting condition that requires the counterparty to complete a
condition specified period of service during which services are provided to the
entity. If the counterparty, regardless of the reason, ceases to provide
service during the vesting period, it has failed to satisfy the condition.
A service condition does not require a performance target to be met.
...
`vesting The A conditions that determines whether the entity receives the
conditions services that entitle the counterparty to receive cash, other assets or
equity instruments of the entity, under a share-based payment
arrangement. A vVesting conditions are is either service conditions a
service condition or performance conditions a performance
condition. Service conditions require the counterparty to complete a
specified period of service. Performance conditions require the
counterparty to complete a specified period of service and specified
performance targets to be met (such as a specified increase in the
entity's profit over a specified period of time). A performance
condition might include a market condition.
7
Amendment to
Ind AS 103 Business Combinations
Paragraphs 40 and 58 are amended. New text is underlined and deleted text is struck
through.
Contingent consideration
...
40 The acquirer shall classify an obligation to pay contingent consideration that meets the
definition of a financial instrument as a financial liability or as equity on the basis of the
definitions of an equity instrument and a financial liability in paragraph 11 of Ind AS 32
Financial Instruments: Presentation, or other applicable Indian Accounting Standards.
The acquirer shall classify as an asset a right to the return of previously transferred
consideration if specified conditions are met. Paragraph 58 provides guidance on the
subsequent accounting for contingent consideration.
...
Contingent consideration
58 Some changes in the fair value of contingent consideration that the acquirer recognises
after the acquisition date may be the result of additional information that the acquirer
obtained after that date about facts and circumstances that existed at the acquisition date.
Such changes are measurement period adjustments in accordance with paragraphs 4549.
However, changes resulting from events after the acquisition date, such as meeting an
earnings target, reaching a specified share price or reaching a milestone on a research and
development project, are not measurement period adjustments. The acquirer shall account
for changes in the fair value of contingent consideration that are not measurement period
adjustments as follows:
(a) ...
(b) Other cContingent consideration classified as an asset or a liability that:
(i) is a financial instrument and is within the scope Ind AS 39 shall be measured at
fair value at each reporting date, with any resulting gain or loss recognised either
in profit or loss or in other comprehensive income and changes in fair value shall
be recognised in profit or loss in accordance with Ind AS 39.
(ii) is not within the scope of Ind AS 39 shall be accounted for in accordance with
Ind AS 37 or other Indian Accounting Standards as appropriate. measured at fair
value at each reporting date and changes in fair value shall be recognised in profit
or loss.
...
8
Consequential amendments to other Ind ASs resulting from the
amendment to Ind AS 103
Amendment to
Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets
Paragraph 5 is amended. New text is underlined and deleted text is struck through.
Scope
...
5 When another Standard deals with a specific type of provision, contingent liability or
contingent asset, an entity applies that Standard instead of this Standard. For example,
some types of provisions are addressed in Standards on:
(a) ...
(d) employee benefits (see Ind AS 19 Employee Benefits); and
(e) insurance contracts (see Ind AS 104 Insurance Contracts). However, this Standard
applies to provisions, contingent liabilities and contingent assets of an insurer,
other than those arising from its contractual obligations and rights under insurance
contracts within the scope of Ind AS 104.; and
(f) contingent consideration of an acquirer in a business combination (see Ind AS 103
Business Combinations).
...
Amendment to Ind AS 39 Financial Instruments: Recognition and
Measurement
Paragraph 9 is amended. New text is underlined.
Definitions
...
9 The following terms are used in this Standard with the meanings specified:
...
Definitions of four categories of financial instruments
9
A financial asset or financial liability at fair value through profit or loss is a financial
asset or financial liability that meets either any of the following conditions.:
(a) ...
(aa) It is contingent consideration of an acquirer in a business combination to which
Ind AS 103 Business Combinations applies.
(b) ...
10
Amendments to
Ind AS 108 Operating Segments
Paragraphs 22 and 28 are amended. New text is underlined and deleted text is struck through.
General information
22 An entity shall disclose the following general information:
(a) factors used to identify the entity's reportable segments, including the basis of
organisation (for example, whether management has chosen to organise the entity
around differences in products and services, geographical areas, regulatory
environments, or a combination of factors and whether operating segments have
been aggregated);, and
(aa) the judgements made by management in applying the aggregation criteria in
paragraph 12. This includes a brief description of the operating segments that have
been aggregated in this way and the economic indicators that have been assessed in
determining that the aggregated operating segments share similar economic
characteristics; and
(b) types of products and services from which each reportable segment derives its
revenues.
...
Reconciliations
28 An entity shall provide reconciliations of all of the following:
(a) ...
(c) the total of the reportable segments' assets to the entity's assets if the segment assets
are reported in accordance with paragraph 23.
(d) ...
11
Amendment to
Ind AS 16 Property, Plant and Equipment
Paragraph 35 is amended. New text is underlined and deleted text is struck through.
Revaluation model
...
35 When an item of property, plant and equipment is revalued, any accumulated depreciation
the carrying amount of that asset is adjusted to the revalued amount. Aat the date of the
revaluation, the asset is treated in one of the following ways:
(a) restated proportionately the gross carrying amount is adjusted in a manner that is
consistent with the change in the gross carrying amount of the asset so that
revaluation of the carrying amount of the asset. For example, the gross carrying
amount may be restated by reference to observable market data or it may be
restated proportionately to the change in the carrying amount. The accumulated
depreciation at the date of the revaluation is adjusted to equal the difference
between the gross carrying amount and the carrying amount of the asset after taking
into account accumulated impairment losses; or after revaluation equals its
revalued amount. This method is often used when an asset is revalued by means of
applying an index to determine its replacement cost (see Ind AS 113).
(b) the accumulated depreciation is eliminated against the gross carrying amount of the
asset. and the net amount restated to the revalued amount of the asset. This method
is often used for buildings.
The amount of the adjustment arising on the restatement or elimination of accumulated
depreciation forms part of the increase or decrease in carrying amount that is accounted
for in accordance with paragraphs 39 and 40.
...
12
Amendment to
Ind AS 24 Related Party Disclosures
Paragraph 9 is amended and paragraphs 17A and 18A are added. New text is underlined.
Definitions
9 The following terms are used in this Standard with the meanings specified:
A related party is a person or entity that is related to the entity that is preparing its
financial statements (in this Standard referred to as the `reporting entity').
(a) ...
(b) An entity is related to a reporting entity if any of the following conditions applies:
(i) ...
(viii) The entity, or any member of a group of which it is a part, provides key
management personnel services to the reporting entity or to the parent of
the reporting entity.
...
All entities
...
17A If an entity obtains key management personnel services from another entity (the
`management entity'), the entity is not required to apply the requirements in
paragraph 17 to the compensation paid or payable by the management entity to
the management entity's employees or directors.
18 ...
18A Amounts incurred by the entity for the provision of key management personnel
services that are provided by a separate management entity shall be disclosed.
...
13
Amendment to
Ind AS 38 Intangible Assets
Paragraph 80 is amended. New text is underlined and deleted text is struck through.
Revaluation model
...
80 If When an intangible asset is revalued, any accumulated amortisation the carrying amount
of that asset is adjusted to the revalued amount. Aat the date of the revaluation, the asset
is either treated in one of the following ways:
(a) restated proportionately the gross carrying amount is adjusted in a manner that is
consistent with the change in the gross carrying amount of the asset so that
revaluation of the carrying amount of the asset. For example, the gross carrying
amount may be restated by reference to observable market data or it may be restated
proportionately to the change in the carrying amount. The accumulated amortisation
at the date of the revaluation is adjusted to equal the difference between the gross
carrying amount and the carrying amount of the asset after taking into account
accumulated impairment losses after revaluation equals its revalued amount; or
(b) the accumulated amortisation is eliminated against the gross carrying amount of the
asset. and the net amount restated to the revalued amount of the asset.
The amount of the adjustment of accumulated amortisation forms part of the increase or
decrease in the carrying amount that is accounted for in accordance with paragraphs 85
and 86.
...
14
|