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Exposure Draft of the Amendments to Indian Accounting Standards (Corresponding to Annual Improvements to IFRSs 2010-12 Cycle) (Comments to be received by June 10, 2014)
May, 07th 2014
                           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

 
 
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