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Annual Improvements to Ind AS (2018) (Corresponding to Annual Improvements to IFRS Standards 20152017 Cycle issued by the IASB)
June, 13th 2018
                                                ED/Ind AS/2018/06



                      Exposure Draft


        Annual Improvements to Ind AS (2018)
(Corresponding to Annual Improvements to IFRS Standards
          2015­2017 Cycle issued by the IASB)




          (Last date for the comments: 11th July, 2018)




                           Issued by
                 Accounting Standards Board
      The Institute of Chartered Accountants of India
                                          Exposure Draft


Annual Improvements to Ind AS (2018) (Corresponding to Annual
Improvements to IFRS Standards 2015­2017 Cycle issued by the IASB)
Following is the Exposure Draft of Annual Improvements to Ind AS (2018) issued by the Accounting
Standards Board of the Institute of Chartered Accountants of India, for comments.






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.

How to Comment


Comments should be submitted using one of the following methods, so as to receive not later than 11th
July, 2018:

1     Electronically:       Click on the below mentioned option to submit a comment letter
                            or visit at the following link (Preferred method):
                            http://www.icai.org/comments/asb/

2     Email:                Comments can be sent at commentsasb@icai.in

3     Postal:               Secretary, Accounting Standards Board,
                            The Institute of Chartered Accountants of India,
                            ICAI Bhawan, Post Box No. 7100,
                            Indraprastha Marg, New Delhi ­ 110 002


Further clarifications on any aspect of this Exposure Draft may be sought by e-mail to asb@icai.in.
The Standards amended

The following table shows the Standards amended and the subject of the amendments.

                   Standard                            Subject of amendment

     Ind AS 103, Business Combinations
                                            Previously held interest in a joint operation
     Ind AS 111, Joint Arrangements

    Ind AS 12, Income Taxes                Income tax consequences of payments on
                                           financial instruments classified as equity


     Ind AS 23, Borrowing Costs             Borrowing costs eligible for capitalisation
Amendments to Ind AS 103, Business Combinations

Paragraphs 42A and 64O are added.



        Additional guidance for applying the acquisition method to particular
        types of business combinations
        A business combination achieved in stages
        ...

42A     When a party to a joint arrangement (as defined in Ind AS 111, Joint Arrangements)
        obtains control of a business that is a joint operation (as defined in Ind AS 111), and
        had rights to the assets and obligations for the liabilities relating to that joint operation
        immediately before the acquisition date, the transaction is a business combination
        achieved in stages. The acquirer shall therefore apply the requirements for a business
        combination achieved in stages, including remeasuring its previously held interest in the
        joint operation in the manner described in paragraph 42. In doing so, the acquirer shall
        remeasure its entire previously held interest in the joint operation.

Effective date and transition

        Effective date
        ...
64O     Annual Improvements to Ind AS (2018) added paragraph 42A. An entity shall apply
        those amendments to business combinations for which the acquisition date is on or after
        the beginning of the first annual reporting period beginning on or after 1 April, 2019.
        Earlier application is permitted. If an entity applies those amendments earlier, it shall
        disclose that fact.
Amendments to Ind AS 111, Joint Arrangements

Paragraph B33CA and Appendix C are added.

       Accounting for acquisitions of interests in joint operations
        ...
B33CA A party that participates in, but does not have joint control of, a joint operation might
      obtain joint control of the joint operation in which the activity of the joint operation
      constitutes a business as defined in Ind AS 103. In such cases, previously held interests
      in the joint operation are not remeasured.
        ...

Appendix C
Effective date

        ...
C1AB Annual Improvements to Ind AS (2018) added paragraph B33CA. An entity shall apply
     those amendments to transactions in which it obtains joint control on or after the
     beginning of the first annual reporting period beginning on or after 1 April, 2019.
     Earlier application is permitted. If an entity applies those amendments earlier, it shall
     disclose that fact.


Amendments to Ind AS 12, Income Taxes
Paragraphs 57A and 98I are added, the heading of the example below paragraph 52B is
amended and paragraph 52B is deleted. New text is underlined and deleted text is struck
through.


Measurement

        ...
52B     [Refer Appendix 1] In the circumstances described in paragraph 52A, the income tax
        consequences of dividends are recognised when a liability to pay the dividend is
        recognised. The income tax consequences of dividends are more directly linked to past
        transactions or events than to distributions to owners. Therefore, the income tax
        consequences of dividends are recognised in profit or loss for the period as required by
        paragraph 58 except to the extent that the income tax consequences of dividends arise
        from the circumstances described in paragraph 58(a) and (b).
         Example illustrating paragraphs 52A and 52B57A
         ....
Recognition of current and deferred tax






         ...
57A     An entity shall recognise the income tax consequences of dividends as defined in Ind
        AS 109 when it recognises a liability to pay a dividend. The income tax consequences
        of dividends are linked more directly to past transactions or events that generated
        distributable profits than to distributions to owners. Therefore, an entity shall recognise
        the income tax consequences of dividends in profit or loss, other comprehensive income
        or equity according to where the entity originally recognised those past transactions or
        events.

Effective date

         ...
98I     Annual Improvements to Ind AS (2018) added paragraph 57A and deleted paragraph
        52B. An entity shall apply those amendments for annual reporting periods beginning on
        or after 1 April, 2019. Earlier application is permitted. If an entity applies those
        amendments earlier, it shall disclose that fact. When an entity first applies those
        amendments, it shall apply them to the income tax consequences of dividends
        recognised on or after the beginning of the earliest comparative period.


Appendix 1
Paragraph 4 is amended.

4.    The following paragraph numbers appear as `Deleted' in IAS 12. In order to maintain
      consistency with paragraph numbers of IAS 12, the paragraph numbers are retained in Ind
      AS 12:
           (i)-(x) ......
           (xi)    paragraph 52B

Amendments to Ind AS 23, Borrowing Costs

Paragraph 14 is amended, and paragraphs 28A and 29D are added. Deleted text is struck
through and new text is underlined.



Recognition

         ...
         Borrowing costs eligible for capitalisation
         ...
14       To the extent that an entity borrows funds generally and uses them for the purpose
        of obtaining a qualifying asset, the entity shall determine the amount of borrowing
        costs eligible for capitalisation by applying a capitalisation rate to the expenditures
        on that asset. The capitalisation rate shall be the weighted average of the
        borrowing costs applicable to the all borrowings of the entity that are outstanding
        during the period., other than borrowings However, an entity shall exclude from
        this calculation borrowing costs applicable to borrowings made specifically for the
        purpose of obtaining a qualifying asset until substantially all the activities
        necessary to prepare that asset for its intended use or sale are complete. The
        amount of borrowing costs that an entity capitalises during a period shall not
        exceed the amount of borrowing costs it incurred during that period.
        ...
Transitional provisions

        ...
28A     Annual Improvements to Ind AS (2018) amended paragraph 14. An entity shall apply
        those amendments to borrowing costs incurred on or after the beginning of the annual
        reporting period in which the entity first applies those amendments.

Effective date

        ...
29D     Annual Improvements to Ind AS (2018) amended paragraph 14 and added paragraph
        28A. An entity shall apply those amendments for annual reporting periods beginning on
        or after 1 April, 2019. Earlier application is permitted. If an entity applies those
        amendments earlier, it shall disclose that fact.

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