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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