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Exposure Draft of the Indian Accounting Standard (Ind AS) 114, Regulatory Deferral Accounts (Corresponding to IFRS 14) (Comments to be received by September 15, 2014)
August, 27th 2014
               Exposure Draft


Indian Accounting Standard (Ind AS) 114,
      Regulatory Deferral Accounts




(Last date for Comments: September 15, 2014)




                   Issued by
          Accounting Standards Board
 The Institute of Chartered Accountants of India
                                                 Exposure Draft
         Indian Accounting Standard (Ind AS) 114,
               Regulatory Deferral Accounts

Following is the Exposure Draft of Indian Accounting Standard (Ind AS)
114, Regulatory Deferral Accounts issued by the Accounting Standards
Board of The Institute of Chartered Accountants of India, for comments. The
Board invites comments on any specific aspect of the 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 September 15, 2014. Comments can also be sent
by email to commentsasb@icai.in

(The 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)




                                                            
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 
Indian Accounting Standard (Ind AS) 114

              Regulatory Deferral Accounts

CONTENTS
                                                              from page


OBJECTIVE                                                           8

SCOPE                                                               8

RECOGNITION, MEASUREMENT, IMPAIRMENT AND
DERECOGNITION                                                       9

PRESENTATION                                                        11

DISCLOSURE                                                          12

APPENDICES                                                          15

A Defined terms                                                     15

B Application Guidance                                              16


C Guidance Note on Accounting for Rate Regulated Activities


1 Comparison with IFRS 14, Regulatory Deferral Accounts
Indian Accounting Standard (Ind AS) 114

Regulatory Deferral Accounts

Objective

1       The objective of this Standard is to specify the financial reporting
        requirements for regulatory deferral account balances that arise when an
        entity provides goods or services to customers at a price or rate that is
        subject to rate regulation.
2       In meeting this objective, the Standard requires:
        (a)   limited changes to the accounting policies that were applied in
              accordance with previous generally accepted accounting principles
              (previous GAAP) for regulatory deferral account balances, which
              are primarily related to the presentation of these accounts; and
        (b)   disclosures that:
              (i)    identify and explain the amounts recognised in the entity's
                     financial statements that arise from rate regulation; and
              (ii)   help users of the financial statements to understand the
                     amount, timing and uncertainty of future cash flows from any
                     regulatory deferral account balances that are recognised.
3       The requirements of this Standard permit an entity within its scope to
        continue to account for regulatory deferral account balances in its
        financial statements in accordance with its previous GAAP when it
        adopts Ind ASs, subject to the limited changes referred to in paragraph 2
        above.
4       In addition, this Standard provides some exceptions to, or exemptions
        from, the requirements of other Standards. All specified requirements for
        reporting regulatory deferral account balances, and any exceptions to, or
        exemptions from, the requirements of other Standards that are related to
        those balances, are contained within this Standard instead of within those
        other Standards.

Scope

5       An entity is permitted to apply the requirements of this Standard in
        its first Ind AS financial statements if and only if it:
        (a)   conducts rate-regulated activities; and
      (b)   recognised amounts that qualify as regulatory deferral account
            balances in its financial statements in accordance with its
            previous GAAP.
6     An entity shall apply the requirements of this Standard in its
      financial statements for subsequent periods if and only if, in its first
      Ind AS financial statements, it recognised regulatory deferral
      account balances by electing to apply the requirements of this
      Standard.


7     This Standard does not address other aspects of accounting by entities
      that are engaged in rate-regulated activities. By applying the
      requirements in this Standard, any amounts that are permitted or required
      to be recognised as assets or liabilities in accordance with other
      Standards shall not be included within the amounts classified as
      regulatory deferral account balances.
8     An entity that is within the scope of, and that elects to apply, this
      Standard shall apply all of its requirements to all regulatory deferral
      account balances that arise from all of the entity's rate-regulated
      activities.


Recognition, measurement, impairment and derecognition
      Temporary exemption from paragraph 11 of Ind AS 8
      Accounting Policies, Changes in Accounting Estimates and Errors
9     An entity that has rate-regulated activities and that is within the
      scope of, and elects to apply, this Standard shall apply paragraphs
      10 and 12 of Ind AS 8 when developing its accounting policies for the
      recognition, measurement, impairment and derecognition of
      regulatory deferral account balances.
10    Paragraphs 11­12 of Ind AS 8 specify sources of requirements and
      guidance that management is required or permitted to consider in
      developing an accounting policy for an item, if no relevant Standard
      applies specifically to that item. This Standard exempts an entity from
      applying paragraph 11 of Ind AS 8 to its accounting policies for the
      recognition, measurement, impairment and derecognition of regulatory
      deferral account balances. Consequently, entities that recognise
      regulatory deferral account balances, either as separate items or as part of
      the carrying value of other assets and liabilities, in accordance with
      previous GAAP, are permitted to continue to recognise those balances in
      accordance with this Standard through the exemption from paragraph 11
     of Ind AS 8, subject to any presentation changes required by paragraphs
     18­19 of this Standard.




     Continuation of existing accounting policies
11   On initial application of this Standard, an entity shall continue to
     apply previous GAAP accounting policies for the recognition,
     measurement, impairment and derecognition of regulatory deferral
     account balances, except for any changes permitted by paragraphs
     13­15. However, the presentation of such amounts shall comply with
     the presentation requirements of this Standard, which may require
     changes to the entity's previous GAAP presentation policies (see
     paragraphs 18­19).
12   An entity shall apply the policies established in accordance with
     paragraph 11 consistently in subsequent periods, except for any changes
     permitted by paragraphs 13­15.


     Changes in accounting policies
13   An entity shall not change its accounting policies in order to start to
     recognise regulatory deferral account balances. An entity may only
     change its accounting policies for the recognition, measurement,
     impairment and derecognition of regulatory deferral account
     balances if the change makes the financial statements more relevant
     to the economic decision-making needs of users and no less reliable,
     or more reliable and no less relevant to those needs. An entity shall
     judge relevance and reliability using the criteria in paragraph 10 of
     Ind AS 8.

14   This Standard does not exempt entities from applying paragraphs 10 or
     14­15 of Ind AS 8 to changes in accounting policy. To justify changing
     its accounting policies for regulatory deferral account balances, an entity
     shall demonstrate that the change brings its financial statements closer to
     meeting the criteria in paragraph 10 of Ind AS 8. However, the change
     does not need to achieve full compliance with those criteria for the
     recognition, measurement, impairment and derecognition of regulatory
     deferral account balances.
15   Paragraphs 13­14 apply both to changes made on initial application of
     this Standard and to changes made in subsequent reporting periods.

     Interaction with other Standards
16   Any specific exception, exemption or additional requirements related
     to the interaction of this Standard with other Standards are
      contained within this Standard (see paragraphs B7­B28). In the
      absence of any such exception, exemption or additional
      requirements, other Standards shall apply to regulatory deferral
      account balances in the same way as they apply to assets, liabilities,
      income and expenses that are recognised in accordance with other
      Standards.
17    In some situations, another Standard might need to be applied to a
      regulatory deferral account balance that has been measured in accordance
      with an entity's accounting policies that are established in accordance
      with paragraphs 11­12 in order to reflect that balance appropriately in
      the financial statements. For example, the entity might have rate-
      regulated activities in a foreign country for which the transactions and
      regulatory deferral account balances are denominated in a currency that
      is not the functional currency of the reporting entity. The regulatory
      deferral account balances and the movements in those balances are
      translated by applying Ind AS 21 The Effects of Changes in Foreign
      Exchange Rates.

Presentation

      Changes in presentation
18    This Standard introduces presentation requirements, outlined in
      paragraphs 20­26, for regulatory deferral account balances that are
      recognised in accordance with paragraphs 11­12. When this Standard is
      applied, the regulatory deferral account balances are recognised in the
      balance sheet in addition to the assets and liabilities that are recognised
      in accordance with other Standards. These presentation requirements
      separate the impact of recognising regulatory deferral account balances
      from the financial reporting requirements of other Standards.
19    In addition to the items that are required to be presented in the balance
      sheet and in the statement of profit and loss in accordance with Ind AS 1
      Presentation of Financial Statements, an entity applying this Standard
      shall present all regulatory deferral account balances and the movements
      in those balances in accordance with paragraphs 20­26.


      Classification of regulatory deferral account balances
20    An entity shall present separate line items in the balance sheet for:
      (a)   the total of all regulatory deferral account debit balances; and
      (b)   the total of all regulatory deferral account credit balances.
21   When an entity presents current and non-current assets, and current
     and non-current liabilities, as separate classifications in its balance
     sheet, it shall not classify the totals of regulatory deferral account
     balances as current or non-current. Instead, the separate line items
     required by paragraph 20 shall be distinguished from the assets and
     liabilities that are presented in accordance with other Standards by
     the use of sub-totals, which are drawn before the regulatory deferral
     account balances are presented.


     Classification of movements in regulatory deferral
     account balances

22   An entity shall present, in the other comprehensive income section of
     the statement of profit and loss , the net movement in all regulatory
     deferral account balances for the reporting period that relate to
     items recognised in other comprehensive income. Separate line items
     shall be used for the net movement related to items that, in
     accordance with other Standards:
     (a)   will not be reclassified subsequently to profit or loss; and
     (b)   will be reclassified subsequently to profit or loss when specific
           conditions are met.
23   An entity shall present a separate line item in the profit or loss
     section of the statement of profit and loss , for the remaining net
     movement in all regulatory deferral account balances for the
     reporting period, excluding movements that are not reflected in
     profit or loss, such as amounts acquired. This separate line item shall
     be distinguished from the income and expenses that are presented in
     accordance with other Standards by the use of a sub-total, which is
     drawn before the net movement in regulatory deferral account
     balances.


24   When an entity recognises a deferred tax asset or a deferred tax liability
     as a result of recognising regulatory deferral account balances, the entity
     shall present the resulting deferred tax asset (liability) and the related
     movement in that deferred tax asset (liability) with the related regulatory
     deferral account balances and movements in those balances, instead of
     within the total presented in accordance with Ind AS 12 Income Taxes for
     deferred tax assets (liabilities) and the tax expense (income) (see
     paragraphs B9­B12).
25     When an entity presents a discontinued operation or a disposal group in
       accordance with Ind AS 105 Non-current Assets Held for Sale and
       Discontinued Operations, the entity shall present any related regulatory
       deferral account balances and the net movement in those balances, as
       applicable, with the regulatory deferral account balances and movements
       in those balances, instead of within the disposal groups or discontinued
       operations (see paragraphs B19­B22).
26     When an entity presents earnings per share in accordance with Ind AS 33
       Earnings per Share, the entity shall present additional basic and diluted
       earnings per share, which are calculated using the earnings amounts
       required by Ind AS 33 but excluding the movements in regulatory
       deferral account balances (see paragraphs B13­B14).


Disclosure

       Objective
27     An entity that elects to apply this Standard shall disclose information
       that enables users to assess:
       (a)   the nature of, and the risks associated with, the rate regulation
             that establishes the price(s) that the entity can charge
             customers for the goods or services it provides; and
       (b)   the effects of that rate regulation on its financial position,
             financial performance and cash flows.


28     If any of the disclosures set out in paragraphs 30­36 are not considered
       relevant to meet the objective in paragraph 27, they may be omitted from
       the financial statements. If the disclosures provided in accordance with
       paragraphs 30­36 are insufficient to meet the objective in paragraph 27,
       an entity shall disclose additional information that is necessary to meet
       that objective.
29     To meet the disclosure objective in paragraph 27, an entity shall consider
       all of the following:
       (a)   the level of detail that is necessary to satisfy the disclosure
             requirements;
       (b)   how much emphasis to place on each of the various requirements;
       (c)   how much aggregation or disaggregation to undertake; and
       (d)   whether users of financial statements need additional information
             to evaluate the quantitative information disclosed.
     Explanation of activities subject to rate regulation
30   To help a user of the financial statements assess the nature of, and the
     risks associated with, the entity's rate-regulated activities, an entity shall,
     for each type of rate-regulated activity, disclose:
     (a)   a brief description of the nature and extent of the rate-regulated
           activity and the nature of the regulatory rate-setting process;
     (b)   the identity of the rate regulator(s). If the rate regulator is a related
           party (as defined in Ind AS 24 Related Party Disclosures), the
           entity shall disclose that fact, together with an explanation of how
           it is related;
     (c)   how the future recovery of each class (ie each type of cost or
           income) of regulatory deferral account debit balance or reversal of
           each class of regulatory deferral account credit balance is affected
           by risks and uncertainty, for example:
           (i)    demand risk (for example, changes in consumer attitudes, the
                  availability of alternative sources of supply or the level of
                  competition);
           (ii)   regulatory risk (for example, the submission or approval of a
                  rate-setting application or the entity's assessment of the
                  expected future regulatory actions); and
           (iii) other risks (for example, currency or other market risks).
31   The disclosures required by paragraph 30 shall be given in the financial
     statements either directly in the notes or incorporated by cross-reference
     from the financial statements to some other statement, such as a
     management commentary or risk report, that is available to users of the
     financial statements on the same terms as the financial statements and at
     the same time. If the information is not included in the financial
     statements directly or incorporated by cross-reference, the financial
     statements are incomplete.


     Explanation of recognised amounts
32   An entity shall disclose the basis on which regulatory deferral account
     balances are recognised and derecognised, and how they are measured
     initially and subsequently, including how regulatory deferral account
     balances are assessed for recoverability and how any impairment loss is
     allocated.


33   For each type of rate-regulated activity, an entity shall disclose the
     following information for each class of regulatory deferral account
     balance:

     (a)   a reconciliation of the carrying amount at the beginning and the
           end of the period, in a table unless another format is more
           appropriate. The entity shall apply judgement in deciding the level
           of detail necessary (see paragraphs 28­29), but the following
           components would usually be relevant:
           (i)    the amounts that have been recognised in the current period
                  in the balance sheet as regulatory deferral account balances;
           (ii)   the amounts that have been recognised in the statement of
                  profit and loss relating to balances that have been recovered
                  (sometimes described as amortised) or reversed in the current
                  period; and
           (iii) other amounts, separately identified, that affected the
                 regulatory deferral account balances, such as impairments,
                 items acquired or assumed in a business combination, items
                 disposed of, or the effects of changes in foreign exchange
                 rates or discount rates;
     (b)   the rate of return or discount rate (including a zero rate or a range
           of rates, when applicable) used to reflect the time value of money
           that is applicable to each class of regulatory deferral account
           balance; and
     (c)   the remaining periods over which the entity expects to recover (or
           amortise) the carrying amount of each class of regulatory deferral
           account debit balance or to reverse each class of regulatory deferral
           account credit balance.
34   When rate regulation affects the amount and timing of an entity's income
     tax expense (income), the entity shall disclose the impact of the rate
     regulation on the amounts of current and deferred tax recognised. In
     addition, the entity shall separately disclose any regulatory deferral
     account balance that relates to taxation and the related movement in that
     balance.
35   When an entity provides disclosures in accordance with Ind AS 112
     Disclosure of Interests in Other Entities for an interest in a subsidiary,
     associate or joint venture that has rate-regulated activities and for which
     regulatory deferral account balances are recognised in accordance with
     this Standard, the entity shall disclose the amounts that are included for
     the regulatory deferral account debit and credit balances and the net
     movement in those balances for the interests disclosed (see paragraphs
     B25­B28).
36   When an entity concludes that a regulatory deferral account balance is no
     longer fully recoverable or reversible, it shall disclose that fact, the
     reason why it is not recoverable or reversible and the amount by which
     the regulatory deferral account balance has been reduced.
Appendix A
Defined terms
This appendix is an integral part of the Standard.

First   Ind   AS The first annual financial statements in which an entity adopts
financial          Indian Accounting Standards (Ind AS) , by an explicit and
statements         unreserved statement of compliance with Ind AS.
First-time          An entity that presents its first Ind AS financial statements.
adopter
Previous GAAP       The basis of accounting that a first-time adopter used
                    immediately before adopting Ind ASs for its reporting
                    requirements in India.For instance, for companies preparing
                    their financial statements in accordance with the existing
                    Accounting Standards notified under the Companies
                    (Accounting Standards) Rules, 2006 shall consider those
                    financial statements as previous GAAP financial statements.

                   Explanation:
                   Guidance Note on Accounting for the Rate Regulated
                   Activities, issued by The Institute of Chartered Accountants of
                   India (ICAI) shall be considered to be the previous GAAP.
Rate-regulated     An entity's activities that are subject to rate regulation.
activities
Rate regulation     `Cost of Service Regulation' as defined in the Guidance Note
                    on Accounting for Rate Regulated Activities.
Rate regulator      `Regulator' as defined in the Guidance Note on Accounting
                    for Rate Regulated Activities.
Regulatory          A `Regulatory Asset' or a `Regulatory Liability' as defined
deferral account in the Guidance Note on Accounting for Rate Regulated
balance            Activities.
Appendix B
Application Guidance
This appendix is an integral part of the Standard.

Rate-regulated activities

B1     Historically, rate regulation applied to all activities of an entity.
       However, with acquisitions, diversification and deregulation, rate
       regulation may now apply to only a portion of an entity's activities,
       resulting in it having both regulated and non-regulated activities.
       This Standard applies only to the rate-regulated activities that are
       subject to statutory or regulatory restrictions through the actions of a
       rate regulator, regardless of the type of entity or the industry to which
       it belongs.

B2     An entity shall not apply this Standard to activities that are self-
       regulated, ie activities that are not subject to a pricing framework that
       is overseen and/or approved by a rate regulator.

Continuation of existing accounting policies

B3     For the purposes of this Standard, a regulatory deferral account
       balance is defined as the balance of any expense (or income) account
       that would not be recognised as an asset or a liability in accordance
       with other Standards, but that qualifies for deferral because it is
       included, or is expected to be included, by the rate regulator in
       establishing the rate(s) that can be charged to customers. Some items
       of expense (income) may be outside the regulated rate(s) because, for
       example, the amounts are not expected to be accepted by the rate
       regulator or because they are not within the scope of the rate
       regulation. Consequently, such an item is recognised as income or
       expense as incurred, unless another Standard permits or requires it to
       be included in the carrying amount of an asset or liability.

B4     In some cases, other Standards explicitly prohibit an entity from
       recognising, in the balance sheet, regulatory deferral account balances
       that might be recognised, either separately or included within other
       line items such as property, plant and equipment in accordance with
       previous GAAP accounting policies. However, in accordance with
       paragraph 11 of this Standard, an entity that elects to apply this
       Standard in its first Ind AS financial statements applies the
       exemption from paragraph 11 of Ind AS 8 in order to continue to
       apply its previous GAAP accounting policies for the recognition,
       measurement, impairment, and derecognition of regulatory deferral
       account balances. Such accounting policies may include, for example,
       the following practices:

       (a)     recognising a regulatory deferral account debit balance when
               the entity has the right, as a result of the actual or expected
             actions of the rate regulator, to increase rates in future periods
             in order to recover its allowable costs (ie the costs for which
             the regulated rate(s) is intended to provide recovery);

     (b)     recognising, as a regulatory deferral account debit or credit
             balance, an amount that is equivalent to any loss or gain on
             the disposal or retirement of both items of property, plant and
             equipment and of intangible assets, which is expected to be
             recovered or reversed through future rates;

     (b)     recognising a regulatory deferral account credit balance when
             the entity is required, as a result of the actual or expected
             actions of the rate regulator, to decrease rates in future periods
             in order to reverse over-recoveries of allowable costs (ie
             amounts in excess of the recoverable amount specified by the
             rate regulator); and

     (c)     measuring regulatory deferral account balances on an
             undiscounted basis or on a discounted basis that uses an
             interest or discount rate specified by the rate regulator.

B5   The following are examples of the types of costs that rate regulators
     might allow in rate-setting decisions and that an entity might,
     therefore, recognise in regulatory deferral account balances:

     (i)     volume or purchase price variances;
     (ii)    costs of approved `green energy' initiatives (in excess of
             amounts that are capitalised as part of the cost of property,
             plant and equipment in accordance with Ind AS 16 Property,
             Plant and Equipment);
     (iii)   non-directly-attributable overhead costs that are treated as
             capital costs for rate regulation purposes (but are not
             permitted, in accordance with Ind AS 16, to be included in the
             cost of an item of property, plant and equipment);
     (iv)    project cancellation costs;
     (v)     storm damage costs; and
     (vi)    deemed interest (including amounts allowed for funds that are
             used during construction that provide the entity with a return
             on the owner's equity capital as well as borrowings).

B6   Regulatory deferral account balances usually represent timing
     differences between the recognition of items of income or expenses
     for regulatory purposes and the recognition of those items for
     financial reporting purposes. When an entity changes an accounting
     policy on the first-time adoption of Ind AS or on the initial
     application of a new or revised Standard, new or revised timing
     differences may arise that create new or revised regulatory deferral
     account balances. The prohibition in paragraph 13 that prevents an
      entity from changing its accounting policy in order to start to
      recognise regulatory deferral account balances does not prohibit the
      recognition of the new or revised regulatory deferral account balances
      that are created because of other changes in accounting policies
      required by Ind AS. This is because the recognition of regulatory
      deferral account balances for such timing differences would be
      consistent with the existing recognition policy applied in accordance
      with paragraph 11 and would not represent the introduction of a new
      accounting policy. Similarly, paragraph 13 does not prohibit the
      recognition of regulatory deferral account balances arising from
      timing differences that did not exist immediately prior to the date of
      transition to Ind AS but are consistent with the entity's accounting
      policies established in accordance with paragraph 11 (for example,
      storm damage costs).
Applicability of other Standards

B7    An entity that is within the scope of, and that elects to apply, the
      requirements of this Standard shall continue to apply its previous
      GAAP accounting policies for the recognition, measurement,
      impairment and derecognition of regulatory deferral account
      balances. However, paragraphs 16­17 state that, in some situations,
      other Standards might also need to be applied to regulatory deferral
      account balances in order to reflect them appropriately in the financial
      statements. The following paragraphs outline how some other
      Standards interact with the requirements of this Standard. In
      particular, the following paragraphs clarify specific exceptions to, and
      exemptions from, other Standards and additional presentation and
      disclosure requirements that are expected to be applicable.

        Application of Ind AS 10 Events after the Reporting Period
B8     An entity may need to use estimates and assumptions in the
       recognition and measurement of its regulatory deferral account
       balances. For events that occur between the end of the reporting
       period and the date when the financial statements are authorised for
       issue, the entity shall apply Ind AS 10 to identify whether those
       estimates and assumptions should be adjusted to reflect those events.


      Application of Ind AS 12 Income Taxes

B9     Ind AS 12 requires, with certain limited exceptions, an entity to
       recognise a deferred tax liability and (subject to certain conditions) a
       deferred tax asset for all temporary differences. A rate-regulated
       entity shall apply Ind AS 12 to all of its activities, including its rate-
       regulated activities, to identify the amount of income tax that is to be
       recognised.
B10    In some rate-regulatory schemes, the rate regulator permits or
      requires an entity to increase its future rates in order to recover some
      or all of the entity's income tax expense. In such circumstances, this
      might result in the entity recognising a regulatory deferral account
      balance in the balance sheet related to income tax, in accordance
      with its accounting policies established in accordance with
      paragraphs 11­12. The recognition of this regulatory deferral
      account balance that relates to income tax might itself create an
      additional temporary difference for which a further deferred tax
      amount would be recognised.

B11   Notwithstanding the presentation and disclosure requirements of Ind
      AS 12, when an entity recognises a deferred tax asset or a deferred
      tax liability as a result of recognising regulatory deferral account
      balances, the entity shall not include that deferred tax amount within
      the total deferred tax asset (liability) balances. Instead, the entity
      shall present the deferred tax asset (liability) that arises as a result of
      recognising regulatory deferral account balances either:
      (a)   with the line items that are presented for the regulatory deferral
            account debit balances and credit balances; or
      (b)   as a separate line item alongside the related regulatory deferral
            account debit balances and credit balances.
B12   Similarly, when an entity recognises the movement in a deferred tax
      asset (liability) that arises as a result of recognising regulatory
      deferral account balances, the entity shall not include the movement
      in that deferred tax amount within the tax expense (income) line item
      that is presented in the statement of profit and loss in accordance
      with Ind AS 12. Instead, the entity shall present the movement in the
      deferred tax asset (liability) that arises as a result of recognising
      regulatory deferral account balances either:
      (a)   with the line items that are presented in the statement of profit
            and loss for the movements in regulatory deferral account
            balances; or
      (b)   as a separate line item alongside the related line items that are
            presented in the statement of profit and loss for the
            movements in regulatory deferral account balances.
Application of Ind AS 33 Earnings per Share

B13    Paragraph 66 of Ind AS 33 requires some entities to present, in the
       statement of profit and loss , basic and diluted earnings per share
       both for profit or loss from continuing operations and profit or loss
       that is attributable to the ordinary equity holders of the parent entity.
       In addition, paragraph 68 of Ind AS 33 requires an entity that reports
       a discontinued operation to disclose the basic and diluted amounts
       per share for the discontinued operation, either in the statement of
       profit or loss and other comprehensive income or in the notes.
B14    For each earnings per share amount presented in accordance with Ind
       AS 33, an entity applying this Standard shall present additional basic
       and diluted earnings per share amounts that are calculated in the
       same way, except that those amounts shall exclude the net movement
       in the regulatory deferral account balances. Consistent with the
       requirement in paragraph 73 of Ind AS 33, an entity shall present the
       earnings per share required by paragraph 26 of this Standard with
       equal prominence to the earnings per share required by Ind AS 33
       for all periods presented.


Application of Ind AS 36 Impairment of Assets

B15    Paragraphs 11­12 require an entity to continue to apply its previous
       GAAP accounting policies for the identification, recognition,
       measurement and reversal of any impairment of its recognised
       regulatory deferral account balances. Consequently, Ind AS 36 does
       not apply to the separate regulatory deferral account balances
       recognised.

B16    However, Ind AS 36 might require an entity to perform an
       impairment test on a cash-generating unit (CGU) that includes
       regulatory deferral account balances. This test might be required
       because the CGU contains goodwill, or because one or more of the
       impairment indicators described in Ind AS 36 have been identified
       relating to the CGU. In such situations, paragraphs 74­79 of Ind AS
       36 contain requirements for identifying the recoverable amount and
       the carrying amount of a CGU. An entity shall apply those
       requirements to decide whether any of the regulatory deferral
       account balances recognised are included in the carrying amount of
       the CGU for the purpose of the impairment test. The remaining
      requirements of Ind AS 36 shall then be applied to any impairment
      loss that is recognised as a result of this test.

  Application of Ind AS 103 Business Combinations

B17   The core principle of Ind AS 103 is that an acquirer of a business
      recognises the assets acquired and the liabilities assumed at their
      acquisition-date fair values. Ind AS 103 provides limited exceptions
      to its recognition and measurement principles. Paragraph B18 of this
      Standard provides an additional exception.

B18   Paragraphs 11­12 require an entity to continue to apply its previous
      GAAP accounting policies for the recognition, measurement,
      impairment and derecognition of regulatory deferral account
      balances. Consequently, if an entity acquires a business, it shall
      apply, in its consolidated financial statements, its accounting policies
      established in accordance with paragraphs 11­12 for the recognition
      and measurement of the acquiree's regulatory deferral account
      balances at the date of acquisition. The acquiree's regulatory deferral
      account balances shall be recognised in the consolidated financial
      statements of the acquirer in accordance with the acquirer's policies,
      irrespective of whether the acquiree recognises those balances in its
      own financial statements.




Application of Ind AS 105 Non-current Assets Held for Sale and
Discontinued Operations

B19   Paragraphs 11­12 require an entity to continue to apply its previous
      accounting policies for the recognition, measurement, impairment and
      derecognition of regulatory deferral account balances. Consequently,
      the measurement requirements of Ind AS 105 shall not apply to the
      regulatory deferral account balances recognised.


B20   Paragraph 33 of Ind AS 105 requires a single amount to be presented
      for discontinued operations in the statement of profit and loss.
      Notwithstanding the requirements of that paragraph, when an entity
      that elects to apply this Standard presents a discontinued operation, it
      shall not include the movement in regulatory deferral account
      balances that arose from the rate-regulated activities of the
      discontinued operation within the line items that are required by
      paragraph 33 of Ind AS 105. Instead, the entity shall present the
      movement in regulatory deferral account balances that arose from the
      rate-regulated activities of the discontinued operation either:
      (a)    within the line item that is presented for movements in the
             regulatory deferral account balances related to profit or loss;
             or

      (b)    as a separate line item alongside the related line item that is
             presented for movements in the regulatory deferral account
             balances related to profit or loss

B21   Similarly, notwithstanding the requirements of paragraph 38 of Ind
      AS 105, when an entity presents a disposal group, the entity shall not
      include the total of the regulatory deferral account debit balances and
      credit balances that are part of the disposal group within the line items
      that are required by paragraph 38 of Ind AS 105. Instead, the entity
      shall present the total of the regulatory deferral account debit balances
      and credit balances that are part of the disposal group either:
      (a)    within the line items that are presented for the regulatory
             deferral account debit balances and credit balances; or
      (b)    as separate line items alongside the other regulatory deferral
             account debit balances and credit balances.
B22   If the entity chooses to include the regulatory deferral account
      balances and movements in those balances that are related to the
      disposal group or discontinued operation within the related regulated
      deferral account line items, it may be necessary to disclose them
      separately as part of the analysis of the regulatory deferral account
      line items described by paragraph 33 of this Standard.

Application of Ind AS 110 Consolidated Financial Statements
and Ind AS 28 Investments in Associates and Joint Ventures

B23   Paragraph 19 of Ind 110 requires that a "parent shall prepare
      consolidated financial statements using uniform accounting policies
      for like transactions and other events in similar circumstances".
      Paragraph 8 of this Standard requires that an entity that is within the
      scope of, and elects to apply, this Standard shall apply all of its
      requirements to all regulatory deferral account balances arising from
      all of the entity's rate-regulated activities. Consequently, if a parent
      recognises regulatory deferral account balances in its consolidated
      financial statements in accordance with this Standard, it shall apply
      the same accounting policies to the regulatory deferral account
      balances arising in all of its subsidiaries. This shall apply irrespective
      of whether the subsidiaries recognise those balances in their own
      financial statements.
B24   Similarly, paragraphs 35­36 of Ind AS 28 require that, in applying
      the equity method, an "entity's financial statements shall be prepared
      using uniform accounting policies for like transactions and events in
      similar circumstances". Consequently, adjustments shall be made to
      make the associate's or joint venture's accounting policies for the
      recognition, measurement, impairment and derecognition of
      regulatory deferral account balances conform to those of the investing
      entity in applying the equity method.


Application of Ind AS 112 Disclosure of Interests in Other Entities
B25   Paragraph 12(e) of Ind AS 112 requires an entity to disclose, for each
      of its subsidiaries that have non-controlling interests that are material
      to the reporting entity, the profit or loss that was allocated to non-
      controlling interests of the subsidiary during the reporting period. An
      entity that recognises regulatory deferral account balances in
      accordance with this Standard shall disclose the net movement in
      regulatory deferral account balances that is included within the
      amounts that are required to be disclosed by paragraph 12(e) of Ind
      AS 112.

B26   Paragraph 12(g) of Ind AS 112 requires an entity to disclose, for each
      of its subsidiaries that have non-controlling interests that are material
      to the reporting entity, summarised financial information about the
      subsidiary, as specified in paragraph B10 of Ind AS 112. Similarly,
      paragraph 21(b)(ii) of Ind AS 112 requires an entity to disclose, for
      each joint venture and associate that is material to the reporting entity,
      summarised financial information as specified in paragraphs B12­
      B13 of Ind AS 112. Paragraph B16 of Ind AS 112 specifies the
      summary financial information that an entity is required to disclose
      for all other associates and joint ventures that are not individually
      material in accordance with paragraph 21(c) of Ind AS 112.
B27   In addition to the information specified in paragraphs 12, 21, B10,
      B12­B13 and B16 of Ind AS 112, an entity that recognises regulatory
      deferral account balances in accordance with this Standard shall also
      disclose the total regulatory deferral account debit balance, the total
      regulatory deferral account credit balance and the net movements in
      those balances, split between amounts recognised in profit or loss and
      amounts recognised as other comprehensive income, for each entity
      for which those Ind AS 112 disclosures are required.
B28   Paragraph 19 of Ind AS 112 specifies the information that an entity is
      required to disclose when the entity recognises a gain or loss on
      losing control of a subsidiary, calculated in accordance with
      paragraph 25 of Ind AS 110. In addition to the information required
      by paragraph 19 of Ind AS 112, an entity that elects to apply this
      Standard shall disclose the portion of that gain or loss that is
      attributable to derecognising regulatory deferral account balances in
      the former subsidiary at the date when control is lost.
Appendix 1
Note: This Appendix is not a part of this Indian Accounting Standard. The purpose
of this Appendix is only to bring out the differences, if any, between Indian
Accounting Standard (Ind AS) 114 and the corresponding International Financial
Reporting Standard (IFRS) 14, Regulatory Deferral Accounts.
.


Comparison with IFRS 14, Regulatory Deferral Accounts

1.     Appendix A, Defined terms have been modified to clarify that Guidance
       Note of Accounting for Rate Regulated Activities would be considered as
       the previous GAAP for the purpose of Ind AS 114..
2.     Different terminology is used in this standard, e.g., the term `balance sheet'
       is used instead of `Statement of financial position', and `Statement of profit
       and loss' is used instead of `Statement of Profit and Loss and
       comprehensive income'.
 

 
 
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