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Applicability of IND AS 114

Subhrajit Bhattacharjee (Service) (61 Points)

28 December 2022

A rate regulated entity adopted IND AS in FY 2020-21. There was no balance of Regulatory Assets / Liabilities in Indian GAAP and as a result IND AS 114 was not applied during First Time Adoption of IND AS. Now, the entity wants to recognise Regulatory Assets as per IND AS 114. Can it be recognised since IND AS 114 in Paragraph 6 states that " 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 1 , it recognised regulatory deferral account balances by electing to apply the requirements of this Standard."

If it cannot be recognised, what solution is available to the entity as regards recognition of Regulatory Assets?

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6 Replies

Yasaswi Gomes new (Finance ) (4474 Points)
Replied 29 December 2022

It must be elected.

When needed make retrospective changes to first time adoption dates

You can follow indas even before adopting indas for internal management only.

Once adopted for the first time, the precious AS accounting policies can be carried forward to new indas like depreciation, revaluation etc.

If the measurement and presentation doesn't meet the new indas, then you have to measure it in accordance with indas

For this query, regulatory deferral accounts must be presented seperately in the statement of financial position.

If you haven't presented it seperately, do it now using changes in accounting policy standard.

Anything else I missed, give me a buzz

Yasaswi Gomes new (Finance ) (4474 Points)
Replied 29 December 2022

It must be elected.

When needed make retrospective changes to first time adoption dates

You can follow indas even before adopting indas for internal management only.

Once adopted for the first time, the precious AS accounting policies can be carried forward to new indas like depreciation, revaluation etc.

If the measurement and presentation doesn't meet the new indas, then you have to measure it in accordance with indas

For this query, regulatory deferral accounts must be presented seperately in the statement of financial position.

If you haven't presented it seperately, do it now using changes in accounting policy standard.

Anything else I missed, give me a buzz

1 Like

Subhrajit Bhattacharjee (Service) (61 Points)
Replied 02 January 2023

Can you clarify it a bit more? I have to restate the First Time Adoption financials?

Yasaswi Gomes new (Finance ) (4474 Points)
Replied 02 January 2023

Since you already have first rime adoptiin statements, rectify error through indas8. Everyhting is business as usual.

If your following indas and set accounting policies for deferral accounts as per indas method, it is fine. But you have an exemption that you can still use your previous gaap.

You can change your deferal account setup into Indas through the use of indas 8

Subhrajit Bhattacharjee (Service) (61 Points)
Replied 03 January 2023

Thank you for your assistance.

1 Like

Yasaswi Gomes new (Finance ) (4474 Points)
Replied 03 January 2023

Not to mention. You did a great job u derstanding the issue. There is a website called MCA or ICAI which publishes all of theze principles for free. Its written very easy to understanding. You can download every standard for free.