Know Your Rights!!

The first time Ind AS adopters are having a nerve racking time in getting the pieces together for risk disclosures. The quintessential Ind AS 107 mandates disclosures which will aid the financial statement users to evaluate the nature and extent of risks arising from financial instruments and how the company manages those risks. Like the other financial instruments standards, scope of Ind AS 107 specifies that the standard applies to ALL the entities. So the myth that risk is for the financial services entities only has to disappear sooner. This disclosure standard merely sets out the amount of information reported to the management for the purpose of running the business which must be made available to the users. Risk Disclosures of two types are required: § Qualitative disclosures: Company has to provide a brief explanation of the their exposure to risk, how they arise and how these risks are measured and managed § Quantitative disclosures:    o Credit risk/ Co...

Have you come across a situation when you find that the block of assets are fully depreciated in the books but the company is still using them in its operation to generate revenue?  In this case, the original estimate of assets useful life proved to be incorrect. These assets are used beyond their useful life, they are fully depreciated and their carrying amount in the books is zero. What depreciation expense can you recognize in the profit or loss? None, of course – because the carrying amount of the assets cannot be sub zero. As a result, the matching principle does not work here. The expenses simply do not match the benefits gained from these assets. The standard IAS 16 Property, Plant and Equipment defines the useful life as either: · The period over which an asset is expected to be available for use by an entity, or · The number of production or similar units expected to be obtained from the asset by an entity. Now this is e...