Ind AS 101, First-time Adoption of Indian Accounting Standards, provides guidance on how entities should prepare and present their financial statements when transitioning from previous accounting practices to Indian Accounting Standards (Ind AS).
Under Ind AS 101, entities are required to apply Ind AS retrospectively, meaning that financial statements must be restated as if Ind AS had always been applied. However, in some cases, retrospective application is impractical or involves excessive cost, and certain exemptions and exceptions are provided.
Entities must assess and recognize the cumulative effect of applying Ind AS as an adjustment to the opening balance of retained earnings or another appropriate category of equity as of the transition date. This ensures that the financial statements present a true and fair view of the entity’s financial position and performance in accordance with Ind AS.
Ind AS 101 also provides guidance on the selection of accounting policies when an entity has a choice between different methods allowed by Ind AS. Entities should choose policies that are consistent with the concepts and principles of Ind AS and that result in reliable and relevant information for users of financial statements.
Disclosure requirements in Ind AS 101 include providing information about the nature and effect of changes in accounting policies, the reasons for significant exceptions to retrospective application, and the impact of adopting Ind AS on the entity’s financial position and performance.
