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Issue 5: Intangible assets:
Accounting Standards Ind AS Impact on company’s financial
(Erstwhile IGAAP) statements

The useful life of an The useful life of an intangible asset Consequently, there would be no
intangible asset cannot be like brand/trademark can be impact as on the date of transition
indefinite under IGAAP indefinite. Not required to be since company intends to use the
principles. The Company amortised to be amortised and only carrying amount instead of book
amortised brand/ trademark tested for impairment. value at the date of transition.
on a straight-line basis Company can avail the exemption
over maximum of 10 years given in Ind AS 101 as on the date of
as per AS 26. transition to use the carrying value
as per previous GAAP.

Issue 6: Deferred tax
Accounting Standards Ind AS Impact on company’s financial
(Erstwhile IGAAP) statements
As per AS, deferred taxes are As per Ind AS, deferred On date of transition to Ind AS,
accounted as per income taxes are accounted as per deferred tax liability would be
statement approach balance sheet approach. increased by Rs. 25,000.

Journal Entry on the date of transition
Particulars Debt (Rs.) Credit (Rs.)
Retained earnings Dr. 25,000
To Deferred tax liability 25,000

Q7 (NOV 21)

Is offsetting permitted under the following circumstances?
(a) Expenses incurred by a holding company on behalf of subsidiary, which is reimbursed by the subsidiary -
whether in the separate books of the holding company, the expenditure and related reimbursement of

expenses can be offset?
(b) Whether profit on sale of an asset against loss on sale of another asset can be offset?
When services are rendered in a transaction with an entity and services are received from the same entity in
two different arrangements, can the receivable and payable be offset?

SOLUTION

a) As per paragraph 33 of Ind AS 1, offsetting is permitted only when the offsetting reflects the substance
of the transaction.
In this case, the agreement/arrangement, if any, between the holding and subsidiary company needs to
be considered. If the arrangement is to reimburse the cost incurred by the holding company on behalf of
the subsidiary company, the same may be presented net. It should be ensured that the substance of the

arrangement is that the payments are actually in the nature of reimbursement.
b) Paragraph 35 of Ind AS 1 requires an entity to present on a net basis gains and losses arising from a
group of similar transactions. Accordingly, gains or losses arising on disposal of various items of property,
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