CA Final PAPER 1: FINANCIAL REPORTING Syllabus

PAPER 1: FINANCIAL REPORTING syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for PAPER 1: FINANCIAL REPORTING in CA Final, not a summary of it.

1. 1

   Introduction to General Purpose Financial Statements as per Indian Accounting Standard (Ind AS)

   2 topics

   • Statutory provisions: Applicability criteria
   • Division II of Schedule III to the Companies Act, 2013 and Guidance Note thereupon
2. 2

   Conceptual Framework for Financial Reporting under Indian Accounting Standards (Ind AS)

   overview

   Examined as a single unit within PAPER 1: FINANCIAL REPORTING — no further topic split in the official outline.

3. 3

   Application of Ind AS with reference to General Purpose Financial Statements

   8 topics

   • Ind AS on Presentation of Items in the Financial Statements
     • Ind AS 1 'Presentation of Financial Statements'
     • Ind AS 34 'Interim Financial Reporting'
     • Ind AS 7 'Statement of Cash Flows'
   • Ind AS on Measurement based on Accounting Policies
     • Ind AS 8 'Accounting Policies, Changes in Accounting Estimates and Errors'
     • Ind AS 10 'Events after the Reporting Period'
     • Ind AS 113 'Fair Value Measurement'
   • Ind AS on Income Statement
     • Ind AS 115 'Revenue from Contracts with the Customers'
   • Ind AS on Assets and Liabilities of the Financial Statements
     • Ind AS 2 'Inventories'
     • Ind AS 16 'Property, Plant and Equipment'
     • Ind AS 116 'Leases'
     • Ind AS 23 'Borrowing Costs'
     • Ind AS 36 'Impairment of Assets'
     • Ind AS 38 'Intangible Assets'
     • Ind AS 40 'Investment Property'
     • Ind AS 105 'Non-current Assets Held for Sale and Discontinued Operations'
     • Ind AS 19 'Employee Benefits'
     • Ind AS 37 'Provisions, Contingent Liabilities and Contingent Assets'
   • Ind AS on Items impacting the Financial Statements
     • Ind AS 12 'Income Taxes'
     • Ind AS 21 'The Effects of Changes in Foreign Exchange Rates'
   • Ind AS on Disclosures in the Financial Statements
     • Ind AS 24 'Related Party Disclosures'
     • Ind AS 33 'Earnings per Share'
     • Ind AS 108 'Operating Segments'
   • Other Ind AS
     • Ind AS 20 'Accounting for Government Grants and Disclosure of Government Assistance'
     • Ind AS 102 'Share Based Payment'
     • Ind AS 41 'Agriculture'
   • Ind AS on Financial Instruments
     • Financial Instruments: Scope and Definitions
     • Classification and Measurement of Financial Assets and Financial Liabilities
     • Financial Instruments: Equity and Financial Liabilities
     • Derivatives and Embedded Derivatives
     • Recognition and Derecognition of Financial Instruments
     • Hedge Accounting
     • Disclosures
4. 4

   Ind AS on Group Accounting

   2 topics

   • Business Combinations (Ind AS 103)
   • Consolidated and Separate Financial Statements
     • Ind AS 110
     • Ind AS 111
     • Ind AS 27
     • Ind AS 28
     • Ind AS 112
5. 5

   First time adoption of Indian Accounting Standards (Ind AS 101)

   overview

   Examined as a single unit within PAPER 1: FINANCIAL REPORTING — no further topic split in the official outline.

6. 6

   Analysis of financial statements (as per Ind AS)

   overview

   Examined as a single unit within PAPER 1: FINANCIAL REPORTING — no further topic split in the official outline.

7. 7

   Ethics with Accounting Concepts

   1 topic

   • Identify and explain the key ethical issues
8. 8

   Technology and Accounting

   1 topic

   • Evolution of Accounting in the technological environment

PAPER 1: FINANCIAL REPORTING flashcards for CA Final

24 of 53 cards from the PAPER 1: FINANCIAL REPORTING deck — real questions with worked answers.

1. Under which criteria must an Indian company mandatorily apply Ind AS in Phase I (from FY 2016-17)?

   Companies (listed or unlisted) with net worth of Rs. 500 crore or more, plus their holding, subsidiary, joint venture and associate companies.

2. What is the Phase II Ind AS applicability threshold (from FY 2017-18)?

   Listed companies (or those in process of listing) and unlisted companies with net worth of Rs. 250 crore or more but less than Rs. 500 crore, along with their holding, subsidiary, JV and associate companies.

3. For Ind AS applicability, is net worth computed on a standalone or consolidated basis, and as on which date?

   Net worth is computed on a standalone basis as per the audited balance sheet as on 31 March 2014 (or the first audited financials thereafter), and once Ind AS applies it continues to apply even if net worth later falls.

4. Which companies are specifically exempt from voluntary/mandatory roadmap and continue with AS (Companies Accounting Standards)?

   Companies whose securities are listed or in process of listing on SME exchange are not required to apply Ind AS; insurance, banking and NBFC companies follow their own separate roadmaps.

5. Which Schedule III Division governs financial statements of companies required to comply with Ind AS?

   Division II of Schedule III to the Companies Act, 2013 prescribes the format of financial statements for companies whose financial statements are drawn up in compliance with Ind AS.

6. Under Division II of Schedule III, how must assets and liabilities be presented in the Balance Sheet?

   They must be classified as current and non-current; a current/non-current bifurcation is mandatory, presented in that order with non-current first within each category.

7. Per Division II of Schedule III, where are 'Other Comprehensive Income' items presented?

   OCI is presented within the Statement of Profit and Loss, separated into items that will not be reclassified to profit or loss and items that will be reclassified to profit or loss.

8. What is the rounding-off requirement under Division II of Schedule III when turnover is Rs. 100 crore or more?

   Figures may be rounded off to the nearest lakhs, millions or crores, or decimals thereof; below Rs. 100 crore turnover, rounding to nearest hundreds, thousands, lakhs or millions is permitted. Once chosen, it must be used uniformly.

9. Under Ind AS 1, what are the four current asset criteria for classifying an asset as current?

   An asset is current if: (a) expected to be realised/sold/consumed in the normal operating cycle; (b) held primarily for trading; (c) expected to be realised within 12 months after the reporting period; or (d) it is cash or a cash equivalent (unless restricted beyond 12 months).

10. Per Ind AS 1, what is the operating cycle and its default when not clearly identifiable?

    The operating cycle is the time between acquisition of assets for processing and their realisation in cash/cash equivalents; when not clearly identifiable, it is assumed to be 12 months.

11. Under Ind AS 1, what is the minimum frequency of presenting a complete set of financial statements, and when is a third balance sheet required?

    At least annually. A third balance sheet (as at the beginning of the preceding period) is required when an entity applies an accounting policy retrospectively, makes a retrospective restatement, or reclassifies items and the effect is material.

12. Define materiality as per Ind AS 1.

    Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that primary users of general purpose financial statements make on the basis of those statements.

13. Under Ind AS 8, what is the hierarchy for selecting an accounting policy when no Ind AS specifically applies?

    Management uses judgement, referring first to Ind AS dealing with similar issues, then to the Conceptual Framework definitions/recognition criteria; it may also consider recent pronouncements of other standard-setters and accepted industry practices, provided they don't conflict with the above.

14. How are changes in accounting estimates accounted for under Ind AS 8, versus changes in accounting policy?

    Changes in estimates are applied prospectively (in the period of change and future periods). Changes in accounting policy are applied retrospectively, adjusting opening retained earnings of the earliest period presented, unless impracticable.

15. Under Ind AS 8, how are prior period errors corrected?

    Material prior period errors are corrected retrospectively by restating comparative amounts, or if the error occurred before the earliest period presented, by restating opening balances of assets, liabilities and equity of the earliest period.

16. Under Ind AS 1, name the components of a complete set of financial statements.

    Balance sheet, Statement of profit and loss (including OCI), Statement of changes in equity, Statement of cash flows, Notes (significant accounting policies and other explanatory information), and comparative information; plus opening balance sheet when retrospective application/restatement occurs.

17. Per Ind AS 7, what are the three classifications of cash flows?

    Operating activities, Investing activities, and Financing activities.

18. Under Ind AS 7, how are interest and dividends classified for a non-financial entity (typical Indian practice)?

    Interest paid and dividend paid are classified as financing activities; interest received and dividend received are classified as investing activities (a financial institution may classify them as operating).

19. Define revenue recognition under the 5-step model of Ind AS 115.

    (1) Identify the contract; (2) Identify performance obligations; (3) Determine the transaction price; (4) Allocate the transaction price to performance obligations; (5) Recognise revenue when (or as) each performance obligation is satisfied.

20. Under Ind AS 115, when is revenue recognised over time?

    When: (a) the customer simultaneously receives and consumes benefits as the entity performs; (b) performance creates/enhances an asset the customer controls; or (c) performance creates an asset with no alternative use and the entity has an enforceable right to payment for performance completed to date.

21. Under Ind AS 2, how is inventory measured and what cost formulas are permitted?

    Inventory is measured at the lower of cost and net realisable value. Permitted cost formulas are FIFO or weighted average cost; LIFO is prohibited. Specific identification is used for items not ordinarily interchangeable.

22. Define Net Realisable Value (NRV) under Ind AS 2.

    NRV is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

23. Under Ind AS 16, what is the measurement at recognition for an item of Property, Plant and Equipment?

    It is measured at cost, comprising purchase price (net of trade discounts) plus import duties and non-refundable taxes, directly attributable costs of bringing the asset to working condition, and the initial estimate of dismantling/restoration costs.

24. Under Ind AS 16, what are the two measurement models permitted after recognition?

    Cost model (cost less accumulated depreciation and impairment losses) or Revaluation model (fair value at revaluation date less subsequent accumulated depreciation and impairment).

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