An introductory ebook on IFRS covering the following topics: What if IFRS? Why do we need it? What's in it for us? Comparison between IFRS and GAAP How can you prepare IFRS compliant Balance Sheets

1. Prepare Balance
Sheets and Profit
& Loss A/C in IFRS
format

2. What is IFRS?
IFRS refers to International
Financial Reporting Standards
which are applied while
preparing the Balance Sheet
and other Profitability
Statements of a Company and
are developed by IASB. These
have already been applied in
more than 100 countries and
would soon be used across the
globe.
It defines how particular types of
transactions and other events should be
reported in financial statements globally
in a single format.
Reference: www.charteredclub.com

3. Why do you need it?
Different countries employ
different Accounting
Standards while preparing
balance sheets and computing
profits of a company.
Computation of profits in
different currencies always
yield different figures. IFRS
format offers globally uniform
standards of accounting so as
to arrive at uniform profits
across the globe. Adoption of
IFRS will reduce the costs
involved in comparing
investments thus increasing
the quality of information.
Your company will also be
benefitted as a clear
accounting structure would
mean more investors willing
to provide financing.
Reference: www.charteredclub.com

4. What’s in it for you?
By adopting IFRS, you would be
adopting a "global financial
reporting" basis that will enable
your company to be understood
in a global marketplace. This
helps in accessing world capital
markets and promoting new
business. It allows your company
to be perceived as an
international player.
A consistent financial reporting
basis would allow a multinational
company to apply common
accounting standards with its
subsidiaries worldwide, which
would improve internal
communications, quality of
reporting and group decisionmaking.
In increasingly competitive
markets, IFRS allows a company
to benchmark itself against its
peers throughout the world, and
allows investors and others to
compare the company's
performance with competitors
globally.

5. Comparison – IFRS Vs. GAAP
Reporting Category
IFRS
Indian GAAP
US GAAP
Accounting Basis
Subsequent to initial recognition most of the
liabilities like property, plant, equipment,
investment, derivatives etc. are based on fair value
and not on historical cost basis
Indian GAAP emphasis on historical
cost with an exception to fixed assets
which may be revalued.
Like IFRS most of assets / liabilities are valued at
fair value with certain exceptions like property,
p[ant, investments, provisions, intangible assets
which are not permitted to be measured at fair
value under US GAAP
Consolidated Financial
Statement
Entity with at least on e subsidiary must be present
consolidated financial statement unless specific
criteria are met
All entries with at least one subsidiary
must prepare consolidated financial
statement and there is no exemption at
all
Indian GAAP does not specify entities that are
required to present consolidated financial
statements. The standard required to be followed
if consolidated statements are presented
Balance Sheet
Balance sheet need not to be presented in prescribed Companies Act, I 956 gives the format
format, only certain items to be presented on the face in which the balance sheet need to be
of balance sheet.
updated. For Banking and Insurance
format are prescribed by relevant acts.
Unlike IFRS , US GAAP does not contain
requirement to present a classified balance sheet
.Here SEC regulations prescribe the format and
certain minimum line item.
Income Statement
IFRS Require certain item to be presented on the
face of the income statement, there is no
prescribed format.
Though no format is prescribed, but
Companies Act I 956 gives a list of
items which must be disclosed in P&L
Account.
SEC regulation prescribed the format and certain
minimum line item disclosure for SEC registrants.
For Non SEC registrants there is some guidance
on presentations.
Comparative
Information
Comparative information is required for the
preceding year only.
One Year comparative information is
required.
US GAAP does not require comparative
information. However, SEC registrants are
required to present balance sheets as of the end
of current and prior reporting periods.
Reference: www.ifrs.org

6. Comparison – IFRS Vs. GAAP
Reporting Category
IFRS
Indian GAAP
(contd.)
US GAAP
Minority Interest
Minority interests are classified as equity in
balance Minority Interest sheet but are presented
separately from shareholders equity.
Disclosed separately from liability and
equity of the parent shareholders.
It's presented as long term liability or
under equity in Balance Sheet.
Cash Flow Statement
An entity having a subsidiary must present CFS
unless specific criteria are met.
Separate Financial statements of parent that
represent CFS are not required
There is no mandatory requirement under
Companies Act. I 956 for an entity to
present CFS. Accounting Standard also Do
not mandate.
There is no exemption from preparing CFS
for parent entity. An entity must prepare
CFS when it had at least one subsidiary at
any time during current reporting period.
Revenue Recognition
I .Revenue recognition is based on one single
standard which contains general principles that are
applied to different types of transactions.
2. In a sale of good transaction, revenue is
recognized when the seller transfers the significant
risk and rewards of ownership to the buyer.
1. Revenue recognition is based on one
single standard which contains general
principles that are applied to different
types of transactions. 2. In a sale of good
transaction, Indian GAAP recognizes
revenue when the seller transfers the
property in goods to the buyer. There are
some subtle differences in application.
1. Extensive guidance on revenue
recognition specific to industry and
transactions are available.
2. Same as IFRS, however detailed criteria
underlying these principles are different in
U.S GAAP.
True and Fair Presentation
The overriding requirement of IFRS is for financial
statements to give a fair presentation.
The Companies Act 1985 requires Financial
Statement to give true and fair view of
state of affairs and its P& L Account. The
Act also requires compliance with
Accounting Standards
The objective of U.S GAAP is fair
presentation in accordance with U.S GAAP,
which is more restrictive than the
requirement under IFRS.
Foreign Currency
Measures assets, liabilities, expenses and incomes
at functional currency. Functional currency is
different from local currency and it is the currency
of the primary economic environment in which the
entity operates.
No concept of functional currency and
entities has to report their financial
statements in Indian rupees.
Same as IFRS
Reference: www.ifrs.org

7. Comparison – IFRS Vs. GAAP
Reporting Category
(contd.)
IFRS
Indian GAAP
US GAAP
Share Based Payments
Cash-settled share-based payments are within the
scope of the share based payment standard.
However there is no explicit guidance when the
liabilities is settled by a share holder or another
group entity.
Share-based payment to non-employees generally
are measured at the date(s) that the goods are
received or services are rendered, based on the
fair value of the 10 goods or services received.
Guidance given in the guidance
note is same as IFRS . However,
there is no specific guidance under
the SEBI guidelines. There is no
specific guidance under Indian
GAAP.
Liabilities classified (cash settled) share —based payments
are within the scope of the share-based payment
standard even if settled by another group entity or a
shareholder.
Share-based payments to non-employees generally are
measured at the measured at the earlier of the
performance and the performance commitment date,
based on the fair value of the instrument issued.
Deferred Tax
Calculation
A deferred tax liability/asset is not recognized if it
arises from the initial recognition of an asset or
liability in a transaction that is not a business
combination, and at the time of the transaction
affects neither accounting profit nor taxable profit.
Deferred tax is measured based on rates and tax
laws that are enacted or substantively enacted at
the reporting date.
It is accounted as a permanent
difference under Indian GAAP.
Deferred tax is measured based on
rates and tax
Deferred tax is measured based on
rates and tax laws
laws that are enacted or
substantively enacted at the
reporting date.
There is no exemption from recognizing a different tax
liability/asset for the initial recognition of an asset or
liability in a transaction that is not a business
combination, and at the time of the transaction affects
neither accounting profit nor taxable profit.
Deferred tax is measured based on rates and tax laws that
are enacted at the reporting date.
Asset Accounting
I . Assets are initially recognized at cost and then
measured at fair value. All items in the same class
are revalued at the same time and revaluations
are kept up to date.
2. If an item of a property has different
components with different depreciation rates,
each component are
depreciated separately.
1. Valuation principle is same as
IFRS but revaluation of entire class
of assets is not mandatory.
2. Component accounting is not
mandatory.
I. Initial valuation is at historical cost and revaluation of
fixed asset is not permitted.
2. Component accounting is not mandatory.
Reference: www.ifrs.org

8. How can you prepare Balance
sheets in IFRS format?
BUSY 14 provides you the flexibility
to generate balance sheet in any
format including Schedule VI and
IFRS. You can configure both Balance
Sheet and Profit & Loss Account.
There’re also pre-defined formats for
IFRS compliant financial statements.
You can easily restructure your data in
BUSY to meet the IFRS requirements.
You can change captions of your
balance sheets and even the sequence
in which they occur so that it fits your
requirement easily. Given below are
steps depicting how can you start using
this feature in BUSY 14:

9. Configuring IFRS in BUSY 14
You would need to go to the “Administration” option in BUSY 14 main window where you open a
company. Then by clicking on “Final Results Configuration” select the option of adding a format.
After this you should click on the option to select the format type. The next window will appear (Fig.
1), which will ask you to define the format for your balance sheet or your Profit & Loss Account. You
can select the standard format which BUSY provides or you can select the IFRS format.
Go to Administration
Final Results Configuration
Steps to configure IFRS in BUSY 14
Add a Format
Click on Configure to select the
format type
Here, select the format type in which you want to
configure your Balance sheet by clicking on the
option available
Fig 1

10. Once you select IFRS format, you will be
presented with this screenshot (Fig 2). Here you
have the option of changing any caption and
making it IFRS compliant. In the second column
you can choose the level of the entered caption.
It can be a sub caption like L2 or even a new
caption like “Liabilities and Equity”. In the next
column you can define the type of value you
want to assign to a particular caption and from
where the value should be sourced. The value
can be sourced from the following options:
Fig 2
Group (All A/c): All accounts under the selected
group will be picked.
Group (Direct): All accounts directly tagged under
the selected group will be picked.
Account: Any selected account will be picked.
Sub total down/up: It will do a total of the head
which are below or upwards in the hierarchy
defined in the “Levels” column.
Derived Value: Any combination of any head
within the same format.
Payable/Receivable: Value of Trade Receivable or
Payable.
Net Profit: Current year profit up to a specific
date.
Value: Reflection of selected value type
Percentage: % of value to be derived under the
“value” column.

11. You can configure the Profit & Loss account in a similar manner. All the balance sheets in BUSY 14 are
fully configurable. Apart from IFRS compliant, you can prepare balance sheets in a format of your
choice or standard being followed in your country.
For viewing the report
Go to Display
Final Results
Select Balance Sheet or Profit & Loss A/C
click on Vertical (configurable)
Select the format name
Fig 3
You can view the report by clicking on display then selecting the final result. Select the report that
you want to see. It can either be a balance sheet or a profit & loss A/C. Select the
“Vertical(configurable)” option and then choose whether you want the balance sheet date wise or
month wise.

12. FAQs
Is reconfiguration possible once the IFRS compliant balance sheet is made? Is it a static report or a dynamic
report?
Yes, you can reconfigure the report as many times as you want and in different formats. BUSY 14 allows you to
configure and reconfigure the report in the format of your choice.
Which version of BUSY is this feature available?
This feature is available in Standard and Enterprise editions of BUSY 14. To know more about different features in
BUSY 14, you can log on to www.busy14.busy.in for more details.
Can we make multiple formats of final accounts?
Yes, you can design any number of formats to meet your different needs.
After making the report, can we print it directly from BUSY?
No, you will have to export the report in excel or pdf to get a printout.
If there exists multiple companies in BUSY, then can you transfer one balance sheet or Profit & Loss to another
company?
Yes, you can transfer it to another company created in BUSY.
Is the configurable report available in both horizontal and vertical format?
No, the report is available only in vertical format.

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