CORPORATE FINANCIAL REPORTING FINAL

SYLLABUS - 2016

FINAL : PAPER - 17

CORPORATE FINANCIAL REPORTING

STUDY NOTES

FINAL

(Incorporating IND-AS)

The Institute of Cost Accountants of India CMA Bhawan, 12, Sudder Street, Kolkata - 700 016

First Edition : August 2016 Reprint : January 2018 Revised : November 2018 Revised Edition : January 2019 Edition : August 2019

Published by : Directorate of Studies The Institute of Cost Accountants of India (ICAI) CMA Bhawan, 12, Sudder Street, Kolkata - 700 016 icmai.in

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Copyright of these Study Notes is reserved by the Institute of Cost Accountants of India and prior permission from the Institute is necessary

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Syllabus- 2016

PAPER 17: CORPORATE FINANCIAL REPORTING (CFR) Syllabus Structure The syllabus comprises the following topics and study weightage:

A GAAP and Accounting Standards

20%

B Accounting of Business Combinations & Restructuring

20%

C Consolidated Financial Statements

20%

D Developments in Financial Reporting

25%

E Government Accounting in India

15%

D 25%

C 20%

E 15%

A 20%

B 20%

ASSESSMENT STRATEGY There will be written examination paper of three hours. OBJECTIVES To understand the recognition, measurement, disclosure and analysis of information in an entity's financial statements to cater the needs of the stakeholders. Learning Aims The syllabus aims to test the student's ability to: Demonstrate the financial statements for understanding of stakeholders ; Analyze the impact of GAAP and its application for reporting and compliance ; Evaluate financial statements for strategic decision-making ; Interpret and apply the ongoing developments for financial reporting. Skill set required Level C: Requiring skill levels of knowledge, comprehension, application, analysis, synthesis and evaluation.

Section A : GAAP and Accounting Standards

20%

1.Accounting Standards

Section B : Accounting of Business Combinations & Restructuring

20%

2. Accounting of Business Combinations & Restructuring

Section C : Consolidated Financial Statements (Ind AS)

20%

3. Group Financial Statements

Section D : Developments in Financial Reporting and other item of Reporting

25%

4. Recent Trends in Financial Reporting

5. Valuation, Accounting and Reporting of Financial Instruments and others (Ind AS)

6. Share Based Payments (Ind AS)

7. Reporting through XBRL (Extended Business Reporting Language)

Section E : Government Accounting in India

15%

8. Government Accounting Procedure and Standards

SECTION A: GAAP AND ACCOUNTING STANDARDS [20 MARKS ] 1. Accounting Standards

(a)Generally Accepted Accounting Principles in India (b) Overview of Accounting Standards (AS) (c) International Financial Reporting Standards (d) Over View of Ind AS

SECTION B: ACCOUNTING OF BUSINESS COMBINATIONS & RESTRUCTURING [20 MARKS ] 2. Accounting of Business Combinations & Restructuring (as per Ind AS)

(a)Relevant Terms, Types of merger, methods of accounting, treatment of Goodwill arising on merger, Purchase consideration and settlement

(b) Accounting in books of vendor/ transferor and transferee (c) Accounting for investment in subsidiary (d)Accounting for Mergers / Acquisitions (including chain holdings, cross holdings, multiple holdings) (e) Corporate Financial restructuring, Reconstruction Schemes, De-merger, Reverse merger (g) Notes to Accounts & related disclosures under amalgamation

SECTION C: CONSOLIDATED FINANCIAL STATEMENTS [20 MARKS ] 3. Group Financial Statements

(a)Concept of a group, Purposes of consolidated financial statements, Consolidation procedures, Noncontrolling interest, Goodwill, Treatment Pre-acquisition profit and Postacquisition profit and concept of Fair value at the time of acquisition.

(b) Consolidation with two or more subsidiaries, consolidation with foreign subsidiary. (c)Consolidated Income Statement, balance Sheet and Cash Flow Statements for Group of companies. (d) Impact on group financial statements at the point of acquisition (e)Treatment of investment in associates in consolidated financial statements. Compare and contrast

acquisition and equity methods of accounting (f) Treatment of investment in joint ventures in consolidated financial statements

SECTION D: DEVELOPMENTS IN FINANCIAL REPORTING AND OTHER ITEM OF REPORTING [25 MARKS ] 4. Recent trends in Financial Reporting

(a)Sustainability Reporting (b) Tripple Bottom Line Reporting (c) Corporate Social Responsibility Reporting (CSR Reporting) (d) Fair Value Measurement

(e) Integrated Reporting (IR) (f) Business Responsibility Reporting

5.Valuation, Accounting and Reporting of Financial Instruments and others (a)Recognition & Valuation Financial Instruments (Ind AS) (b) GST Accounting (c) NBFC ? Provisioning Norms and Accounting (d) Valuation of Shares (e) Valuation of Goodwill

6.S hare Based payments transactions (Ind AS)

7.Reporting Through XBRL (Extended Business Reporting Languate)

SECTION E: GOVERNMENT ACCOUNTING IN INDIA [15 MARKS] 8. Government Accounting

(a) General Principles and comparison with commercial accounting (b) Role of Comptroller and Auditor General of India (c) Role of Public Accounts Committee, Review of Accounts (d)Government Accounting Standards issued by Government Accounting Standards Advisory Board

(GASAB) (e) Government Accounting and Reporting

Contents

SECTION A ? GAAP AND ACCOUNTING STANDARDS

Study Note 1 : Accounting Standards

1.1

2

1.2

5

1.3

89

1.4

92

1.5

93

SECTION B ? ACCOUNTING OF BUSINESS COMBINATIONS & RESTRUCTURING

Study Note 2 : Accounting of Business Combinations and Restructuring

2.1

Introduction

163

2.2

Types of Meger

163

2.3

Concept of Business Combination

164

2.4

Ind AS: 103 Business Combination

165

2.5

Scheme of Reconstruction

192

2.6

Business Combination under Common Control

200

2.7

Demerger ? Concpet

203

2.8

Reverse Acquisition

209

SECTION C ? CONSOLIDATED FINANCIAL STATEMENTS

Study Note 3 : Consolidated Financial Statements

3.1

Holding Company

213

3.2

Transactions and Accounting

214

3.3

Ind AS 110: Consolidated Financial Statement ? Summarised

221

3.4

Accounting Requirements

223

3.5

Equity Method

236

3.6

Preparation of Group Cash Flow Statement

238

3.7

Ind AS 27: Separate Financial Statements

251

3.8

Ind AS 28: Investments in Associates and Joint Ventures

252

3.9

Ind AS 105: Non-current Assets held for sale and Discontinued Operations

252

3.10 Ind AS 111: Joint Arrangements

254

3.11 Ind AS 112: Disclosure of Interests in Other Entities

256

SECTION D ? DEVELOPMENTS IN FINANCIAL REPORTING AND OTHER ITEM OF REPORTING

Study Note 4 : Recent Trends in Financial Reporting

4.1

Sustainability Reporting

259

4.2

Concept of Triple Bottom Line (TBL)

261

4.3

Concept of Triple Bottom Line Reporting

261

4.4

Benefits of Triple Bottom Line Reporting

262

4.5

Implementation of Triple Bottom Line Reporting

263

4.6

Forms of TBL Reporting

263

4.7

Users of TBL Reporting

263

4.8

Financial Reporting vis-?-vis Triple Bottom Line Reporting

264

4.9

Challenges of Triple Bottom Line Reporting Framework

264

4.10 Corporate Social Responsibility Reporting (CSR Reporting)

265

4.11 Ind AS 113: Fair Value Measurement

266

4.12 Integrated Reporting (IR)

269

4.13 Business Responsibility Reporting

271

Study Note 5 : Valuation, Accounting and Reporting of Financial Instruments and Others.1

5.1

Recognition & Valuation of Financial Instruments (Ind AS-32, Ind AS-107 & Ind AS-109) 275

5.2

Goods and Services Tax (GST) Accounting

280

5.3

NBFC - Provisioning Norms and Accounting

286

5.4

Valuation of Shares

302

5.5

Valuation of Goodwill

324

Study Note 6 : Share Based Payments

6.1

Introduction

331

6.2

Share Based Payment

331

6.3

Employee Share Based Payment Plans

332

6.4

Share Based Payment Transaction

333

6.5

Recognition of Share Based Payment in Financial Statement

333

6.6

Measurement of Share Based Payment

334

6.7

Disclosure

334

6.8

Accounting

335

Study Note 7 : Reporting through XBRL (Extended Business Reporting Language)

7. 1

Concept of XBRL

345

7.2

Meaning of XBRL

346

7.3

Definition of XBRL

346

7.4

Important XBRL Related Concepts

346

7.5

Myths Regarding XBRL

347

7.6.

Features of XBRL Reporting

348

7.7

Benefits of XBRL Reporting

348

7.8

Users of XBRL

349

7.9

XBRL International

350

7.10 XBRL in India

350

SECTION E ? GOVERNMENT ACCOUNTING IN INDIA

Study Note 8 : Government Accounting

8.1

Government Accounting ? an Overview

353

8.2

General Principles of Government Accounting

355

8.3

Comparison between Government Accounting and Commercial Accounting

355

8.4

Government Accounting & Reporting

356

8.5

Comptroller and Auditor General of India (C&AG)

358

8.6

Public Accounts Committee (P.A.C)

361

8.7

Review of Accounts

362

8.8

Government Accounting Standards Advisory Board (GASAB)

363

8.9

Government Accounting Standards Issured by Government Accounting

Standards Advisory Board (GASAB)

364

8.10 Indian Government Accounting Standards (IGAS)

364

8.11 Indian Government Financial Reporting Standards (IGFRS)

379

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