Ind AS is converged with IFRS but not identical. Explain how they relate and give examples of differences.

What the interviewer wants to hear

• Ind AS are based on IFRS and notified under the Companies Act
• Applicability depends on listing status and net worth thresholds
• Carve-outs and carve-ins exist
• Example: bargain purchase gain to capital reserve under Ind AS 103
• Example: discount rate for employee benefits based on government bonds

Model answer

Ind AS are Indian accounting standards based on IFRS, notified by the government under the Companies Act. They apply in phases to listed companies and to unlisted companies above certain net worth levels, while smaller companies use the older Indian GAAP standards. India chose convergence instead of full adoption, so there are carve-outs, where Ind AS differs from IFRS, and some carve-ins. One well-known example is a bargain purchase in a business combination: IFRS 3 recognises the gain in profit or loss, while Ind AS 103 generally recognises it in other comprehensive income and accumulates it in capital reserve, or directly in capital reserve in some cases. Another is Ind AS 19, which uses market yields on government bonds to discount employee benefit obligations instead of high-quality corporate bonds. Ind AS also has some extra options, such as for loan covenant breaches. For a group reporting under IFRS in the UAE, I would map these differences when consolidating an Indian subsidiary.

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