1. What IND AS 1 Covers — The Complete Set of Financial Statements
IND AS 1 prescribes the basis for presenting general purpose financial statements, to ensure comparability with the entity's own financial statements of previous periods and with the financial statements of other entities. A complete set of financial statements comprises:
- A balance sheet as at the end of the period
- A statement of profit and loss (including other comprehensive income) for the period
- A statement of changes in equity for the period
- A statement of cash flows for the period
- Notes, comprising significant accounting policies and other explanatory information
- Comparative information for the preceding period
- A third balance sheet as at the beginning of the earliest comparative period, only when an entity applies an accounting policy retrospectively, restates items, or reclassifies items in its financial statements
2. General Features — Fair Presentation, Going Concern, Materiality
| Principle | What it requires |
|---|---|
| Fair presentation and compliance | Faithful representation of the effects of transactions, applying IND AS with additional disclosures where necessary; a fair presentation override exists only in extremely rare circumstances |
| Going concern | Financial statements prepared on a going concern basis unless management intends to liquidate or cease trading, or has no realistic alternative |
| Accrual basis | All financial statements prepared on the accrual basis, except the statement of cash flows |
| Materiality and aggregation | Material classes of similar items presented separately; immaterial items aggregated with items of a similar nature |
| Offsetting | Assets/liabilities and income/expenses are not offset, unless required or permitted by another IND AS |
| Frequency of reporting | A complete set of financial statements at least annually |
| Comparative information | Comparative information disclosed for all amounts reported, unless another standard permits/requires otherwise |
| Consistency of presentation | Presentation and classification retained from one period to the next unless a change is justified |
3. Current vs Non-Current Classification
An entity presents current and non-current assets and liabilities as separate classifications on the face of the balance sheet (unless a presentation based on liquidity provides more relevant and reliable information, common for banks and similar financial institutions).
| Classification | Test |
|---|---|
| Current asset | Expected to be realised/sold/consumed in the normal operating cycle; held primarily for trading; expected to be realised within 12 months; or is cash/cash equivalent (unless restricted from exchange or use for at least 12 months) |
| Current liability | Expected to be settled in the normal operating cycle; held primarily for trading; due within 12 months; or the entity does not have an unconditional right at the reporting date to defer settlement for at least 12 months |
The liability classification test is based on rights that exist at the reporting date — not on management's expectations, or on events after the reporting date. A liability due within 12 months is still classified as current even if the entity expects to (or actually does) refinance or roll it over on a long-term basis after the reporting date, unless the entity has an unconditional right, in place at the reporting date, to defer settlement for at least 12 months.
4. Structure of the Balance Sheet
IND AS 1 doesn't prescribe a rigid balance sheet format or the order of line items, but it does require certain minimum line items to be presented on the face where relevant — PP&E, investment property, intangible assets, financial assets, investments accounted for using the equity method, inventories, trade and other receivables, cash and cash equivalents, trade and other payables, provisions, financial liabilities, current tax liabilities and assets, deferred tax liabilities and assets, and issued capital and reserves. In India, the detailed format itself is largely governed by Schedule III to the Companies Act, 2013, which operates alongside IND AS 1's principles.
5. The Statement of Profit and Loss and Other Comprehensive Income
An entity presents profit or loss and other comprehensive income either in a single statement, or in two statements — a separate statement of profit and loss followed immediately by a statement beginning with profit or loss and displaying OCI. Items of OCI are grouped based on whether they will subsequently be reclassified to profit or loss:
| Never reclassified to P&L | May be reclassified to P&L |
|---|---|
| Remeasurements of the net defined benefit liability/asset (IND AS 19) | Gains/losses on FVOCI debt instruments (IND AS 109) |
| Fair value gains/losses on FVOCI equity instruments (IND AS 109) | Effective portion of cash flow hedge gains/losses (IND AS 109) |
| Revaluation surplus (IND AS 16 / IND AS 38) | Foreign currency translation differences on a foreign operation (IND AS 21) |
Critically, IND AS 1 does not permit any items to be presented as "extraordinary items" — unusual or infrequent items are shown within the normal classified structure, with separate disclosure of nature and amount where material.
6. Statement of Changes in Equity
The statement of changes in equity is a mandatory primary statement, showing total comprehensive income for the period (split between amounts attributable to owners of the parent and to non-controlling interests), the effects of retrospective application or restatement for each component of equity, and a reconciliation between the opening and closing carrying amount for each component of equity, separately disclosing changes from profit or loss, each item of OCI, and transactions with owners in their capacity as owners (contributions, distributions, changes in ownership interests not resulting in loss of control).
7. Notes to the Financial Statements
Notes present information about the basis of preparation and specific accounting policies used, disclose information required by IND AS not presented elsewhere, and provide additional information relevant to understanding the financial statements. IND AS 1 specifically requires disclosure of the judgements management has made in applying accounting policies that have the most significant effect on the amounts recognised, and information about key sources of estimation uncertainty that have a significant risk of causing a material adjustment within the next financial year.
8. Worked Example — Classification and OCI Presentation
Current vs Non-Current — Three Loan Scenarios at 31 March
| Scenario | Facts | Classification |
|---|---|---|
| A | ₹50,00,000 loan due in 8 months, but refinanced before the reporting date into a facility giving an unconditional right to defer settlement for 18 more months | Non-current — unconditional right existed at the reporting date |
| B | ₹30,00,000 loan breaches a covenant before the reporting date, making it payable on demand; lender agrees to waive the breach only after the reporting date, with no grace period in place at year-end | Current — no unconditional right to defer existed at the reporting date, regardless of the later waiver |
| C | ₹20,00,000 loan breaches a covenant before the reporting date, but the lender grants (before the reporting date) a grace period ending 14 months after the reporting date, during which the entity can rectify the breach | Non-current — the right to defer for at least 12 months, subject only to remedying the breach, existed at the reporting date |
Explore Finosutra's IND AS tools
Free calculators for lease accounting, security deposits, ECL provisioning and financial statement generation — audit-ready workpapers in minutes.
Explore IND AS Tools →OCI Presentation Example
Scenario: Meridian Corp Ltd's OCI movements for the year: FVOCI debt instrument fair value gain ₹5,00,000; FVOCI equity instrument fair value gain ₹8,00,000; defined benefit plan remeasurement gain ₹3,00,000; effective cash flow hedge gain ₹2,00,000; PP&E revaluation surplus ₹10,00,000; foreign currency translation gain on a foreign subsidiary ₹4,00,000.
| Item | Amount (₹) |
|---|---|
| Items that will not be reclassified to profit or loss: | |
| FVOCI equity instrument fair value gain | 8,00,000 |
| Defined benefit plan remeasurement gain | 3,00,000 |
| Revaluation surplus | 10,00,000 |
| Subtotal | 21,00,000 |
| Items that may be reclassified to profit or loss: | |
| FVOCI debt instrument fair value gain | 5,00,000 |
| Cash flow hedge reserve gain | 2,00,000 |
| Foreign currency translation gain | 4,00,000 |
| Subtotal | 11,00,000 |
| Total other comprehensive income for the year | 32,00,000 |
9. IND AS 1 vs Old IGAAP (Schedule III / AS 1) — Key Differences
| Aspect | Old IGAAP (AS 1 / Schedule III) | IND AS 1 |
|---|---|---|
| Scope of AS 1 | Old AS 1 was narrow — only "Disclosure of Accounting Policies," not a comprehensive presentation standard | Comprehensive framework covering the complete set of statements, classification, and OCI |
| Other comprehensive income | No explicit OCI concept or two-section reclassification structure | Explicit OCI statement with the "will/may be reclassified" split |
| Current/non-current liability test | Present in Schedule III, less explicit on the "rights at reporting date" nuance | Explicit rights-based test, aligned with the international standard's refinancing/covenant-breach guidance |
| Extraordinary items | Some older frameworks referenced extraordinary items | Explicitly prohibited |
| Fair presentation override | Not an explicit formal concept | Exists for extremely rare circumstances, heavily conditioned |
10. Disclosures Required
Beyond the primary statements themselves, IND AS 1 requires disclosure of judgements made in applying accounting policies with the most significant effect on recognised amounts, key sources of estimation uncertainty with a significant risk of material adjustment within the next financial year, information enabling users to evaluate the entity's objectives, policies and processes for managing capital, details of any puttable financial instruments classified as equity, and dividends recognised as distributions and proposed or declared before the financial statements were authorised for issue but not recognised as a distribution.
11. Common Mistakes CAs Make
Error 1 — Classifying a loan as non-current based on a refinancing agreed after the reporting date. Only an unconditional right that existed at the reporting date matters — a refinancing completed afterward, however certain, doesn't change the classification at year-end.
Error 2 — Presenting an unusual item as an "extraordinary item." IND AS 1 doesn't permit this category at all — unusual or infrequent items stay within the normal statement structure, with separate disclosure if material.
Error 3 — Netting assets against liabilities (or income against expenses) without a specific standard permitting it. Offsetting is the exception, not the default — it requires explicit authority from another IND AS.
Error 4 — Misclassifying an OCI item between the "will" and "may be reclassified" sections. Each type of OCI item has a fixed classification set by the standard that created it (e.g. FVOCI equity gains never recycle, FVOCI debt gains do) — this isn't a judgement call to make freely.
Error 5 — Skipping the disclosure of significant judgements and estimation uncertainty. These disclosures are explicitly required by IND AS 1, not optional boilerplate, and are one of the most commonly under-disclosed areas in practice.
12. FAQs
What is the complete set of financial statements under IND AS 1?
A balance sheet as at the end of the period; a statement of profit and loss (including other comprehensive income) for the period; a statement of changes in equity for the period; a statement of cash flows for the period; notes comprising significant accounting policies and other explanatory information; comparative information for the preceding period; and a third balance sheet as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively, restates items, or reclassifies items in its financial statements.
How is an asset or liability classified as current vs non-current?
An asset is current if it is expected to be realised or consumed in the normal operating cycle, held primarily for trading, expected to be realised within 12 months, or is cash/cash equivalent (unless restricted). A liability is current if it is expected to be settled in the normal operating cycle, held primarily for trading, due within 12 months, or the entity does not have an unconditional right at the reporting date to defer settlement for at least 12 months. Everything else is non-current.
What are the two sections of other comprehensive income?
Items of other comprehensive income are grouped into those that will never be reclassified to profit or loss (e.g. remeasurements of the net defined benefit liability, fair value gains on FVOCI equity instruments, revaluation surplus) and those that may be reclassified to profit or loss in a future period when specific conditions are met (e.g. fair value gains on FVOCI debt instruments, effective cash flow hedge gains, foreign currency translation differences on a foreign operation).
Can assets and liabilities be offset in the balance sheet under IND AS 1?
No, not as a general rule. Assets and liabilities, and income and expenses, are presented separately and not offset against each other unless offsetting is specifically required or permitted by another IND AS — for example, the specific net-presentation criteria in IND AS 32 for financial assets and financial liabilities.
Does IND AS 1 allow items to be presented as "extraordinary items"?
No. IND AS 1 does not permit any items of income or expense to be presented as "extraordinary items," either on the face of the statement of profit and loss or in the notes — a departure from some older accounting frameworks. Unusual or infrequent items are instead presented within the normal classification structure, with separate disclosure of their nature and amount where material.
Is IND AS 1 the same as IAS 1?
IND AS 1 is India's converged version of IAS 1 and follows the same complete set of financial statements, general features, current/non-current classification framework, and OCI presentation structure. It goes well beyond the narrower scope of the old Indian AS 1 (Disclosure of Accounting Policies), which only addressed accounting policy disclosure, with the broader presentation framework historically filled in by Schedule III to the Companies Act, 2013 for company-format requirements.