A. Background: In recent times, many companies have chosen to raise money by issuing convertible instruments. A convertible instrument is a hybrid instrument that offers investors the option to  redeem the security for cash  at the end of (or during) its term  or convert it to equity shares  of the entity. Convertible instruments generally offer lower interest rates (because of the additional consideration by way of conversion option) than comparable conventional instruments, making them a cost-effective way for the entity to raise money. Convertible instruments are typically issued by companies that have high growth expectations and relatively lower credit ratings. The companies get access to money for expansion at a lower cost than they would have to pay for conventional instruments. Investors, in turn, get the flexibility of turning their convertible instruments into cash or equity shares of the entity. Examples of convertible instruments are optionally convertibl...

  Background: Entity is engaged in the business of development of a special economic zone and industrial park. For development of SEZ, the Entity has purchased, and Government has awarded large parcels of land to the entity. The Company shall develop the land and shall create infrastructure on such land before selling/ leasing the plots to the other businesses. Thus, some portion of land with the entity will be sold in ordinary course of business and some shall be provided on finance lease. Consequently that land shall be classified and presented as “inventory” as per IAS 2 / Ind AS 2 – Inventories in the books of the entity. Due to some legal issues, there are uncertainties regarding the usage of the land and entity is uncertain about the exact usage of the land i.e., whether it will be sold or given on finance lease or operating lease on the date of reporting. Few queries with respect to the accounting of such property have been raised as below. As a part of this blog, we will an...

    Introduction Mergers and acquisitions are becoming more and more common as entities aim to achieve their growth objectives other than in an organic way. IFRS 3 / Ind AS 103 – Business combinations transform the way companies plan and execute their acquisition strategies. This standard applies to most of business combinations, including amalgamations/ mergers and acquisitions. This standard lays down the principles of accounting for business combinations by way of acquisitions or mergers. Ind AS also provides guidance on a combination of entities or businesses under common control. However, IFRS does not provide guidance on combinations under common control. The companies that engage in business combination transactions face various challenges in accounting and financial reporting of such transactions, including: 1. Accounting for purchase consideration transferred by acquirer and other transaction costs incurred in the transaction. 2. Recognition and measurement of the net...

  In the previous blog of the series on  IPO reporting , we evaluated the accounting framework applicable for the IPO. Accordingly, the issuer company shall prepare restated consolidated financial information to be presented in the offer document based on reporting framework in which they have prepared their latest financial statements before filing the offer document. Even if the latest financial statements are in  Indian GAAP, SEBI  has provided an option to issuer company to adopt Ind AS to restate the financial statements for all three years. Per our view, the issuer company shall opt for the Ind AS reporting framework for the restated financial statements as it reduces time, costs, and efforts of the Company. The company could execute Ind AS restatement as well as IPO restatement at the same time by removing duplication of efforts which otherwise would be performed at different times. In this blog, we will analyze the nature of adjustments required to prepare ‘C...