Difference Between AS 25 and Ind AS 34

Accounting Standard 25: AS 25 does not mandate which enterprises should be required to present interim financial reports, how frequently, or how soon after the end of an interim period. If an enterprise is required or elects to prepare and present an interim financial report, it should comply with this Standard. The standard prescribes the minimum contents of an interim financial report and requires that an enterprise which elects to prepare and present an interim financial report, should comply with this standard.

It also lays down the principles for recognition and measurement in a complete or condensed financial statements for an interim period. Timely and reliable interim financial reporting improves the ability of investors, trade payables and others to understand an enterprise’s capacity to generate earnings and cash flows, its financial condition and liquidity.

A statute governing an enterprise or a regulator may also require an enterprise to prepare and present certain information at an interim date which may be different in form and/or content as required by this Standard. In such a case, the recognition and measurement principles as laid down in this Standard are applied in respect of such information, unless otherwise specified in the statute or by the regulator.

Ind AS 34 Interim Financial Reporting

The objective of Ind AS 34 is to prescribe the minimum content of an interim financial report and to prescribe the principles for recognition and measurement in complete or condensed financial statements for an interim period. Timely and reliable interim financial reporting improves the ability of investors, creditors, and others to understand an entity’s capacity to generate earnings and cash flows and its financial condition and liquidity.

This Standard applies if an entity is required or elects to publish an interim financial report in accordance with Indian Accounting Standards.

Interim financial report means a financial report containing either a complete set of financial statements (as described in Ind AS 1, Presentation of Financial Statements, or a set of condensed financial statements (as described in this Standard) for an interim period.

Difference Between AS 25 and Ind AS 34

AS 25 Ind AS 34
AS 25 does not provide any specific guidance on this issue. However, as per AS 28, it is possible to reverse the impairment loss recognised for goowill, but only in certain circumstances.

Under Ind AS 34, if an entity has recognised impairment of:

  • goodwill  or
  • investment in an equity instrument or
  • any other financial asset

in one interim period, then it cannot be reversed in the subsequent interim period as well as in annual financial statements.

AS 25 becomes applicable if the entity prepares interim financial report, either suo moto or due to the requirement of statute or regulator. Ind AS 34 becomes applicable when the entity, either suo moto, or due to the requirement of statute or regulator, prepares the interim financial report in compliance with Accounting Standards.

As per AS 25, the contents of an interim financial report includes, at the minimum:

  • Condensed Balance Sheet
  • Condensed P&L
  • Condensed CFS and
  • Selected explanatory notes
In addition to these, Ind AS 34 requires a condensed statement of changes in equity for the period to be included in interim financial report.
AS 25 requires disclosure of information relating to contingent liabilities only. Ind AS 34 requires the disclosure of information relating to contingent liabilities as well as contingent assets.
AS 25 does not contain such requirement.

Ind AS 34 states that if an interim financial report is prepared in compliance with the requirements of Ind AS 34, such fact should be disclosed.

An interim financial report is said to be complying with Ind AS 34, only  when it complies with all the requirement of Ind AS 34.

AS 25 exempts an entity to present comparative P&L Statement and Cash flow Statement, in case the entity is preparing the interim financial report for the first time, in accordance with AS 25. Ind AS 34 does not provide such relaxations.
As per AS 25, in case of change in accounting policy, the entity shall restate the financial statements of comparative prior interim periods of current financial year only.

Ind AS 8 states that in case of change in accounting policy, the financial statements of earlier periods also need to be restated.

Consequently, Ind AS 34 requires restatement of comparative interim periods of prior financial years also, unless it is impracticable.

Reference to extraordinary items is still there. In line with Ind AS 1, references to extraordinary items have been deleted in Ind AS 34.

AS 25 requires the disclosure of :

  • agreegate dividend or
  • dividend per share

payable to equity and other types of shares outstanding.

Such disclosure can be made either in absolute terms or in % terms.

Ind AS 34 requires the disclosure of :

  • agreegate dividend or
  • dividend per share

paid to equity and other types of shares outstanding.

As per AS 25, in case the entity follows the practice of providing consolidated financial statements, along with separate financial statements, then the interim financial report should also include both these statements. Ind AS 34 states that if an entity’s most recent annual financial statements include consolidated financial statements along with separate financial statements, then interim financial report may, at the option of the entity, consist of consolidated financial statement only or of consolidated as well as separate financial statements.

As per AS 25, notes to interim financial statements shall contain a statement that the accounting policies, followed while preparing interim financial statements are same as those followed in preparation of the most recent annual financial statements.

In case the accounting policy followed in preparation of interim financial report are at variance from that followed while preparing most recent annual financial statements, a description of the nature and effect of change must be given.

Ind AS 34, in addition to the disclosure required by AS 25, requires the disclosure of methods of computation followed.
AS 25 does not address these issues separately. Under Ind AS 34, separate guidance is available for treatment of interim period manufacturing cost variance and foreign currency translation gains and losses