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reimburSemenT of exPenSeS from STAndPoinT of finAnCiAl rePorTinG

4.2 Treatment in Consolidated Financial a financial liability or equity instrument of
Statements another entity. A financial asset may be a
contractual right to receive cash or another
In consolidated financial statements all intra-
group reimbursements will be eliminated financial asset from another entity and a
in full in accordance with Ind AS 110, financial liability may be a contractual obligation
Consolidated Financial Statements and AS 21, to deliver cash or another financial asset to
Consolidated Financial Statements. All the relevant another entity. So, reimbursement from one
expenditures and payments are treated from entity to another entity can be recorded as
the group’s point of view. financial instrument. One entity can record it
as financial asset and other entity as financial
5. Other matters liability in their financial statements.
5.3 Related Party Disclosures
5.1 Forex differences on reimbursement
Ind AS 24 and AS 18, Related Party Disclosures
Reimbursement in foreign currency should be states that if an entity has had related party
measured and recognised in accordance with transactions during the period, it shall disclose
Ind AS 21 and AS 11, The Effects of Changes the nature of the related party relationship
in Foreign Exchange Rates. and information about those transactions and
As per both Standards, initially reimbursement outstanding balances, including commitments.
in foreign currency is recognised at spot Therefore, reimbursement by an entity to its
exchange rate and, subsequently, on reporting related parties during the year should be
date it is remeasured at closing. Any gain disclosed in the financial statements.
or loss on reporting date should be treated
as relevant provisions of respective Standard. Conclusion

5.2 Reimbursement- Whether a Financial 6. An entity should frame its accounting
Instrument under Ind AS? policies on treatment of various reimbursements

Ind AS 32, Financial Instruments: Presentation carefully and a proper disclosures necessary
define financial instrument as a contract for users to understand the potential effect
between two entities or parties that give of reimbursement on the financial statements.
rise to a financial asset of one entity and lll

124 January 20 To January 26, 2018 u Taxmann’s Corporate Professionals Today u Vol. 41 u 18