EITHER Explain the criteria in the Conceptual Framework for Financial Reporting for the recognition and de-recognition of an asset. OR List out the…

(a) Recognition of assets The Conceptual Framework for Financial Reporting defines an asset as a present economic resource controlled by the entity as a result of past events. An economic resource is a right that has the potential to produce economic benefits. Assets should be recognized if they meet the Conceptual Framework definition of an asset and such recognition provides users of financial statements with information that is useful i.e. with(a)relevant information; and(b)a faithful representation of the asset. (i) Relevance Information about assets is relevant to users of financial statements. However, recognition of a particular asset may not always provide relevant information like when: (i) it is uncertain whether an asset exists; or (ii) an asset exists, but the probability of an inflow or outflow of economic benefits is low It may be a combination of factors and not any single factor that determines whether recognition provides relevant information. Whether or not the asset is recognised, explanatory information about the uncertainties associated with it, may need to be provided in the financial statements. (ii) Faithful representation Recognition of a particular asset is appropriate if it provides not only relevant information, but also a faithful representation of that asset and of any resulting income, expenses or changes in equity. Whether a faithful representation can be provided may be affected by the level of measurement uncertainty associated with the asset or by other factors. Faithful representation of a recognised asset involves not only recognition of that item, but also its measurement as well as presentation and disclosure of information about it. Derecognition of assets Derecognition is the removal of all or part of a recognised asset from an entity's balance sheet. Derecognition normally occurs when that item no longer meets the definition of an asset i.e. when the entity loses control of all or part of the recognised asset. In some cases, an entity might appear to transfer an asset but derecognition of that asset is not appropriate. For example, if an entity has apparently transferred an assetbut retains exposure to significant positive or negative variations in the amount of economic benefits that may be produced by the asset, this sometimes indicates that the entity might continue to control that asset. If an entity has transferred an asset to another party that holds the asset as an agent for the entity₁ the transferor still controls the asset. Or MCA has notified the Companies (Indian Accounting Standards) Rules, 2015. Accordingly, it has notified 39 Ind AS and has laid down mandatory Ind AS transition roadmap for companies and non- banking finance companies excluding banking companies and insurance companies under following two phases: Phase I Following companies were covered under Phase I for accounting periods beginning on or after 1st April 2016, with the comparatives for the periods ending on 31st March 2016: (a) companies whose equity or debt securities are listed or are in the process of being listed on any stock exchange in India or outside India and having net worth of rupees five hundred crore or more; (b) companies other than those covered by sub-clause (a) above and having net worth of rupees five hundred crore or more; (c) holding, subsidiary, joint venture or associate companies of companies covered by sub-clause (a) and sub-clause (b) as mentioned above. Phase II Following companies were covered under Phase II for accounting periods beginning on or after 1st April 2017, with the comparatives for the periods ending on 31st March 2017: (a) companies whose equity or debt securities are listed or are in the process of being listed on any stock exchange in India or outside India and having net worth of less than rupees five hundred crore; (b) companies other than those covered in sub-clause (a) above i.e. unlisted companies having net worth of rupees two hundred and fifty crore or more but less than rupees five hundred crore. (c) holding, subsidiary, joint venture or associate companies of companies covered by sub-clause (a) and sub-clause (b) as mentioned above. Exclusions: The roadmap shall not be applicable to companies whose securities are listed or are in the process of being listed on SME without initial public offering in accordance with the provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. Ind AS would not be applicable to companies other than listed companies whose net worth is less than 250Crores and they will continue to follow AS. However, they can voluntary adopt Ind AS any time.