The current economic environment in the world poses several geopolitical challenges and is facing the weaning effects of the pandemic. These challenges could have (or have already had) an adverse effect on companies. It would be essential to understand this impact on the assets of the companies. There could be indicators of impairment and which may require companies to perform impairment testing and provide disclosures. Thus, impairment testing of non-financial assets and disclosures of impairment testing become imperative. This edition of our Accounting and Auditing Update carries an article on the topic of impairment of non-financial assets and it highlights key areas that regulators have provided improvement points in this area. The article also provides illustrations of disclosures from thematic reviews performed by the Financial Reporting Council (FRC).

The publication also carries an article on the topic of Delayed Payment Charges (DPC). Recently, the Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India (ICAI) deliberated on the accounting and presentation of the DPC collected by a company from its customers. Determination of transaction price is a critical step while accounting for revenue under Ind AS 115, Revenue from Contracts with Customers. An entity needs to consider multiple factors while determining the transaction price of a contract, for example, the inclusion of a variable consideration, a financing component, etc. One of such factors should be considered by companies while determining the transaction price is DPC. Our article on this topic aims to discuss some of the key factors considered by the EAC while opining on the accounting and presentation of DPC in the statement of profit and loss and the statement of cash flows.

As is the case each month, we have also included a regular round-up of some recent regulatory updates in India and internationally.

We would be delighted to receive feedback/suggestions from you on the topics we should cover in the forthcoming editions of the AAU.

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