In the context of recent developments, what is the convergence of Ind-AS with? MCQ with Answer and Explanation

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In the context of recent developments, what is the convergence of Ind-AS with?

A. Chinese Accounting Standards

B. US GAAP

C. IFRS

D. UK GAAP

Answer: Option C

Solution (By JKSSB Mock Tests)

Ind-AS (Indian Accounting Standards) are converged with IFRS (International Financial Reporting Standards) issued by the IASB.

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Question #1

The 'Updated Return' (ITR-U) attracts additional tax of:

A. 25% of tax and interest if filed within 12 months, 50% if filed after 12 months

B. 10%

C. No additional tax

D. Fixed penalty

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Correct Answer: Option A

Explanation:
Additional tax on updated return is 25% if filed within 12 months from end of AY, 50% if after 12 months but before 24 months.

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Question #2

Under Ind AS 2, which of the following costs are excluded from the cost of inventory and recognized as expenses in the period they are incurred?

A. Abnormal amounts of wasted materials, labor, or other production costs

B. Design costs incurred before the production stage for a specific customer order

C. Fixed production overheads allocated based on normal capacity

D. Costs of conversion

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Correct Answer: Option A

Explanation:
Ind AS 2 explicitly excludes abnormal waste, storage costs (unless necessary in the production process), administrative overheads not contributing to bringing inventories to their present location/condition, and selling costs from inventory cost.

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Question #3

A company issues 10,000, 9% preference shares of ₹100 each, redeemable at a premium of 10%. The shares are issued at par. What is the amount to be transferred to the Capital Redemption Reserve (CRR)?

A. ₹9,00,000

B. ₹11,00,000

C. ₹1,00,000

D. ₹10,00,000

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Correct Answer: Option D

Explanation:
When preference shares are issued at par and redeemed at a premium, the CRR must be created out of free reserves equal to the nominal value of the shares redeemed. Therefore, CRR = 10,000 * ₹100 = ₹10,00,000. The premium on redemption is provided out of securities premium or P&L.

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