Many companies have seen their net income go up following adjustments made in the financial statements in accordance with the new accounting standards, says a report.
Currently, certain class of firms are required to comply with the new Indian Accounting Standards (Ind AS), which are converged with global accounting norms.
Consultancy PwC has said that majority of companies had to make adjustments on account of taxes, financial instruments and revenue recognition after adopting Ind AS.
The conclusion is based on PwC’s Ind AS Impact analysis that covered the reported results of all the Ind AS-impacted Nifty 50 and Nifty Next 50 companies.
As per the analysis, there was a positive impact on the reported net income of 41 companies under Ind AS for the quarter ended June 30, 2015.
“The total increase in Ind AS net income for these was approximately Rs 3,918 crore. There was a negative impact on the reported net income of 34 companies under Ind AS.
“The total decrease in net income was approximately Rs 3,621 crore, resulting in an overall net increase of approximately Rs 297 crore,” PwC said in a report.
Sumit Seth, Partner at Price Waterhouse & Co, said the impact of Ind AS adoption has been pervasive and not restricted to only one sector or industry.
“Taxes, financial instruments (including derivatives) and revenue recognition continue to be the top three significant areas of adjustment arising from Ind AS adoption,” he noted.
Seth also said sectors such as pharmaceuticals, industrial manufacturing and automotive were positively impacted, whereas telecom, metals and infrastructure were impacted negatively.