Question

Choose a country that has adopted IFRS. Do you feel that adoption of IFRS benefited the companies in this country?

Answer 1

Countries currently considering adopting IFRSs include:

•United States

•Japan

•India

•Russia

•Malaysia

•Colombia

-->> Benefits of adopting IFRS for Indian companies :-

:- The decision to converge with IFRS is a milestone decision and is likely to provide significant benefits to Indian corporates.

1:- Improved access to international capital markets :- Many Indian entities are expanding or making significant acquisitions in the global arena, for which large amounts of capital is required. The majority of stock exchanges require financial information prepared under IFRS. Migration to IFRS will enable Indian entities to have access to international capital markets, removing the risk premium that is added to those reporting under Indian GAAP.

2:- Enable benchmarking with global peers and improve brand value :- Adoption of IFRS will enable companies to gain a broader and deeper understanding of the entity's relative standing by looking beyond country and regional milestones. Further, adoption of IFRS will facilitate companies to set targets and milestones based on global business environment, rather than merely local ones.

3:- Reflects true value of acquisitions :- In Indian GAAP, business combinations, with few exceptions, are recorded at carrying values rather than fair values of net assets acquired. Purchase consideration paid for intangible assets not recorded in the acquirer's books is usually not reflected separately in the financial statements; instead the amount gets added to goodwill.

4:- New opportunities will open up for corporates

5:-Lower cost of capital :-Migration to IFRS will lower the cost of raising funds, as it will eliminate the need for preparing a dual set of financial statements. It will also reduce accountants' fees, abolish risk premiums and will enable access to all major capital markets as IFRS is globally acceptable.

6:- Reflects true value of acquisitions