For Reporting and Compliance
For Reporting and Compliance
Financial Reporting Valuations (Ind AS / IFRS)
Common valuation requirements under Ind AS / IFRS include:
Ind AS 113 / IFRS 13 – Fair Value Measurement
It defines how fair value for assets, liabilities and equity instruments should be determined using a market-based approach. Used in multiple standards wherever “fair value” is referenced.
Ind AS 36 / IAS 36 – Impairment of Assets
There is a need to test whether the carrying amount of assets or cash generating units (CGUs) exceeds their recoverable amount. Appraisal determines the recoverable value using discounted cash flows or other accepted methods.
Ind AS 103 / IFRS 3 – Business Combinations
Purchase Price Allocation (PPA) is required - this involves distributing the acquisition consideration among identifiable assets, liabilities, and goodwill at their fair value.
Ind AS 102 / IFRS 2 – Share-Based Payments
Valuation of ESOPs (Employee Stock Option Plans) or other equity-based compensation using models such as Black-Scholes or Monte Carlo.
Ind AS 109 / IFRS 9 – Financial Instruments
Appropriate pricing is required for derivatives, convertible instruments and other financial assets or liabilities.
Ind AS 38 / IAS 38 – Intangible Assets
Valuation for internally generated or acquired intangibles such as patents, trademarks, or goodwill is required for financial reporting and impairment testing.
Regulatory Valuations
Companies Act, 2013
- Valuation by a registered valuer is mandatory (under section 247).
- Required for activities like issue of shares, merger, demerger, preferential allotment and transfer of shares.
- Ensures fairness and protects shareholder interests during corporate operations.
FEMA (Foreign Exchange Management Act, 1999)
- Valuation required for issuing or transferring shares between residents and non-residents.
- Valuation should follow internationally accepted pricing methods on an arm's length basis (as per RBI and FEMA guidelines).
- Commonly used for inbound/outbound investment, FDI, or cross-border transactions.
Income Tax Act, 1961
- Valuation is required to determine fair market value (FMV) for taxation purposes under rules such as Rule 11UA/11UAA.
- This is applicable to share transfers, issuance of shares at a premium to ensure that there is no undervaluation or excess in value.
SEBI Regulations
- Valuations are required under various SEBI frameworks, such as Issue of Capital and Disclosure Requirements (ICDR), Takeover Code, and Delisting Regulations.
- Ensures fairness in pricing for public shareholders, investor protection, and compliance with capital market norms.
Insolvency and Bankruptcy Code (IBC), 2016
- Valuation is mandatory during the Corporate Insolvency Resolution Process (CIRP) and liquidation.
- Conducted by Registered Valuer appointed by Resolution Professional (RP).
- Helps in determining the fair value and liquidation value of the assets of the corporate debtor for resolution and distribution purposes.
Our Process
- Know the reporting requirements and standards.
- Check financial and operational information.
- Use relevant methodology of valuation.
- Produce compliant valuation report, which is audit ready.
Why Choose Ascend Valuations?
- Cross-industry registered Valuers.
- Compliance approach based on ICAI and IVS standards.
- Clear, auditable records.
- Transparent, data-informed insights for executive decision-making.
FAQ
Frequently Asked Questions
Your Questions Answered
What are financial reporting valuations and when are they required?
Financial reporting valuations are independent assessments required when preparing financial statements under Ind AS (Indian Accounting Standards) or IFRS. They are needed for fair value measurement (Ind AS 113), impairment testing (Ind AS 36), business combinations (Ind AS 103), ESOP accounting (Ind AS 102), financial instruments (Ind AS 109), and intangible asset valuation (Ind AS 38).
What is Purchase Price Allocation (PPA) and why does it matter?
Purchase Price Allocation (PPA) is required under Ind AS 103 / IFRS 3 after a business acquisition. It involves distributing the total acquisition consideration among identifiable assets, liabilities, and goodwill at their respective fair values. Reliable PPA is critical for compliant financial reporting and avoiding future impairment surprises.
Is valuation mandatory under the Companies Act, 2013?
Yes. Section 247 of the Companies Act, 2013 mandates valuation by a Registered Valuer for activities such as issuance of shares, preferential allotment, mergers, demergers, and share transfers. Ascend Valuations is led by a IBBI-registered and ICAI-compliant valuer, making all reports fully valid for regulatory submissions.
When is valuation required under FEMA (Foreign Exchange Management Act)?
Under FEMA, valuation is mandatory when issuing or transferring shares between Indian residents and non-residents (inbound FDI or outbound investments). The valuation must follow internationally accepted pricing methods on an arm’s length basis, in line with RBI and FEMA guidelines.
What is Rule 11UA / 11UAA valuation under the Income Tax Act?
Under the Income Tax Act, 1961, Rule 11UA and 11UAA require fair market value (FMV) determination for share transfers and issuance of shares at a premium. This prevents undervaluation or overvaluation for tax purposes. Ascend Valuations prepares tax-compliant FMV reports used for income tax filings and scrutiny.
What valuations are required under SEBI regulations?
SEBI requires valuations under multiple frameworks, including the Issue of Capital and Disclosure Requirements (ICDR), the Takeover Code (for open offers), and Delisting Regulations. These valuations ensure fair pricing for public shareholders and protect investor interests during capital market activities.
What is IBC valuation and who can conduct it?
Under the Insolvency and Bankruptcy Code (IBC), 2016, a Registered Valuer appointed by the Resolution Professional (RP) must conduct valuation during the Corporate Insolvency Resolution Process (CIRP) and liquidation. The valuation determines the fair value and liquidation value of assets of the corporate debtor for resolution planning.
