Security deposits (given or taken) – “Fair Value” – Ind-As

As per the current accounting system in India, there is no specific treatment defined for any kind of security deposits which are being taken/ given in normal course of business by an entity and all such deposits that are refundable shown at their respective transaction values.

After the introduction of Ind-As, these type of deposits will be treated differently and a careful assessment is required to segregate their values and capture into accounting systems accordingly.

Below are some relevant extract of Ind-As which talks about the requirements to do such fair valuation and accordingly will talk about its practical requirements while applying Ind-As-

Ind-As 32- Financial Instruments- Presentation – para 11 –

A financial asset is any asset that is:

(a)cash;

(b)an equity instrument of another entity;

(c)a contractual right:

(i) to receive cash or another financial asset from another entity; or

(ii) to exchange financial assets or financial liabilities with another entity under conditions that  are 
potentially favourable to the entity; or…………………..

A financial liability is any liability that is:

(a) a contractual obligation :

(i)  to deliver cash or another financial asset to another entity; or

(ii) to exchange financial assets or financial liabilities For further reading please refer http://gyanifrs.com/2017/02/security-deposits-given-or-taken-fair-value-ind-as-ifrs/