Accounting Issues For Entrepreneurs

ACCOUNTING ISSUES FOR
ENTREPRENEURS
by :
DR. T.K. JAIN
AFTERSCHO☺OL
centre for social entrepreneurship
sivakamu veterinary hospital road
bikaner 334001 rajasthan, india
FOR – PGPSE / CSE PARTICIPANTS
mobile : 91+9414430763
5 DECEMBER 09 www.afterschool.tk 1
study material of PGPSE / CSE
My words....
Ours is a great country with immense entrepreneurial potential. However,

our legal system and taxation system is so cumbersome that our creativity
and talent is wasted / unnecessarily diverted in these sectors. I wish that
these are simplified so that an ordinary entrepreneur can understand these
without help from any expert. Here I present a few basic questions for
fundamental understanding of Accounting I wish that more people should
become entrepreneurs. An ordinary Indian entrepreneur wishes to remain
an honest entrepreneur and contribute to the development of nation, but our
systems and processes ...
Is debenture redemption fund
compulsory for a company ?
Yes
According to SEBI guidelines, creation of
debenture redemption reserve equivalent to
50% of the debenture issue is obligatory.
However, a company may create more reserve
if it so desire
Where would you show discount
on issue of debenture in balance
sheet?
Discount on issue of debentures is a capital

loss of the company and it is required to be
shown on the assets side of the Balance Sheet
under the heading “Miscellaneous
Expenditure” until it is written off
What is ex-interest quote of a
debenture?
If the purchase price for the debentures

excludes the interest for the expired period, the
quotation is said to be “Ex-interest”.
Where would you show
preliminary expenses in balance
sheet ?
preliminary expenses are of capital nature and

as such should be shown on the assets side of
the Balance Sheet under the heading
“Miscellaneous Expenditure”.
How can preliminary expenditure
be written off ?
Preliminary expenses being of capital nature,

may be written off against capital profits or
may be written off over 10 years period
What are the parts of preliminary
expenses ?
Stamp duty
legal charges for preparing the Prospectus,
Memorandum and Articles
Accountants’ and Valuers’ fees for reports
Cost of printing the Memorandum and Articles
company’s seal and books of account, statutory
books
printing and stamping Debenture Trust Deed
What are not the parts of
preliminary expenses ?
Cost of preparation of the feasibility report.

Cost of preparation of the project report.
Cost of market survey
Consultancy fees
What can be used for issue of
bonus shares ?
Balance in the Profit and Loss Account;

General Reserves or other Reserves created
out of the profits;
Realised capital profits and reserves;
Securities Premium Account;
Capital Redemption Reserve Account
What are the uses of accounting
standards ?
in the resolution of potential financial conflicts

of interest between the various important
groups
What are the objectives of
accounting standards board?
To conceive of and suggest areas in which
Accounting Standards need to be developed.
To formulate Accounting Standards with a
view to assisting the Council of the ICAI in
evolving and establishing Accounting
Standards in India.
To study the relevance of International
Accounting Standards
What is the composition of
accounting standards board ?
Representatives of : Ministry of Corporate

Affairs, Comptroller and Auditor General
,Central Board of Direct Taxes ,
RBI,ICWAI,ICSI,SEBI,IIMs,
UNIVERSITIES, Central Board of Excise and
Customs.,Industry associations, financial
institutions etc.
What are the contents of draft of
an accounting standard issued by
ASB for approval ?
1. Objective of the Standard,

2. Scope of the Standard,
3. Definitions of the terms used in the Standard,
4. Recognition and measurement principles, wherever
applicable,
5. Presentation and disclosure requirements.
To whom will ASB circulate draft
of accounting standard for
approval ?
SEBI,RBI,SCOPE,IBA,ASSOCHAM,CAG,FI
CCI,ICSI,ICWAI,etc.
WHAT IS AS 1?
All significant accounting policies adopted in

the preparation and presentation of financial
statements should be disclosed
For which type of policies
/assumption, no disclosure is
required ?
If the fundamental accounting assumptions,

viz. going concern, consistency and accrual are
followed in financial statements, specific
disclosure is not required.s But if a
fundamental accounting assumption is not
followed, the fact should be disclosed.
Is it necessary to disclose all the
changes in accounting policies ?
Yes
Any change in the accounting policies which has a material effect in
the current period or which is reasonably expected to have a material
effect in later periods should be disclosed. In the case of a change in
accounting policies which has a material effect in the current period,
the amount by which any item in the financial statements is affected
by such change should also be disclosed to the extent ascertainable.
Where such amount is not ascertainable, wholly or in part, the fact
should be indicated.
While taking cost or market price
(lower), what is excluded from
cost as per AS 2?
(i) abnormal amounts of wasted materials,

labour or other production costs; (ii) storage
costs; (iii) administrative overheads that do not
contribute to bringing the inventories to their
present location and condition and (iv) selling
and distribution costs.
What are the acceptable methods
for cost calculations as per AS2?
(i) Specific identification cost (ii) First-In-First

Out and (iii) Weighted average cost.
What method of valuation should be used for
valuing inventories that are damaged or that have
become wholly or partially obsolete or selling price
has declined
Net realisable value

or
the replacement cost of materials (if it is
known that finished goods will be higher in
value than net realisable value)
As per AS 2, inventory has to be classified
and inventory valuation formula must be
shown. What are the methods for
classification?
raw materials and components,
work-in-progress,
finished goods,
stores and spares
loose tools.
How should a company report
foreign exchange transactions as
per AS 3?
Cash flows arising from transactions in a foreign

currency should be recorded in an enterprise’s reporting
currency by applying to the foreign currency amount the
exchange rate between the reporting currency and
foreign currency at the date of the cash flow
When can a company change
depreciation policy ?
As per AS 6 : A change in one method of

providing depreciation to another method
should be made only if the adoption of the new
method is required by statute or for compliance
with the accounting standard or if it is
considered that the change would result in a
more appropriate preparation or presentation of
financial statements
What should be shown in the
balance sheet regarding
depreciation ?
(i) historical cost or other amount substituted
for historical cost of each class of depreciable
asset; (ii) total depreciation for the period for
each class of assets; (iii) the related
accumulated depreciation; (iv) depreciation
methods used; and (v) depreciable rates &
useful life (if rate are different from schedule
14)
What are methods to recognise
revenue of contract ?
1. the proportion that contract costs incurred

for work performed upto the reporting date
bear to the estimated total contract costs; or
2. surveys of work performed; or
3. completion of a physical proportion of the
contract work.
What should be done about
expected losses in a contract ?
AS 7 : When it is probable that total contract

cost will exceed total contract revenue, the
expected loss should be recognised as an
expense immediately.
In construction contracts, what
should be disclosed ?
1. the amount of contract revenue recognised

as revenue in the period;
2. the methods used to determine the contract
revenue recognised in the period; and
3. the methods used to determine the stage of
completion of contracts in progress.
When should sale be recognised ?
AS 9 : WHEN :
(i) the property in goods is transferred from
seller to buyer
AND
(ii) there is no uncertainty regarding the
amount of consideration
How shold self constructed assets
be shown ?
only direct costs are included in the cost of the

asset.
Exclude administrative and other overheads
When can we show goodwill ?
Goodwill should be recorded only when some

consideration has been paid for it. (AS 10)
How should assets acquired on
hire puchase be shown ?
Fixed assets acquired on hire-purchase should

be disclosed only at net cash value stating the
fact of hire purchase.
What should be done with the
benefit arising from revaluation of
fixed assets ?
An increase in net book value arising on

revaluation of fixed assets should be credited
directly to owner’s interest under revaluation
reserve and should not be used for any purpose
except to write off decrease in value of assets.
What details should be given
about revaluation of assets (AS
10)?
revalued assets (asset class – when revalution
is done, it should be for entire class) should
include revalued amount substituted for
historical cost of fixed assets, the method
adopted to compute the revalued amounts, the
nature of indices used, the year of any
appraisal made and whether an external valuer
was involved etc.
What should be the method of
valuation of assets in foreign
exchange ?
foreign currency monetary items should be reported using the
closing rate.
non-monetary items which are carried in terms of historical cost
denominated in a foreign currency should be reported using the
exchange rate at the date of the transaction; and
non-monetary items which are carried at fair value or other similar
valuation denominated in a foreign currency should be reported
using the exchange rates that existed when the values were
determined
What is difference between
integral and non-integral
operations for forex transactions?
A foreign operation that is integral to the operations of the reporting

enterprise carries on its business as if it were an extension of the
reporting enterprise’s operations. In contrast, a non-integral foreign
operation accumulates cash and other monetary items, incurs
expenses, generates income and perhaps arranges borrowings, all
substantially in its local currency.
What are the 2 methods of
showing government grants ?
‘capital approach’ under which a grant is

treated as part of the shareholders’ funds
‘income approach’ under which a grant is
taken to income over one or more periods
As per AS 13, how should we value an
investment, if it is acquired in exchange for
another asset?
If an investment is acquired in exchange for

another asset, the acquisition cost of the
investment should be determined by reference
to the fair value of asset given up.
Should we recognise long term
investments at cost or market
price ?
No
Investments classified as current investments
should be stated at lower of cost and fair value
while long-term investments be stated at cost
with provision for diminution to recognise a
decline.
What is differnce between
amalgamation as merger and as
purchase ?
Merger : there is a pooling not merely of assets and liabilities of the
amalgamating companies but also of the shareholders’ interests and
of the business of these companies.
Purchasse : one company acquires another company and as a
consequence, the shareholders of the company which is acquired,
normally do not continue to have proportionate share in the equity of
the combined company. Also the business of the company which is
acquired is not intended to be continued.
What is the difference between
purchase and merger ?
Purchase : The reserves whether capital or
revenue or arising on revaluation of the
transferor company other than the statutory
reserves, should not be included in the
financial statements of the transferee company.
Merger : - reserves should be recorded at their
existing carrying amounts and in the same
form as at the date of the amalgamation.
What are rules regarding
capitalisation of borrowing cost as
per AS 16?
Capitalisation of borrowing cost can be done : 1. expenditure for
the acquisition, construction or production of a qualifying asset is
being incurred;
2. borrowing costs are being incurred;
3. activities that are necessary to prepare the asset for its intended
use or sale are in progress (it is not complete). It should be shown in
final accounts.
When can we identify a unit as a
segment (AS 17) ?
(a) its revenue from sales to external customers and from transactions
with other segment is 10 per cent or more of the total revenue,
external and internal of all segments; or
(b) its segment result, whether profit or loss is 10 per cent or more
of (i) the combined result of all segments in profits or (ii) the
combined results of all segments in loss which is greater in absolute
amount; or
(c) its segment assets are 10 per cent or more of the total assets of all
segments.
Who are related parties as per AS
18?
(b) associates and joint ventures of the reporting enterprise and the
investing party or venturer in respect of which the reporting
enterprise is an associate or a joint venture; (c) individuals owning,
directly or indirectly, an interest in the voting power of the reporting
enterprise that gives them control (d) key management personnel and
relatives of such personnel and (e) enterprises over which any person
described is able to exercise significant influence.
What should be disclosed ass per
AS 18?
1. the name of the transacting related party;
2. a description of the relationship between the parties;
3. description of the nature of the transactions;
4. volume of transactions
5. any other relevant information
6. the amounts or appropriate propositions of outstanding items
pertaining to related parties at the balance sheet date and provision
for doubtful debts due from such parties at that date; and
7. the amounts written off or written back in the period in respect
of debts due from or to related parties. Items of a similar nature may
be disclosed in aggregate by type of related party.
How to depreciate assets in
finance lease ?
a finance lease gives rise to a depreciation expense for the asset as

well as finance expense for each accounting period. If there is no
reasonable certainty that the lessee will obtain ownership by the end
of the lease term, the asset should be fully depreciated over the lease
term or its useful life whichever is shorter. The assets have to be
shown at value / present value of all lease payments (whichever is
lower)
Who should show assets in
balance sheet in lease ?
In finance lease = lessee

in operating lease = lessor
(accordingly depreciation will apply, read AS
19 for details )
How should revenue be shown in
lease ?
Finance lease = fixed % on invesment

operating lease = straight line basis method
What happens Sale and lease back
transaction changes in finance or
operating lease ?
Finance lease = recognise income over the

term of lease
operating lease = recognise it immediately
How should basic EPS be
calculated ?
By dividing the net profit or loss for the period

attributable to equity shareholders by the
weighted average number of equity shares
outstanding during the period.
When is diluted EPS calculated ?
Diluted earnings per share is calculated when

there are potential equity shares in the capital
structure of the enterprise.
What is potential capital ?
Potential equity share are those financial

instruments which entitle the holder to the right
of equity shares like convertible debentures,
convertible preference shares, options warrants
etc.
What should every company show about calculation
of EPS in its financial statements (as per AS 20)?
1. The amounts used as the numerators in calculating basic and

diluted earnings per share, and a reconciliation of those amounts to
the net profit or loss for the period;
2. The weighted average number of equity shares used as the
denominator in calculating basic and diluted earnings per share, and
a reconciliation of these denominators to each other; and
3. The nominal value of shares along with the earnings per share
figures.
As per AS 21, should a company
prepare both separate and
consolidated accounts ?
Yes
A parent which presents consolidated financial
statements should present these statements in
addition to its separate financial statements.
What are the cases when
consolidation is not necessary ?
1. its control is intended to be temporary
because the subsidiary is acquired and held
exclusively with a view to its subsequent
disposal in the near future; or
2. it operates under severe long-term
restrictions which significantly impair its
ability to transfer funds to the parent.
(read AS 21)
How should consolidation take
place ?
1. Eliminate the cost of the investment
2. The excess of the cost to the parent of its investment in a
subsidiary over the equity of the subsidiary = ‘goodwill' if cost is
less, the difference is ‘capital reserve’.
3. The majority interest in the net income of consolidated
subsidiaries have to be identified and adjusted against the income of
the group so as to arrive at the net income attributable to the owners
of the parent.
4. minority interests in the net assets of consolidated subsidiaries
has to be identified and presented separately from liabilities and
equity of the parents’ shareholders.
5. Eliminate Intragroup balances and intragroup transactions and
resulting unrealized profits
What are tax differences as per
AS 22?
The differences between taxable income and accounting income can
be classified into permanent differences and timing differences.
Permanent differences are those differences between taxable income
and accounting income which originate in one period and do not
reverse subsequently. Timing differences are those differences
between taxable income and accounting income for a period that
originate in one period and are capable of reversal in one or more
subsequent periods. Timing differences arise because the period in
which some items of revenue and expenses are included in taxable
income do not coincide with the period in which such items of
revenue and expenses are included or considered in arriving at
accounting income.
Can permanent tax differences
come in balance sheet ?
No
Permanent differences do not result in
deferred tax assets or deferred tax liabilities.
(but it is not so in the case of timing
differences)
What is associate as per AS 23?
An associate is an enterprise in which the

investor has significant influence and which is
neither a subsidiary nor a joint venture of the
investor. (e.g. 20% or more shareholding)
Examples of associateships ?
— Representation on the board of directors.

— Participation in policy making processes;
— Material transactions between the investor and the investee.
— Interchange of managerial personnel.
— Provision of essential technical information.
What is discontinuing operations
as per AS 24?
When a unit is relatively large component of an enterprise which is

major line of business or geographical segment, this is
distinguishable operationallys. In discontinuing operation, this unit
of businessis is seprarated on the basis of an overall plan in one shot
or in piecemeal. Discontinuance will be carried either through
demerger or spin-off, piecemeal disposal of assets and settling of
liabilities or by abandonment.
What must be shown in interim
financial reports as per AS 25?
Condensed balance sheet;

Condensed statement of profit and loss;
Condensed cash flow statement; and
Selected explanatory notes
Basic and diluted earnings per share as per AS-20.
What is intangible asset as per AS
26?
“non-monetary asset, without physical

substance, held for use in the production or
supply of goods or services, for rental to
others, or for administrative purposes.”
When should intangible asset be
recognised ?
it is probable that the future economic

benefits that are attributable to the asset will
flow to the enterprise; and
the cost of the asset can be measured
reliably
When can an organisation
recognise intangible asset ?
the technical feasibility of completing the intangible asset so that
it will be available for use or sale;
its intention to complete the intangible asset and use or sell it;
its ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic
benefits. The company should show the usefulness of the intangible
asset;
the availability of adequate technical, financial and other
resources to complete the development and to use or sell the
intangible asset; and
its ability to measure the expenditure attributable to the
intangible asset during its development reliably.
Can the method of amortisation be
changed ?
Yes
If the expected useful life of the asset is significantly different from
previous estimates, the amortisation period should be changed
accordingly. If there has been a significant change in the expected
pattern of economic benefits from the asset, the amortisation method
should be changed to reflect the changed pattern. Such changes
should be accounted for in accordance with AS-5, Net Profit or Loss
for the Period, Prior Period items and Changes in Accounting
Policies.
What is impairment of intangible
asset ?
if its recoverable amount is less than the

carrying amount
What is a joint venture as per AS
27?
A joint venture is a contractual arrangement

whereby two or more parties undertake an
economic activity, which is subject to joint
control.
What are the assets where we
cannot apply AS 28 regarding
impairment of assets ?
inventories;
assets arising from construction contracts;
financial assets;
deferred tax assets.
What are the steps in impairment
of an asset ?
Collect information from external and internal
sources about impairment of asset
estimate the future cash inflows and
outflows arising from continuing use of the
asset and from its ultimate disposal; and
apply the appropriate discount rate to these
future cash flows
change depreication rate / method (if required)
What is contingent liability as per
AS 29?
a possible obligation that arises from past events and the
existence of which will be confirmed only by the occurrence or non-
occurrence of one or more uncertain future events not wholly within
the control of the enterprise; or
a present obligation that arises from past events but is not
recognised because:
it is not probable that an outflow of resources embodying
economic benefits will be required to settle the obligation; or
a reliable estimate of the amount of the obligation cannot be made.
WHAT IS A PROVISION?
A provision is a liability, which can be

measured only by using a substantial degree of
estimation.
When should provision be
recognised as per AS 29?
an enterprise has a present obligation as a result of a past event;

it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation; and
a reliable estimate can be made of the amount of the obligation.
Can a provision be used for a
purpose other than the purpose
intendend for ?
No
A provision should be used only for
expenditures for which the provision was
originally recognised. (read AS 29)
Can we make provision for future
operating losses ?
No
Provisions should not be recognised for future
operating losses. An expectation of future
operating losses is an indication that certain
assets of the operation may be impaired. An
enterprise tests these assets for impairment
under Accounting Standard (AS) 28,
Impairment of Assets.
What should be shown as per AS
29 for contingent liabilities?
an estimate of its financial effect;

an indication of the uncertainties relating
to any outflow; and
the possibility of any reimbursement.
What are the types of hedges as
per AS 30?
(a) fair value hedge: a hedge of the exposure to changes in fair value
of a asset or liability or an unrecognised firm commitment, that is
attributable to a particular risk and could affect profit or loss. (b)
cash flow hedge: a hedge of the exposure to variability in cash flows
that (i) is attributable to a particular risk associated with a recognised
asset or liability (such as all or some future interest payments on
variable rate debt) or a highly probable forecast transaction and (ii)
could affect profit or loss. (c) hedge of a net investment in a foreign
operation as defined in AS 11.
How should a financial instrument
be recognised ?
A financial asset or financial liability at fair

value through profit or loss should be
measured at fair value on the date of
acquisition or issue (AS 30)
What are the cases when fair
value is not used to measure
financial instruments ?
loans and receivables

held-to-maturity investments
investments in equity instruments that do not
have a quoted market price
What is a finacial lease as per
ASS 17
A lease is classified as finance lease if it

transfers substantially all risks and rewards
incidental to ownership.
How should government grants be
shown as per IAS 20?
Grants should not be credited directly to

equity. They should be recognised as income
in a way matched with the related costs. Grants
related to assets should be deducted from the
cost or treated as deferred income.
What are the 3 types of joint
ventures as per IAS 31?
Jointly controlled operations

Jointly controlled assets
Jointly controlled entities
What is an onerous contract? Is
provision necessary for this ?
a contract in which the unavoidable costs of

meeting the obligations under the contract
exceed the expected economic benefits
yes, provision is necessary for this
What cannot be recognised as
intangible assets ?
Internally generated goodwill, Internally

generated brands, mastheads, publishing titles,
customer lists and items similar in substance.
Can we reclassify an expense as
intangible asset later on ?
No
Expenditure on an intangible item that was
initially recognized as an expense shall not be
recognized as part of the cost of an intangible
asset at a latter date.
What are methods to recognise
investment property?
a fair value model: Investment property

should be measured at fair value and changes
in fair value should be recognised in the
income statement; or
a cost model: Investment property should be
measured at depreciated cost (less any
accumulated impairment losses).
WHEN WERE
INTERNATIONAL FINANCIAL
REPORTING STANDARDS
(IFRS) ISSUED ?
2001
What is the main theme of IFRS
1?
How should a company adopt IFRS and that it

must explain how the transition from previous
GAPP to IFRSs affected its reported financial
position, financial performance and cash flows.
What must be disclosed as per
IFRS 7?
It is about financial assets.
information on the significance of financial instruments to the

entity’s financial position and performance;
the nature and extent of risk exposures arising from financial
instruments (quantitative disclosures); and
the approach taken in managing those risks (qualitative
disclosures).
What is expected to be a major
issue for accountants in 2011?
convergence of Indian Accounting Standards

with IFRS by 1st April 2011.
Can directors change the location
of accounts ?
Yes
. If the Directors decide to keep the books or
any of the books at a place other than the
registered office (the other place must be in
India), the Registrar must be notified within
seven days of the decision.
Who is responsible for keeping
books of accounts ?
managing director or manager;

where the company has neither a managing director nor manager
then every director of the company; and
every officer and other employees and agent as defined under
Section 240(6) of the Act.
What is the time limit for getting
minimum subscription?
within 120 days of the issue of prospectus
otherwise return entire amount, if the
subscriptions are not repaid within 130 days of
the issue of prospectus, the defaulting directors
will be jointly and severally liable to pay
interest @ 6% per annum from the expiry of
130 days.
What is interest on call in arrearss
as per Table A ?
Interest has to be paid from the day appointed

for payment to the time of actual payment at a
rate not exceeding 5% per annum
What for can a company use
share premium amount as per sec.
78?
issuing fully paid bonus shares to the members;

writing off preliminary expenses of the company;
writing off the expenses of or the commission paid or discount
allowed on any issue of shares or debentures of the company; or
providing for the premium payable on the redemption of any
redeemable preference shares or of any debentures of the company.
Can a company use share
premium in buy back of its
shares?
Yes
according to Section 77A, a company may
purchase (or buy back) its own shares or other
specified securities out of the Securities
Premium Account.
What conditions must be fulfilled
for issue of shares at discount ?
The shares must belong to a class already issued.
At least one year has elapsed since the date on which
the company was entitled to commence business
The issue is authorised by a resolution passed in the
general meeting of the company and the sanction of the
Central Government is obtained.The resolution must
specify the maximum rate of discount
at least one year has at the date of the issue elapsed
from commencement of business
shares be issued within two months of sanction
Where should the amount paid to
promoters for services rendered
by them is shown in accounts?
Show it in goodwill
What is the time limit for
submission of return regarding
buy back of shares ?
After the completion of buy-back, a return

containing such particulars relating to the buy-
back as may be prescribed has to be filed with
the Registrar of Companies and Securities and
Exchange Board of India within thirty days of
such completion.

What cannot be used for buy back
of shares ?
Free resserves can be used but these should be excluded :
Unamortised miscellaneous expenditure.
Unamortised deferred revenue expenditure.
Contingent liabilities likely to mature and not provided for.
Purchased goodwill.
Any diminution of long-term investments not provided for.
Any impairment in the value of tangible assets not provided
for.

Which money can used for
redemption of preference shares ?
The capital redemption reserve account / fresh

issue proceeds may be applied by the company
in paying up unissued shares of the company to
be issued to the members of the company as
fully paid bonus shares. Otherwise Capital
Redemption Account must be maintained
intact unless otherwise sanctioned by the Court
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Accounting Issues For Entrepreneurs

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Accounting Issues For Entrepreneurs

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ACCOUNTING ISSUES FOR

Ours is a great country with immense entrepreneurial potential. However,

Discount on issue of debentures is a capital

If the purchase price for the debentures

preliminary expenses are of capital nature and

Preliminary expenses being of capital nature,

Cost of preparation of the feasibility report.

Balance in the Profit and Loss Account;

in the resolution of potential financial conflicts

Representatives of : Ministry of Corporate

1. Objective of the Standard,

All significant accounting policies adopted in

If the fundamental accounting assumptions,

(i) abnormal amounts of wasted materials,

(i) Specific identification cost (ii) First-In-First

Net realisable value

Cash flows arising from transactions in a foreign

As per AS 6 : A change in one method of

1. the proportion that contract costs incurred

AS 7 : When it is probable that total contract

1. the amount of contract revenue recognised

only direct costs are included in the cost of the

Goodwill should be recorded only when some

Fixed assets acquired on hire-purchase should

An increase in net book value arising on

A foreign operation that is integral to the operations of the reporting

‘capital approach’ under which a grant is

If an investment is acquired in exchange for

a finance lease gives rise to a depreciation expense for the asset as

In finance lease = lessee

Finance lease = fixed % on invesment

Finance lease = recognise income over the

By dividing the net profit or loss for the period

Diluted earnings per share is calculated when

Potential equity share are those financial

1. The amounts used as the numerators in calculating basic and

An associate is an enterprise in which the

— Representation on the board of directors.

When a unit is relatively large component of an enterprise which is

Condensed balance sheet;

“non-monetary asset, without physical

it is probable that the future economic

if its recoverable amount is less than the

A joint venture is a contractual arrangement

A provision is a liability, which can be

an enterprise has a present obligation as a result of a past event;

an estimate of its financial effect;

A financial asset or financial liability at fair

loans and receivables

A lease is classified as finance lease if it

Grants should not be credited directly to

Jointly controlled operations

a contract in which the unavoidable costs of

Internally generated goodwill, Internally

a fair value model: Investment property

How should a company adopt IFRS and that it

information on the significance of financial instruments to the

convergence of Indian Accounting Standards

managing director or manager;

Interest has to be paid from the day appointed

issuing fully paid bonus shares to the members;

After the completion of buy-back, a return