ACCOUNTS CIA

COMPONENT 1
COMPARISION OF FINANCIAL
STATEMENTS UNDER GAAP AND
IFRS.

CHAHAT GUPTA
1820338
1 BBA-C
COMPANY PROFILE

Wipro Ltd., the flagship company of the Azim H Premji group and was incorporated
in the year 1945. The company started off originally as a manufacturer of vegetable
ghee/vanaspati , refined edible oils etc. Gradually diversification has taken place .
Today Wipro Limited is the first PCMM Level 5 and SEI CMM Level 5 certified IT
Services Company globally. Wipro provides comprehensive IT solutions and services,
including systems integration, Information Systems outsourcing, package
implementation, software application development and maintenance, and research and
development services to corporations globally.
In the Indian market, Wipro is a leader in providing IT solutions and services for the
corporate segment in India offering system integration, network integration, software
solutions and IT services. Wipro also has profitable presence in niche market
segments of consumer products and lighting. In the Asia Pacific and Middle East
markets, Wipro provides IT solutions and services for global corporation.
Wipro forms balance sheets on both IFRS and GAAP basis.
 Logo since 2017
Type Public
Traded as BSE: 507685
NSE: WIPRO
NYSE: WIT
BSE SENSEX Constituent
CNX Nifty Constituent
Industry IT services, IT consulting
Founded 29 December 1945; 72 years ago
(Amalner, Maharashtra)
Founder Mohamed Premji
Headquarte Bengaluru, India
rs
Area served Worldwide
Key people Azim Premji (Chairman)
Abidali Neemuchwala
(CEO)
Services Digital Strategy, Business
Consulting and IT Services
Revenue US$8.4 billion (2018)[1]
Operating US$1.57 billion (2018)[1]
income
Net income US$1.23 billion (2018)[1]
Total assets US$11.68 billion (2018)[1]
Total equity US$7.45 billion (2018)[1]
Owner Azim Premji (73.25%)[2]
Number of 160,000 (2017)[1]
employees
Website www.wipro.com

Definition of GAAP

Generally Accepted Accounting Principles or GAAP refers to the standard

framework, principles and procedures used by the companies for financial accounting.
The principles are issued by Financial Accounting Standard Board (FASB). It is a set
of accounting standards that consists of standard ways and rules for recording and
reporting of the financial data i.e. balance sheet, income statement, cash flow
statement, etc.


GAAP principles are updated to meet with current financial requirements periodically
.The system is transparent and consistent. The information provided as per GAAP by
the financial statement is helpful to the economic decision makers such as investors,
creditors, shareholders, etc.

Definition of IFRS

IFRS is short for International Financial Reporting Standard is a globally adopted

method of financial reporting issued by International Accounting Standard Board
(IASB). Formerly, it is known as International Accounting Standard (IAS). Thi
standard is used in the preparation and presentation of the financial statement such as
balance sheet, income statement, cash flow statement, changes in equity and
footnotes, etc.

IFRS ensures comparability and understandability of international business. It is

aimed to provide users with information about the financial position, performance,
profitability and liquidity of the company, to help them in making rational economic
decisions.

Basis IFRS Indian GAAP

Stands for International Financial
Reporting Standards
Leading International Accounting
Authority Standards Board (IASB)
Based on Principles
Used in Over 110 countries, and more
are planning to shift to it
True & Fair In extremely rare circumstances
Override the true and fair override is
allowed.
Functional Assets and liabilities are
and translated at the exchange rate at
presentation the balance sheet date when the
currency financial statements are
presented in a currency other
than the functional currency.
Historical Generally uses historical cost,
Cost but intangible assets, property
plant and equipment (PPE) and
investment property may be
revalued to fair value
Cash Flow No Exemption
Statements
Revenue Revenue should be measured at
the fair value of the
consideration received or
receivable
Generally Accepted Accounting
Principles
Ministry of Corporate Affairs
(MCA)
Rules
India
True and fair override is not
permitted
No concept of functional or
presentation currency.
Uses historical cost, but property,
plant and equipment may be
revalued to fair value.
Exemption for SMEs
Revenue is measured by the
charges made to the customers or
clients for goods supplied or
services rendered by them and by
 the charges and rewards arising
from the use of resources by them.
Depreciation Depreciation is based on useful Depreciation is based on higher of
life. useful life
Major Major repairs and overhaul Major repair and overhaul
repairs and expenditure are capitalized as expenditure are treated as expenses.
overhaul replacement under certain
expenditure conditions.
Presentation Both proportional consolidation Proportional consolidation method
of joint and equity method permitted used
ventures
Acquired Intangible assets assigned an All intangible assets are amortized
intangible indefinite useful life are not over useful life with a rebuttable
assets amortized presumption of not exceeding 10
years.
Developed International Accounting Financial Accounting Standard
by Standard Board (IASB). Board (FASB).
Inventory FIFO and Weighted Average FIFO, LIFO and Weighted Average
valuation Method. Method.
Extraordinar Not segregated in the income Shown below.
y items statement.
Developmen Capitalized, only if certain Treated as an expense
t cost conditions are satisfied.
Reversal of Permissible, if specified Prohibited
Inventory conditions are met.
GAAP BALANCE SHEET Notes As at As at As at
March 31, 2017 March 31, 2016 April 01, 2015

ASSETS

Non-current assets

Property, plant and equipment 5 37,555 36,418 34,805

Capital work-in-progress 5 6,941 3,251 3,612

Goodwill 6 3,882 3,882 3,882

Other intangible assets 6 2,185 375 499

Financial assets

Investments 7 59,994 57,811 56,260

Derivative assets 18 106 260 736

Trade receivables 8 3,998 1,362 2,443

Loans to subsidiaries 33 - 1,958 1,848

Other financial assets 10 3,545 4,067 4,221

Deferred tax assets 19 2,352 4,254 3,022

Non-current tax assets 19 12,008 11,751 11,409

Other non-current assets 12 11,732 11,257 9,425

Total non-current assets 144,298 136,646 132,162

Current assets

Inventories 11 3,559 5,262 4,794

Financial assets

Investments 7 291,467 204,195 93,827

Trade receivables 8 81,299 83,980 77,797

Cash and cash equivalents 9 35,166 84,088 149,425

Derivative assets 18 9,747 5,549 4,889

Unbilled revenues 32,845 37,100 33,387

Loans to subsidiaries 33 1,917 - -

Other financial assets 10 6,151 7,658 11,730

Current tax assets 19 7,701 6,519 5,497

Other current assets 12 17,419 18,252 16,838

Total current assets 487,271 452,603 398,184

TOTAL ASSETS 631,569 589,249 530,346

EQUITY

Share capital 13 4,861 4,941 4,937

Other equity 462,195 407,316 361,448

Total Equity 467,056 412,257 366,385

LIABILITIES

Non-current liabilities

Financial liabilities

Borrowings 14 11,463 11,465 10,632

Derivative liabilities 18 2 118 71

Other financial liabilities 15 77 55 -

Provisions 16 3,733 3,991 2,736

Deferred tax liabilities 19 1,391 722 567

Non-current tax liability 19 9,099 8,231 6,695

Other non-current liabilities 17 349 291 210

Total non-current liabilities 26,114 24,873 20,911

Current liabilities

Financial liabilities

Borrowings 14 50,186 55,495 49,704

Trade payables 38,186 43,623 40,191

Derivative liabilities 18 2,708 2,340 753

Other financial liabilities 15 17,628 18,174 18,548

Unearned revenues 11,506 14,222 14,021

Provisions 16 6,269 6,426 6,357

Current tax liabilities 19 6,792 6,363 7,360

Other current liabilities 17 5,124 5,476 6,116

Total current liabilities 138,399 152,119 143,050

TOTAL EQUITY AND LIABILITIES 631,569 589,249 530,346

IFRS BALANCE SHEET:

As at March 31,
Notes 2016 2017 2017
Convenience
translation
into U.S.$ in
millions
(Unaudited)
Refer note
2(iii)
ASSETS
Goodwill 5 1,01,991 1,25,796 1,940
Intangible assets 5 15,841 15,922 246
Property, plant and equipment 4 64,952 69,794 1,076
Derivative assets 15 260 106 2
Investments 7 4,907 7,103 110
trade receivables 8 1,362 3,998 62
Deferred tax assets 17 4,286 3,098 48
Non-current tax assets 11,751 12,008 185
Other non-current assets 11 15,828 16,793 259
Total non-current assets 2,21,178 2,54,618 3,928
Inventories 9 5,390 3,915 60
trade receivables 8 99,614 94,846 1,463
Other current assets 11 32,894 30,751 474
Unbilled revenues 48,273 45,095 695
Investments 7 2,04,244 2,92,030 4,503
 Current tax assets 7,812 9,804 151
Derivative assets 15 5,549 9,747 150
Cash and cash equivalents 10 99,049 52,710 813
Total current assets 5,02,825 5,38,898 8,309
TOTAL ASSETS 7,24,003 7,93,516 12,237
EQUITY
Share capital 4,941 4,861 75
Share premium 14,642 469 7
Retained earnings 4,25,118 4,90,930 7,570
Share based payment reserve 2,229 3,555 55
Other components of equity 18,242 20,489 316
Equity attributable to the equity holders of the
Company 4,65,172 5,20,304 8,023
Non-controlling interest 2,212 2,391 37
Total equity 4,67,384 5,22,695 8,060
LIABILITIES
Long-term loans and borrowings 12 17,361 19,611 302
Derivative liabilities 15 119 2 —
Deferred tax liabilities 17 5,108 6,614 102
Non-current tax liabilities 8,231 9,547 147
Other non-current liabilities 14 7,225 5,500 85
Provisions 14 14 4 —
Total non-current liabilities 38,058 41,278 636
Loans, borrowings and bank overdrafts 12 1,07,860 1,22,801 1,894
trade payables and accrued expenses 13 68,187 65,486 1,010
Unearned revenues 18,076 16,150 249
Current tax liabilities 7,015 8,101 125
Derivative liabilities 15 2,340 2,708 42
Other current liabilities 14 13,821 13,027 201
Provisions 14 1,262 1,270 20
Total current liabilities 2,18,561 2,29,543 3,541
TOTAL LIABILITIES 2,56,619 2,70,821 4,177
TOTAL EQUITY AND LIABILITIES 7,24,003 7,93,516 12,237


COMPARISION
ITEMS GAAP IFRS
Property, Plant and 37555 69794
equipment
Investment 291467 292030
Trade Receivables 81299 94846
Inventory 3559 3915
Unbilled revenues 32845 45095
Borrowings 11463 19611
Derivative liabilities 1391 2708
Provisions 3733 1270
REASONS
1 Inventory Methods

Under GAAP, a company is allowed to use the Last In, First

Out (LIFO) method for inventory estimates. However, under IFRS,
the LIFO method for inventory is not allowed. The Last In, First
Out valuation for inventory does not reflect an accurate flow of
inventory in most cases, and thus results in reports of unusually low
income levels.

2 Classification of Liabilities

The classification of debts under GAAP is split between current

liabilities, where a company expects to settle a debt within 12
months, and noncurrent liabilities, which are debts that will not be
repaid within 12 months. With IFRS, there is no differentiation
made between the classification of liabilities, as all debts are
considered noncurrent on the balance sheet.

3 Fixed Assets

When it comes to fixed assets, such as property, furniture and

equipment, companies using GAAP accounting must value these
assets using the cost model. The cost model takes into account the
historical value of an asset minus any accumulated depreciation.
IFRS allows a different model for fixed assets called
the revaluation model, which is based on the fair value at the
current date minus any accumulated depreciation and impairment
losses.

4 Quality Characteristics

GAAP works within a hierarchy of characteristics, such as

relevance, reliability, comparability and understandability, to make
informed decisions based on user-specific circumstances. IFRS also
works with the same characteristics, with the exception that
decisions cannot be made on the specific circumstances of an
individual.