FINANCIAL ACCOUNTING

DIGITAL ASSIGNMENT 3
1. How many Accounting standards have been issued so far by
the Institute of Chartered Accountants of India? Which
Accounting standards are applicable to depreciation and
statement of cash flows?

Accounting Standards are written policy documents issued by expert

accounting body or by the government or other regulatory body covering
the aspects of recognition, measurement, treatment, presentation, and
disclosure of accounting transactions in financial statements.
32 Accounting Standards have been issued/ amended by the
Accounting Standards Board of ICAI from time to time, to establish
uniform standards for preparation of financial statements, in accordance
with generally accepted accounting practices (GAAP) in India and for
better understanding of the users.

Indian Accounting Standards

AS 01 : Disclosure of Accounting Policies
AS 02 : Valuation of Inventories
AS 03 : Cash Flow Statements
AS 04 : Contingencies and Events Occurring after the Balance Sheet Date
AS 05 : Net Profit or Loss for the Period, Prior Period Items and Changes
in Accounting Policies
AS 06 : Depreciation Accounting
AS 07 : Construction Contracts
AS 08 : Accounting for Research and Development
AS 09 : Revenue Recognition
AS 10 : Property, Plant and Equipment
AS 11 : The effects of changes in Foreign Exchange Rates
AS 12 : Accounting for Government Grants
AS 13 : Accounting for Investments
AS 14 : Accounting for Amalgamations
AS 15 : Employee benefits
AS 16 : Borrowing Costs
AS 17 : Segment Reporting
AS 18 : Related Party Disclosures
AS 19 : Leases
AS 20 : Earnings Per Share
AS 21 : Consolidated Financial Statements
AS 22 : Accounting for Taxes on Income
AS 23 : Accounting for Investments in Associates in Consolidated
Financial Statements
AS 24 : Discontinuing Operations
AS 25 : Interim Financial Reporting
AS 26 : Intangible Assets
AS 27 : Financial Reporting of Interest in Joint Ventures
AS 28 : Impairment of Assets
AS 29 : Provisions Contingent Liabilities and Contingent Assets
AS 30 : Financial Instruments : Recognition and Measurements
AS 31 : Financial Instruments : Presentation
AS 32 : Financial Instruments : Disclosures
Accounting Standard applicable to Depreciation-

AS 06 Depreciation Accounting.

 This Standard applies to all depreciable assets, except

the following items to which special considerations apply:
—

(i) forests, plantations and similar regenerative natural resources;

(ii) wasting assets including expenditure on the exploration

for and extraction of minerals, oils, natural gas and similar non-
regenerative resources;

(iii) expenditure on research and development;

(iv) goodwill;

(v) live stock.

This standard also does not apply to land unless it has a limited useful
life for the enterprise.

 Different accounting policies for depreciation are adopted by

different enterprises. Disclosure of accounting policies for
depreciation followed by an enterprise is necessary to appreciate the
view presented in the financial statements of the enterprise
Accounting Standard applicable to Statement of Cash
Flows –
AS 03 Cash flow statement

 The applicability of AS 03 Cash flow statement has been defined

under the Companies Act, 2013. As per the definition in the act, a
financial statement includes the following:

i. Balance sheet

ii. Profit and loss account or Income and expenditure account

iii. Cash flow statement

iv. Statement of changes in equity

v. Explanatory notes

Thus, cash flow statements are to be prepared by all companies but

the act also specifies a certain category of companies which
are exempted from preparing the same. Such companies are One
Person Company (OPC), Small Company and Dormant Company.
 AS 3 Cash Flow Statements states that cash flows should exclude
the movements between items which forms part of cash or cash
equivalents as these are part of an enterprise’s cash management
rather than its operating, financing and investing activities.
 Presentation of Cash Flow

A cash flow statement must depict the cash flows within the period
classifying them as

A. Operating activities

B. Investing

C. Financing activities

Companies must prepare and present cash flows from operating,

financing as well as investing activities in such manner that is apt to
their business. Financing and investing transactions which don’t
require cash or cash equivalents mustn’t be included in the cash flow
statement. Those transactions must be presented elsewhere in
financial statements in a way which gives relevant information about
such financing and investing activities.

NAME:S.JAYAGOKUL.

REG NO: 19BCC0020.