| MASTERMINDS = No.1 for CA/CMA & MEC/CEC AS 1: DISCLOSURE OF ACCOUNTING POLICIES AS - 1 Disclosure of Accounting Policies ¥ ¥ ¥ ¥ ¥ 4.mesning ot ) [2.Areas } [3.Selecion | (4, Disclosure 8. Changes in Accounting Policy Accounting Policy ing of Accounting Policies Accounting Principle + Methods adopted by enterprises = in application of principles Ex: Providing Depreciation on Assets ¥ Ex SLM, WDV (01) Other Methods Examples € £ SS ¥ ¥ SS ¥ ¥ ¥ Methods of | [ Valuation of |[ Valuation of | {Valuation 1) |{ Translation ] [Contingent Depreciation Inventory Investments }§ of Fixed || Godwil of Foreign Liability Assets currency item S 3. Selection of Accounting Policies (It is responsibility of management) Primary Consideration ‘Secondary / Other Consideration ¥ True & Fair view of + ¥ Financial Statements Prudence ‘Substance over form Materiality ¥ ¥ + Making of Estimates, || Transaction and other events | | Information is material if which is required under || should be accounted for and || its misstatement could Condition of uncertainty |} péesented in according wth | influence the decisions of substance and financial realty,| | user of FIS. Materialty is 2 not with their legal form ot always a matier of Ex: Garying amount of ¥ ove J inventory ignores proft | Ex: Car purchased but not margin registered deprecation shoul |" Re 50,000 era 6 charged by reporting entity |) ordinary loss might be immaterial for a large & profitable organization, but it willbe material for a small organization that has very litle profit CA Inter | 40e | Flowcharts | Accounting Standards98851 25025 / 26 www.mastermindsindia.com Need Example Where Exception > Better understanding Enterprise in adopting At one single Fundamental > Uniform disclosure WD.V method for place as a part Accounting providing depreciation on of notes to assumptions Fixed Assets Accounts Going concem | | Consistency ‘Accrual NOTE: Followed Not followed Disclose is not the remedy for inappropriate ‘Accounting treatment t q Not required Fact needs to to disclose be disclosed 5. Change in Accounting Policy “ Need Disclosure i I 1 mera ‘Statutory Compliance More Appropriate requirement |} with Accounting Presentation eee lies = Current period Later period No need to. I disclose Ascertainable Not Ascertainable > Nature of change » Fact of change ¥ ¥ sd » Nature of change » Nature of change » Period to the extent > Fact of Change Copyrights Reserved ‘To MASTER MINDS, Guntur CA Inter | 40e | Flowcharts | Accounting Standardsg g g S iu = a < = g s AS — 2: VALUATION OF INVENTORIES yruio} S09) pue sai9 (2pe1, u yp0%8 (ensonas ) t [Arnaeordde-sony } (Cerunoynco¢ ) (coma ] ‘Buisn jo asodind (24) 10} PIGH :81003 #8007 jesse oxy sejnoqied @ 0} y90ds ou 818 Yat seeds B SaI0Kg {2108 40} Blo ~ SPOOD paustUly ‘tes yons 10} s880016 Lvononpaid 10} pia Fat (Camas) t t ar] ‘selioquanul jo uonenten z~ Sv ' Copyrights Reserved To MASTER MINDS, Guntur CA Inter | 40e | Flowcharts | Accounting Standardswww.mastermindsindia.com 98851 25025 / 26 [perro mey = ‘aeHA e251 seseuang 01800) a an : * soo | amen nes | | Lf LD epoca ‘Aiowuanuy jo uonenien CA Inter | 40e | Flowcharts | Accounting Standards‘204d 1809 18 Penten eq IMA We OU PEYSNIES 10U 10% UORIPUDD @ADGE OU JO GUO AUE 9/4 101800 > OF 40 AUN Wri 309800 > WH JO AUN ‘e820 Buymoj}o} au) Ul YeOxe ILO 7809 Je PANIEA SAEMVE [BUBIEW MEY 1p LON ‘Avo woo wueweoerdags ye panien stywrd { pnpoid ujew jo yS09 OM} paanpes eq pINOUS JoNPoe eXA Jo AUN—IoNPOd Ofg Jo ese U| Pex9pisuoe eq Pinoys yuIod 4o jI1ds ye anjeA oles ennele1 ~ onpoId WUlOP Jo Ose UI (! 7€ ION “RIN (10) enjer yoRUCD Jo Jomo} 1B PeN|eA aq Pinos Alo\UeAU] "SESTOWENUSD :z O10N siseq dnoi6 uo auop 9q Kew seseo 80s yng ‘siseq WOH! 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UO AoqUAAU Jo UOHENIEA = O1ON g g g S iu = a < = g s [_sprepueis WM Aten JOU Sp 4809 jeNIDe J} ] uonezjueBso Hey Powis uoneoynusp! 2yloeds 7 eigeeGueyoueiuy AueUIpIS, ‘eiqeabueysioqu AeUrJ0-I0N eC F INWO4 YS09 “e CA Inter | 40e | Flowcharts | Accounting Standards98851 25025 / 26 www mastermindsindia.com AS — 3: CASH FLOW STATEMENT AS 3: Cash Flow Statement ¥ Presentation of Flow of Cash & ae Eaquivatents during the year Cash activity een en Inet eivies Financing Actives + + + Pein Reveme producing actives Acquistion & Disposal of longterm Which changes te compostion ot other han nvesing and fanciog anata hers (ober tench sie of one's capa boroving aciites ‘cavivalens) : = hacen \__,——. > Cash flows from customers 7 Snot ee ee Present on Gross basis subject to exceptions maturity & large amounts Presentation 2 Methods —, Direes Method Indirect Method y Majorclasses of gross cash Net Profit before tax receipts & cash payments are +1- Non eash & Non operating ++#-Changes in Working Capital discipsed r ~ Tax pid & extraordinary items Bape os ¥ Difference is there only in presentation of operating activities. JA & FA are same as Direct Method Josure: > Components of Cash & Cash Equivalents > Recosciliation of the amounts in CFS with amounts reported in Balance Sheet. > Management comments on special areas, Copyrights Reserved ‘To MASTER MINDS, Guntur CA Inter | 40e | Flowcharts | Accounting Standardsg g g S iu = a < = g s 3 g 3 E é g E ‘aug yo wsaouea 6405) Stooge woes stinsoy 008 x —t Tondo ade Tue Smansriog Sane t E ¥ = ¥ sor Sunslpy-uon ‘0rg Buysnipy t ¥ Tas Ba /sjorevon ase 1 280, je9ueu f (eiqesnonejun / 9\qesnoned) Shep ye04s souejeg Joye Buyund90 s\U0Ag 212q J90Ug eouejEg Joye GuLUNo90 syueAg ¥ Se!>Ue6URUOD y ~ Sy CA Inter | 40e | Flowcharts | Accounting Standardswww.mastermindsindia.com NET PROFIT / LOSS FOR THE PERIOD, PRIOR PERIOD ITEMS AND 98851 25025 / 26 CHANGE IN ACCOUNTING POLICIES sores wea jepow se way oF) ‘540 wonewaeaid edad ain ur asus Suunosoy my sad * ogee | toneoyiss — paatrause yo meus s19pH) ‘potiad s01d Jo 5 30 vnopmindaid ino say poured 20rd aeip wouIa20p so pUyy sd 29150 soot jousupmy © ‘ening o1onpssoy & co porsads sou a TN “ARI, sonunse daeupaoeaea * nou pur antehy + 30 aumsc oct 830005 CA Inter | 40e | Flowcharts | Accounting Standardsreyiodse sepuobun09 ‘muon 0 9 wo onp Wun sis) « votes (P ee ‘sjasse jo uomjowan ai © aun vow yeweunioynio po voREneN “2 Teese jo uoWIOse/woRNIeG “a pout (a ssooea rs von jewnoue — soysenves g g g S iu = a < = g s CONSTRUCTION CONTRACTS eK doo86y (© pezubooe: 1 ep || so Suveow au ung penne onuoney yosse jo uonouy na ‘grave sseifod ‘seyeumse Buqunooe ys09 yoeaag ~ ue ABojouyoa = Trpemog «|| dedueupeee ieee “ubiseq wo poweea s enue 2 paieuen psotag «|| eyoouconoon | | e—wause ‘ pesn poueW « urebuerp & ‘Sia S10}9eqU0o ‘szuBooes ‘oe quod (10) anuanas Agetas ‘uy semuoo yOSSe UE JO ‘enueney yoequoo jo sajewyse: 9q you UBD peveumsa ‘uogonsuoo ‘uoponnsuos sriemu0g 4 rue y ¥ + soud pong « | | 10) Suqunoooy so) 1980009 — I _ t | seyewyse ut Sony ed suo) retciia ssor/woudyo |} {BojouuuO, vogonsuo, ameopaa's | | sebueua 2 ueerdtico's || SONAL 'Y || sock | fone yo Ouueoyy z z z x £ x ¥ ‘syenuog UoHINN}suOD 1~ SY CA Inter | 40e | Flowcharts | Accounting Standardswww.mastermindsindia.com 98851 25025 / 26 ypenu0o YO} ay 1 PEyHeO HOM JO OVERS spor e409 9 Jo vomsodaxs eoishyd jo uonere\wo9 wood 0m jo Konins Ag Powew 3800 011800 « uona|duios yo 960g (pequuoyeng) sews ou ypenuoo ‘Spiepuris suewoyed epeanxe Tew soy yn TOPIENUES FoyUTTETS ‘aq suouked euonipoy Uoyeoyoods ] [7 seanuesor Agen « : | sepnexg | In| ne “wonyeydusoo Jo [sees ] [soma ] [nav wauee%] [mm : boven | | voutony weaasapeieewpeam | fF Si HD opamp hy [Tensrme en | ¥ CA Inter | 40e | Flowcharts | Accounting StandardsNo.1 for CA/CMA & MEC/CEC {eo 186 och pezubo0eu envonda}-[uoApordue® jo be UeDIN x eid YERUOS] gemwung aj9jdwoo 0} 109 payeunsy}+paunouy 4800 =vomyduioa jo ebequ2d%9, aiep 61 1800) eae oor x Z:3LON ‘93tl038N0 of snp jUnoWiy: Y99q ‘srewioysno wow anp yunowry : siding, junowee soi0uNA) 1a: Buyua sseiBog (Gunoosip pue sigap peq e%1 parsnioy) 00K ‘sassoj azjuBooas o wng XXX (enueney) woud peziu8oses + paxinouy auinow 609 Ong 18 o 01 pobieup 8807 = Tol paeta =e (uota}duiod jo % x enuansesemUED) —_———__— ft oo uorsinaid 40 Aer ayy Aq paziuGooa (27y $807 9 Wo4e 01 pa6xeU9) 8g 6} Ss0j oouejeg oy 104 pazjuBoo91 2g 0} $507 to omvonou penucdisootvenwog | _t ‘anusaay joesued < 150919811409 en $80} 9e:1U09 ayeUMSe 40) UOISIAOIE “9 | Frey CA Inter | 40e | Flowcharts | Accounting Standardswww.mastermindsindia.com 98851 25025 / 26 aunsur 09 ~ uowe|dis09 0% x anuenses j2ehued) = $807 pazuBooa: 24 o110N voneiduco jo aBers « 10420 paouewwos JoesIUOD Jo HOM IeMNEOM « ‘sSumoyo} a4 0 axtnadsoun pozIuGode1 9q 0) si $50} payreKNa :010N vonneiesjo xonvnaa neg | t ‘geno st ‘xon0093 you Jo paunour 24) a1eydus09 oy 8801 /Yold ainypuodeg younees) Bupunoaoy swan ‘Aygeiio4 porewnse oq 3,ue> y9eU09 uononsjsues ayy Jo ewo2;no UOUAA “(ws CA Inter | 40e | Flowcharts | Accounting Standardsg g g S iu = a < = g s REVENUE RECOGNITION wouoan Anp 99-9 33 pauodisod tua0q soy uowusoaas p W ywnowe ‘ Sunkueo sy eur i 559} uonBg0 pazjubo0e1 aq pinoys see yan ary eee pfenou ka 1 pue peuodsod ‘ ppstimona V8 d 04 pebieuD 1uBooed enuenoy \ pent z z : fenuanoy enuenas r 40 uonwuBo2es | | pazweosun j pazieoy paziea-un, pazyeay [ ‘wou, sure5 | EE s900006 jo Buuapuel pmufooe: ‘29 pnous anuanan ‘sseujsng jo asinoo Aueuspu0 Ut ‘suonesepisuc9 J0Ujo / sajqeneoey 1 ysea yo moyul sso1) ‘Ayurepeoun « = weoyjubig s110y, || ueveoun weoyubis ov 8 au, pn Seon ¥ ¥ ‘ t ¥ i ¥ ‘mura 1 aman eunsoesia's uowuBcoey '¢ peOmmont t z ¥ ¥ uopuBooey enueney 6- Sv CA Inter | 40e | Flowcharts | Accounting Standards(pezub0091 99 10u pinous anuanee) ON www.mastermindsindia.com Peyueps Jey9s 0 spuey eu UF eq Isr! SPO ‘vonayduoo ‘areuorvodoig a) 0/405 0 t —F ‘uo < Awe | wogdua6ep ‘pouou anv ones 98851 25025 / 26 ‘eu IO famioe au ee ‘Seays98 oun yo Buuepuey ¥ ‘onUuBADY JO UOMIUBOOSY CA Inter | 40e | Flowcharts | Accounting Standards| MASTERMINDS = No.1 for CA/CMA & MEC/CEC AS — 10: PROPERTY, PLANT &. EQUIPMENT AS 10: PPE + ods oF provid + Retognition ee + Subsequent expenditure vices bat not fr sale ‘Asset held for produc rc Initial expenditure Capitalize only when it Faure eco ‘benefits are probable (asset) 7 castro Exchange with Byisteof Self coatrion + another ast series + — e — A cons intned fr ore m consinction +All “Romreaihletnes XX FMVof ase gvevsecrities ised alocted ‘cons decly 2PVetestoaton XX OR related SAN diet np in FMV of ase ccd Reay ose x Whichever clearly evident (Don't inl interns 24S 16 BC profi Discount “Govt gas ver its useful if Major assets replacement & overhasling should be captatised and depreviat Y If deferred credit terms ae involved, should be recognised at present value and it would be unwinded over the period. Recognise it interes % Use life, Residual valve & depreciation method shou be reviewed etery year end % Any change in price, life, RV & method af depreciation ~ Account prospectively jc. remaining carying amount over the remaining life Select Cost or revaluation mode! forthe entre class of items. Select and apply consistently. Retirement & Disposal i} — ooo Sain Bera c wov | Not revaled before Or Y ¥ nav + Wyle aleppee-WOV TF ’ Loss Profit Taner 'o PA i " ‘Transfer to P&L. FEL Romig BR user Copyrights Reserved ‘To MASTER MINDS, Guntur CA Inter | 40e | Flowcharts | Accounting Standardswww.mastermindsindia.com THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES 98851 25025 / 26 AS -11: tuonsinboe useniag eouevey ous ur UBUSBAU YU Uy si Jo aj aun fs Luoje20080 ug $8040 eS ya ayes Bus ye $907 ue ole UE || “eH: 104s pUe 3900 OUST ‘swoypan'soigop |] Ue Uoneleouea ug soy 0 ures |) S181 eM0} ast aniog Aiciauyi 1 paureg 4 usemeq AiO, iep yeaus Pees I t 1Avi@am) mansions penne amon |e) lee ple, uaenjaq eauareyp ‘ome sesuetha pue ON Aaeyeuow || Guisn uo Bujeq $807 pUE osc wonsesues oesues a pezubcoan sep ote fousuina a t | oesuesy couse of.) 1uB1040} pebtip aves busetes prenboons unos soy se aues | | nq souioun obverse : untuesg uuonesedo | | peyea,, on ~ Asej@u0_-UON syne ana o ¢ ‘u61010) au teasipting sea ees BaBpaTTOR eB + Arejouoyl ~ 2202.8) i TuTBp SY 70g 2 A Busy yo weuneal|, vuonenien, 6 oe t uaWaINAS 5) a ‘Foualaro ubiaN0} 20182 Ue JO} a}ep airy eye BUOP aq WA NOWANIAS + D 2 Bee eee uae muh tu Buimawog pue Bupua|‘seomes ‘ubia1o os 40 Ang 0) saqyed omy uoamyag yuowioa.by + Julor pue ejeroossy ‘Aveipsqng 40 spoo6 jo Buses pue Buukng syoequ09 aBueyoxg pueMio4 \youeug ‘9% suonesedo ub}e104 ‘24 suogoesuen Aouauino ubje103 z t t €~ ANODALVD 7% AYOOSLVD | [i ‘AODALVO t t ij f sojey oBueyorg UBtoso4 uy soBueyD Jo y0043 OU (002 GaSIAzu) L-sv CA Inter | 40e | Flowcharts | Accounting Standardsg g g S iu = a < = g s ACCOUNTING FOR GOVERNMENT GRANTS AS - 12: ‘spoyed ‘Agsnpu! ay) ut Aqua evo snowaid ul pauinour (fu 0 Dodi ence s9sso) 40 sosuadyo 10) uojesueduco sy aje;pa.wu Bun 404 24 vonisinboe yy ¥ 204 jeuoisse0u09 Ft 6upyng = pue} ey) esse Ave}euoU-UON euIWou ye puoDay S~ Sy 48d se way! Aeuipuoenxe se payuasalg ft Tt 3809 Jo 8a4y saseg jetveds ul syuesg “y @ 4 seg 104, pan}200) JEL J) tf Bujunoooy ¢ t 081 ajewin Ul AuleyE0UN ON ‘SuOMpuoD Jey) SIsjX@ BOUEINSSE aIQeUOSEAY » :uoruBove1 40} suonIpuog 'Z payduioo a 7 SSuompUuod iseg/auniy Jo soverRduioD 40 puyyseo ut S0UEISISSY 1UeID WOH *} Copyrights Reserved CA Inter | 40e | Flowcharts | Accounting Standardswww.mastermindsindia.com 98851 25025 / 26 yasn Bulurewas quewareys jeoueUly ut paziuBose 95 Jo 1uayxa yaIN|EN + amojio} Aojiod Bununcoay y998e poxtg 0} PEIEIY ‘vonnqujuos s8}0Word 0} PAIR “onsei teude2, 0} peype15 Tea ugea~eougreg + ‘anuena! 0} PAE’ ques6 juauUeADD jo punjay "Ss rensn se ayepaideg + uiononpep uwoneraidap eye aouereg a uoniodaud siepeldag + uy ewoou} se ezjuBo0e1 NIRA S$01D_ {adeoue0 BusereH) "2 1ueI6 9p se poreoly + wey ionp0q siseq — opewieysks esuedxe ¥ ¥ pareres woy Yanpeq 1a88e ayqemadep-UON yesse ompoaided F £ ¥ ¥ Uuonnquiueg s se}0WOse} ¥ sosuadxe onuanoy t ft seg 104 ? Jessy oupeds CA Inter | 40e | Flowcharts | Accounting Standards| MASTERMINDS = No.1 for CA/CMA & MEC/CEC AS — 13: ACCOUNTING FOR INVESTMENT AS 13: Investment ‘ ‘Asset held for earning income by way of interest, Rent, Dividend, Capital appreciation etc y Recognition & Measurement ¥ ‘ y Initial Recognition Subsequent measurement on BS date Recognise at Cos i Based on Classification Purchase Price xx a + Incidental expenses. XX ¥ + Pre acquisition income XX Current Invst Long term Tavs, + ‘ Conditions to satisfy: Other than 1. Readily realisable & Current Invst 2. Tobe held fr 1 yess t + Value always at cost Cost -xeeption Or | = If there is any permanent reduction in oe value ~ reduce investment by charging to P&L Reduction in FV > Take toP & L Can increase when value is increased, Disposal: Profit/Loss on sale —> Take it to P&L P/L= Sale proceeds ~ Weighted Average cost of Investment Josure: |. Alc policies adopted PAL on disposal Total amount of Quoted & Unquoted investment Total market value of quoted investment Other Disclosures etc. Copyrights Reserved To MASTER Guntur CA Inter | 40e | Flowcharts | Accounting Standards Em98851 25025 / 26 www mastermindsindia.com AS - 14: ACCOUNTING FOR AMALGAMATION AS 14: Accounting for amalgamation ¥ amation in i nature of Merger ‘Only when it satisfies all 5 conditions ¥ AML of transferor co. = A/L of transferee co. 90% of FV of Bq. shares become shareholders of Purchase Consideration exclusions 3. Consideration in shares ~ cash for fractional shares 4, Intention to continue in business No adjustment to book values; but for Ama 4 Anialgnation ith ntire of porchase if any one of these 5 conditions is not met Follow purchase method > Difference between PC & Net Assets at agreed value Goodwill(Capital Reserve >» Goodwill — write off in max. 5 yrs, > Recognise Assets & Liabilities at agreed/Fair value aS on uniformity in accounting policies Amalgamation date + Follow pooling of interest method > Difference between Purchase consideration & Net assets at book value should be adjusted with Reserves of PC. » No Goodwill Dis tH 4 Additional for Merger General Additional for Purchase t { + , ‘ (Required only in First FS after > Name & General nature cf (Required only in Pirst FS Merger) business of amalgamating cos after Purchase) > Description & No. of shares > Effective date > Consideration, including issued > Method accounting % of each co's equity shares > Particulars of the scheme > Goodwill or capital reserve exchanged mentioned under a statute > Period of amortization of > Difference b/w consideration & > Fact of post Balance Sheet Goodwill the value of the net identifiable amalgamation, ifany assets acquired & its treatment Copyrights Reserved To MASTER Guntur CA Inter | 40e | Flowcharts | Accounting Standardsg g g S iu = a < = g s BORROWING COSTS AS - 16: rey oj uouezieude dois || 5 0} Apoesosse ou 06 ed ‘jes 10 a8n pepusyut aunouljs09 BumMouOR “3 ssei601d u aq pinoys: paunou a. 4200 S10} jusead save peneoas neg yosse 1040 penaoe! povsysues -% owed ‘yseo ssaiiold “4 jowouked “4 sepnjoxa ‘sepnyou “assy BuyAwend) wo ounyipuadg “pasn Bureq jo aygedeo S| | /sss0,4 jo wed ui Kiess00 you sued u paeidwoo si fejep Aresodwe, Uuogonjsuog vay, ¢|| —_ypepuedsng ion pared t F 1 0 98n papi yasse a4jasedaid oj hressacau samnqoe :uoneznendeg je Ajeyueysqns vaya ¢| jouojsuadsng :uonezwendeg jo uonesseg I = Buynowoa poeoxe ou pnoys junowe | ['spury pamauog 2| | yo weusany ‘Aresodui el 1 | [ayy S807 8 wos ‘yeu stag) 51800 ©} paBseyp ys00 squovooe |} Buynouog yo aye Sumouog soo afesany pawyéiay, | | 1900 Sumovg x yasse BurAyenb: Ayeoyyoods ‘aes 10 uo ampusdra “t] |“ Dowouog $n oy peas st ‘Ajesou2B panosioq una un pazyepdeo spuny Youn ilekontct 31}0888 ¢ ‘Burkyjenb uo. 1800 Buywouog juouyean, aziendeo 2q 0} unowy Bununosay t t ii ‘suoeven }sel6qu Jo uepee 01 s6umouog Kouesino ‘ape uoeq jou pey jasse Gunyenb om Uo eumpuadie ue3q aney pinom 424) 53800 3804 iia} 0 Bunees souasayp afueya%3 jovoyezuowy ‘sueo} mnoosip 0 vonezpowy sessy |] sebseyo woununoo BurAqenn renuersans saye} Youn esse uy t CA Inter | 40e | Flowcharts | Accounting Standards98851 25025 / 26 www master AS — 17: SEGMENT REPORTING dsi ia.com AS 17 Segment Reporting ¥ ‘Two Types , — Business Seament Geographical Segment Y Different in: Different in: > Product / services >» Location of Customers / provided Operations. » Risks & Returns of above » Risks & Returns of above Definitions % Segment Revenue:- Direct revenue + Allocated + Inter segment {Except extraordinary items, finance income & Investment income} ‘Segment Expense:- Direct expense + Allocated + Inter segment {Except extraordinary items, Finance expense, Income-tax expense and General Admin expense ‘Segment Result: - Segment Revenue ~ Segment Expenses ‘Segment Asset:- Operating assets + directly atiributable assets % Segment Liabilities: - Operating Liabilities + directly attributable liabilities (ee ee [Teevery segment | reponable? ——————E——e No, only which satisfies any one of the | below Conditions are reportable, Segment Revenue |, ~~ — >= 10% of total revenue (Segment + External} ~~} Management can add extra | segments at ther discretion | | Segment assets >=10% of | total assets 5% of external revenue | should be reported = If not. | Segment results >=10% of total segment profits OR total segment Losses (in absolute terms) whichever ishigher add more segments CA Inter | 40e | Flowcharts | Accounting Standards| MASTERMINDS = No.1 for CA/CMA & MEC/CEC Disclosures: > Primary segment should disclose the Fotlowing:- Revenue {Direct + Other Segments}. © Seg. Results ~ Carrying amount of Seg. Assets ° Cost of acquisition of tangible and intangibles during the year Depreciation and amortisation expenses Non-cash expenses other than depreciation and amortisation. Reconciliation of numbers with presented annual FS. - aE Business segment- Geographical segment-{Disclose above 8 points} Disclose above 8 points > By Assets > By Customers oe > — Other than primary segments + OOO If geographical segments {Ebusinesssegmentis ly WF geographical segment based on based on location of secondary segment Iocation of assets. (C) customers (A) ®) m - Two disclosures — ‘One disclosure — Se; ‘Three disclosures. Two eo | gin om extemal cusomers | | > Canying amount of of eusoaers > Canying amount of segment segment ast, Wecae assets > Cost of acquisition of I > Cont of suistin of ied acts fixed asets during the y during the year. yer. \ | > Bither of two willbe secondary ; > Possible combination for secondary segment: A+B, A*C and B+C Copyrights Reserved To MASTER MINDS, Guntur CA Inter | 40e | Flowcharts | Accounting Standards98851 25025 / 26 www mastermindsindia.com AS-18: RELATED PARTY DISCLOSURES Part I: Definiti [AS IBRelated party Discosuees | [ Disclosure based standard eth [ voies ony to [ nities that directly or indirectly | [ nuties where individuals control or controlled by or under | in pare 3 (©) and (d) have common contro! with the entity. | YO significant influence. ee Associate & IV's of the entity | \4S 18 NOT APRLICABLE Part H: Disclosures: ae related at any time during the period? | Any transaction took place ie. transfer of resources or obligation |>{ No “fa) Paw No disclosure Yes Does control exist? Jp| No jp» reed —e Eves Disclose the following: ] 7 ¥ - (@) Name Disclose the folowing (6) Relationship (@) Name () Relationship Other disclosure not required. (©) Nature of transaction (@) Amount of transaction (©) OVS balance, if any (g) Amounts written off / back during the period. CA Inter | 40e | Flowcharts | Accounting Standards| MASTERMINDS = No.1 for CA/CMA & MEC/CEC AS-19: ACCOUNTING FOR LEASES the lease term. The lessee will get the ownership of leased asset at the end of Yes No ¥ The lessee has an option to buy the leased asset at the end of the term, at price, less than expected F.V. on the date of exercise of option No ¥ The lease term covers the major part of the life of asset No ¥ at the date of inception of the lease. Present value of MLPs substantially equals the asset fair value as. J ws The asset given on lease to lessee is of specialized nature and can only be used by the lessee without major modification. No In the Books of lessee Recognize lease payments in profit and loss account. + Pattern. straight line basis over lease term. ¥ In the Books of lessor Recognize as an asset ‘¢ Recognize lease income in Profit and Loss Alc using straight ine method. * Charge Depreciation as per AS-6 Copyrights Reserved To MASTER MINDS, Guntur Finance lease | In the Books of lessee Recognize as an asset and liability Initial recognization of asset: at lower of F.V. and PV of MLP Finance charges are charged to Profit & Loss A/c Provide Dep. as per AS-6 | In the Books of lessor Recognize as “receivables” at an amount equal to net investment in the lease. Recognize Finance income in Profit and Loss A/c. Pattern: Constant periodic return: CA Inter | 40e | Flowcharts | Accounting Standards98851 25025 / 26 www.mastermindsindia.com KEY TERMS SALE AND LEASE BACK TRANSACTIONS + Gross investment = MLP (in view of lessor) + unguaranteed residual value 4 Net investment = Gross investment - uneamed finance income ¢ Uneamed Finance Income = Gross investment ~ Present value of Gross investment + MLP in view of lessor = lease rentals + any guaranteed R.V. (by or on behalf of lessee) +R.V. Guaranteed by third party. ‘+ MLP in view of lessee = lease rentals + any guaranteed R.V. which is guaranteed by or on behalf of lessee. ‘+ Implicit interest rate = discount rate that makes P.V of gross investment just equal to Fair Value of leased asset. + Fair value of leased asset (at the inception of lease = present value of Minimum lease payments (in view of lessor) + any unguaranteed residual value according to the lessor. ¢ Guaranteed residual value (in respect of lessee): such part of the RLV., which is guaranteed by or on behalf of the lessee. * Guaranteed residual value (in respect of lessor) such part of the R.V., which is guaranteed by or on behalf of the lessee or by an independent third party. ¥ * Iflease back is finance lease. Defer any excess or deficiency of sale proceeds over carrying amount and amortize it over lease term in proportion of dep. on leased asset. S If lease back is operating lease (S.P = Selling Price, F.V = Fair Value, C.A= Carrying Amount) If FV. FV. ¢ Profit or loss to the extent of difference between C.A and F.V. is to be recognized immediately ¢ Profit or loss to the extent of difference between F.V and S.P. is to be amortized CA Inter | 40e | Flowcharts | Accounting Standards| MASTERMINDS = No.1 for CA/CMA & MEC/CEC AS — 20: EPS (EARNING PER SHARE) EPS (EARNING PER SHARE) BASIC EPS DILUTED EPS Profit available to equity share Diluted earnings / Revised WANES holders (PAES) / Weighted Avg. No. of Equity Shares (WANES) HES . + No. of shares (After adjustments for additions and Earnings deletions during the period ¢ Profit after tax less preference + Weight = No. of days shares were outstanding during dividend and dividend the period (Timing) distribution tax there on. TIMING: + Incase of more than one class ¢ Conversion of debt:- Date of conversion of equity shares — distribute + Settlement of liabilty:- Date of settlement Saminge tifpropericn et ‘Acquisition of asset:- Recognition date dividend right for each class. ‘Amalgamation in the nature of Purchase:- Date of acquisition Amalgamation in the nature of merger:- beginning of the reporting period Dilutive Potential Equity share ‘Anti- Dilutive shares Potential equity share is dilutive: ifits LY; Potential equity share is anti-dilutive: inclusion reduces earning per share ifits inclusion increases earings per or increases loss per share share or reduces loss per share Dilutve EPS = Proft/ W.Av. No. of shares Anti- dilutive shares to be ignored ¥ Diluted Earnings Revised WANES + Weighted average of PAES + Dividend along with distribution additional equity shares outstanding tax on convertible preference shares assuming conversion. previously deducted + Interest net of tax effect charged on convertible debentures or loans, (—exEeneEeeT|| Potential shares for which proceeds have | | Potential shares for which proceeds shall be already been received. Like convertible | | received in future. Like options debenture, convertible preference shares, application money received ete ‘Actual number of shares to be issued less + number of shares which can be issued Number of equity’ share to be issued || a¥ainst the same proceeds if issued at average fair value. The balance is the share against such potential shares to be || issued for no consideration and it will be considered. Profit shall be adjusted by | | included for calculating diluted EPS. Profit interest, dividend and consequential tax || may not require any adjustment for such effect related to such potential share. potential equity shares. CA Inter | 40e | Flowcharts | Accounting Standards EH98851 25025 / 26 www.mastermindsindia.com TREATMENT OF DIFFERENT TYPES OF SHARE / POTENTIAL SHARES FOR CALCULATION OF BASIC EPS/ DILUTED EPS (Note: whatever is included for basic EPS gets automatically included for diluted EPS) | POTENTIAL EQUITY SHARES EQUITY SHARES APPEARING || BONUS ISSUE, IN THE BALANCE SHEET SHARE SPLIT CONSOLIDATION Fully paid V 4 L| The weighted Include from the date of issue average number for basic EPS of shares of all the period reported cake in tems including period f If entitled for dividend, habe Net Convertible debenture / preference share Usually at fair value, hence include it from the date of issue for diluted EPS, Numbers to be calculated taking best conversion price from holders point. The interest, dividend tax and related exp. be adjusted in the earning. (even if the event include for basic EPS. took place after the balance sheet date but before approval) be reinstated in the same proportion (ie. increased / decreased in the same proportion) If not entitled for dividend include for diluted EPS from the date call is due just like option. If interest has been charged the same will the adjusted from earning ESOP The deferred employee remuneration will be included in assumed proceeds together with issue price. The rest treatment will be same as in option for calculating diluted EPS. gS Partly paid Include for basic EPS in proportion to its entitlement for dividend. Uncalled on partly paid share To be ignored Different nominal value Optional / Share warrants No. of shares under issue () the number derived by dividing the expected proceeds by fair value of shares, Balance are the shares for no consideration. Same will be included for diluted EPS wef. the date of issue, no adjustment to be made in earnings, Different EPS be calculated if having different dividend rights otherwise convert all into same Share application money received (Excess application money to be excluded) nominal value term for basic EPS. Right issue ight Factor «Fa Yale per share immediately prio o igh ise Theortical ex-right fair valueper share Aggregate far valueof shares Immediate prortotheexercseot therights proceed Money used in business + Ifall necessary conditions are fuffiled use it for basic EPS If conditions are not fulfilled use it for diluted EPS like convertible debentures from oxereeootthrighte No of shares outstanirg tnmediatay aftertheright issue Theoctca ex-right fae valve = Money not so used (kept separately) ¥ Use it for diluted EPS like option CA Inter | 40e | Flowcharts | Accounting Standards| MASTERMINDS = No.1 for CA/CMA & MEC/CEC INTANGIBLE ASSETS | & Intangible Asset (1.A) + Identifiable (separable) * Non-monetary asset ‘+ Without physical substance Recognition criteria ¢ Should have characteristics of asset ¢ Future economic benefits ‘¢ Cost can be reliably measured I The process of R & D classified into 2 phases. ¢ Research phase: All expenses incurred are to be charged as expense as and when incurred. ‘¢ Development phase: Expenses are to be capitalized if and only following conditions are met. Y Technical feasibility of completing LA Availability of resources Intension to complete and use LA Ability to use Probability that |.A. will generate future economics benefits (External market) ¥ Expenses incurred can be measured reliably KAKA K8 1 Initial measurement at cost i Direct Purchase Purchase price and all directly attributable costs 1 Exchange of asset Fair value of asset given up I Government Grants Nominal value (AS-12) t Through issue of securities The fair value of securities issued of a fair value of intangible asset acquired which ever is more clearly evident i Intangible asset is recognized in the books of purchasing company though itis not recognize in selling company provided the amalgamation in the nature of purchase (AS-14), Copyrights Reserved To MASTER MINDS, Guntur CA Inter | 40e | Flowcharts | Accounting Standards98851 25025 / 26 www.mastermindsindia.com ‘SPECIAL POINTS In some cases, the ‘Subsequent Impairment loss Gain or loss on enterprise incurred expenses on + Impairment retirement / expenditure but no intangible asset testis must, if disposal: intangible asset capitalize VY Asset not Recognize in recognized (Charged © Subsequent available for ero enaloas) toP &L Alc) expenses use omy EXAMPLES increase the ¥ Amortizatio J + Employee training future 1 period De-Recognition of expenses economic exceeds 10 | | intangible asset + Advertisement and benefits of years ¢ On disposal or promotional intangibles When no expenses + Subsequent future + Relocating expenses can economic. expenses be attributed to benefits + Restructuring cost and expected. costs, measured reliably. S ‘Amortization + Carry the asset at cost less accumulated amortization and accumulated impairment loss. ‘¢ Useful life -10 years” unless there is clear evidence of longer life ¢ Residual value - “Zero” unless commitment by third party at the end of useful life ‘Method of amortization Y The benefit derived from the intangibles should be matched with the amortization expenses. ¥ Ifpattem of benefit is available — amortize as per pattern ¥ Ifo pattem is available - SLM should be followed CA Inter | 40e | Flowcharts | Accounting Standards| MASTERMINDS = No.1 for CA/CMA & MEC/CEC AS — 22: ACCOUNTING FOR TAXES ON INCOME Will Account ae os Income (F1 always? No ‘Why Difference? ‘Two kinds of difference poo - ‘Temporary Difference re Die ao in a Peres capable of being reversed in anther year Y No accounting i o be done Ignore ‘Accounting js mandatory . bs ADT? s y Recognise DTL. Recognise DTA ‘ Only to the exten that future Tncome is reasonably certain Using enacted / substantially enacted rates, DTA Special circumstances Unabsorbed depreciation & carry forward losses: Recognised DTA only when future Income is vitally cenain which is supported by convincing evidence. > Reassess unrecognised DTA every year ‘Tax Holidays: > Do not recognise differed tax which is arising and reversing during the tax holiday's period. ie, recognise only for that whichis reversing after holiday. > Consider FIFO for arising & reversing. ‘Minimum Alternate Tax: > Apply only regular tax ate ~not MAT rate > MAT credit = MAT paid ~ Normal Tex, Itcan be caried forward for st off inthe future, CA Inter | 40e | Flowcharts | Accounting Standards98851 25025 / 26 www mastermindsindia.com AS-24: DISCOUNTING OPERATIONS _— sr : Represents separate Can be separated Is discontinued (as per a MAJOR LINE of BUSINESS OR (distinguished) SINGLE PLAN) GEOGRAPHICAL area of For by ‘operations Operational Financial purpose reporting purpose Selling ‘Terminating through SUBSTANTIALLY in TO’ Component’s ASSETS abandonment; either in INDIVIDUALLY “Le. stopping the operations SINGLE Transaction (piecemeat disposal) and (as itis) without selling its or settling its liabilities also individually assets/components DEMERGER SPIN OFF luransfer of ownership of component ta share holders} Once an operation satisfies the definition of discontinuing operation — Iii jour event Every year end Entered into binding sale agreement Give following disclosure till completion of Or discontinuance: % BOD approved a formal plan and announced 4 Describe discontinuance the same + Which segment is discontinued? (Whichever is earlier) 4 Date and nature of initial disclosure event + Total amount of assets & Liabilities related Immediately disclose the information to most Revenues & Expenses attributable to that segment affected parties ‘ Pre-tax P&L and tax expense separately * Net cash flows atributable to the segment CA Inter | 40e | Flowcharts | Accounting Standards SE| MASTERMINDS = No.1 for CA/CMA & MEC/CEC AS - 26: INTANGIBLE ASSET AS 26: Intangible Asset ‘An intangible non-monetary asset without physical substance — held for use in producing goods, poovdng evn foal cada pepo Recognition & Measurement TS? Initial Recognition Subsequent expenditure CCapitalise only when there is increment in FEBs & it satisfies Asset definition, 7 + CastvCredit Barter & Issuing securities Self Generation v v Porchase price x Fixed Asset given/FMV of Phases of generation Registration foes XX securities itu £ Stamp Duty XX oF All Direct exp elated FRAY of ngs Aner Reeqehesp Developmen gp to acquisition xx received whichever is clearly * AS T6 Browse Cxs XX ae Charset EL —Captalis oly ~ pio Ok when six criteria 2 z saisied x Amortisation 1 ‘Cost ~ Residual Value = Depreciable asset — SH Useful ie Method ¥ Amorise over its useful life (Rebattable assumption Any method which reflects the pattern of FEBs ‘Max. ife= 10 yrs) inflow (Matching Concept) If iis proved that it i> LO_yrs — Amortise over If not possible to determine ~ Follow SIM ‘hat life otherwise maximum 10 yrs. Disclosures , (@) Separately for internally generated & Other intangible assets ~ Useful livevamortization rate, amortization method = Gross carying amount, accumulated amortization and impairment losses ~ Additions, disposals, impairment losses recognized or reversed, amortization, other changes in carrying amount during the period () Hamortised period > 10 yrs — Reasons for the same. (© Existence & camying amount of assets whos tile is restricted & of assets pledged as security for liabilities (@ Amount of commitments for acquisition of assets Copyrights Reserved (©) R&D recognized as expense during the period Oa RSTER inwDetGI CA Inter | 40e | Flowcharts | Accounting StandardsAS - 29: PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS “C’ means, it is continuing process Has a present obligation arisen as a result of past ra events? -— £ De bl oes a possible ba erat obligation arise which will resources will be needed | No be confirmed only on ne ? to settle the obligation SeeES UL nen ¥ more future events not ee: Can a reliable estimate wholly within the be made of the amount enterprise's control? of the obligation? l Yes Recognise (ie. make) a provision 1s possibilty of loss? |_Yes T obligation remote? [——} Review the provision at each Balance sheet date. NS No WL : QS Is disclosure of same or Liability results in outfow | yo all information as per para ‘of economic benefits. SS) 69 expected to seriously prejudice the position of Jv 2 the enterprise? Use the Revewihe J im rovision for the joni *rabilty and no necessary a Is it otherwise other purposes. a impracticable to make all or any disclosures ree | rae required by para 697 Does the liability exceed |,J Live } Yes + the provision? Reverse Do not recognize a || State the fact that Neither q provision, Disclose || non-disclosure provision nor ‘Adjust in Profit and || 1. Disclose a contingent lability is due to disclosure peas general nature || as pe para 69 impracticabiity required asset asthe case |! 9. Bo nat may be disclose all or any information required as Review the position at | ore a aS each balance Sheet date "and reason for non-disclosure 4. Do not recognize a provision. THE END CA Inter | 40e | Flowcharts | Accounting Standards EE