STANDARDS ON AUDITING SA 540 "Auditing Accounting Estimate Including fair value Accounting Estimate & Related Disclosures Meaning ‘Some’ Financial Statementiemns cannot be- measured prec ements canna be messed preci, Bit ean only be eiimated! Accounting ximationNof a monetary amount in the absence of a precise means of “Gstimate_means anCappro measurement, (i Kinds of Accounting Estimates ‘Two kinds of estimates are involved in preparing & presenting FS:— (a) Fair valle Accounting estimates (Measurement objective expressed in terms of value of a current transaction, such as MP) (by Othe Aveounting estimates rel Is neers Conbyotin] Coe ear

Cor ‘inancial instrumé /hich are not traded in an active and open market g£ 5 i fray Lanvenen > Proj jipment held for disposal a 7 Genin asses of liabilities acquized in a business combination, inéhuding goodwill & intangible assets > ‘Transaction involving the exchange of'assets/oF liabilities between independent parties without vronetay consideration, for example non-monetary exchange of plat > Estimate of FMV of inventory. > Examples of Other Accounting Estimates (osenbny Wnyniy 1 Dopt Desf oe Pong fre | Bronce > Allowance for doubtful : », s Comheet NY Ahidesinee lv geton > Depreciation method or asset useful life > Provision regarding carrying amt. of investment where there is uncertainty regarding its recoverability > Out ontracts ents > Simei Osipaons/ Cost ang om gation Setlement 0 ; stimates estima Following steps are inyglved in audit of accounting estimates: eo roms irae eH etree sive ox GURRRPTRKT Tne 7214 RM, + Give TeSponses tothe assessed risks of MM by determining NTE of aut procedures ( Resperte to Romn) «apply eave POETS ceapontsigiicnt risks (Cotes Seberre Phere fee" « Evaluate fe respond ofthe Accounting Estimates & determine misstatements ( SysWeH + pee seableny eo) + Verify whether propetdisclosure8 related to Accounting estimates have been made as per pre Qe oh J «Obtain Witifom mgt & TCWG whether assumptions inmaking estimates are'FEASONADIE) ( 4? oyenplier § ) posure) =) Dacornt Aiselore Cheaper abl .d by auditors when perform (audi procedures over accounting BY CA ATUL AGARWAL AIR 1CA FINAL Page 33 Conen? 00.92.| gg informotten Geib Koyst chshiye STANDARDS ON AUDITING Vdddé to Accounting o . > to AE | Kespers? 0 ¥S6 = ~ i in anlunderstandinglof the following in order to provide a basis for identification & > -~- assessment of risks of MM relating (0 accounting estimate ry Urodestendie) (i) Reqjutements of fppicable FRA relevant to AE, including related disclosures ‘AE 10 be recognized or disclosed in eee errs Cysou eneumtaces that may give rig f0 new? the need 0 fevise \ | \. existing AE: S ' \ ai lifes those transactions, events & condition that may give rise to the need for | the FSV In obtaining this understanding auditors shall 7d it. fey Imaking process adapted by the migt, including: (0 Rabwees Corel. Over FM G) + (Meta including where applicable the model used in making AE. (:) Sate CAPs lel © © Relevanteontrots + T