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Issued by ICAI
Accounting Bodies have tried to achieve a uniformity in accounting policies Prescribing certain accounting standards in order to narrow down the range available to an organization in respect of collection and presentation of accounting information.
International Accounting Standards
International Accounting Standards Committee (established in 1973) Accounting committees of all countries are a member to IASC IAS 1 to IAS 41
Objectives of the IASC
Formulating, publishing and promoting the use of accounting standards worldwide To work for the improvement and harmonization of regulations, accounting standards and procedures relation to financial statements.
.Importance of the IASC Globalization of the economy Foreign investors bias.
1977. .Indian Accounting Standards ICAI constituted an Accounting Standard Board on 21st April. Function of ASB: to frame accounting standards which would be formally issued under the authority of Council of Institute of Chartered Accountants.
Importance of Accounting Standards Presenting clear-cut accounts on a uniform basis Standards represent ideal practice of accounting. Ensure comparability of accounts Account show the clear position of the state of affairs .
In line with the International standards. .Accounting Standards Issued by ICAI ASB has issued 29 standards.
Three fundamental assumptions Going Concern Accrual Concept Consistency.AS 1: Disclosure of Accounting Policies Deals with disclosure of significant accounting policies Accounting policies vary from enterprises to enterprises. .
AS 2: Inventories Inventories Three aspects of Inventory Valuation Measurement of cost Measurement of net realizable value. Comparison between Cost and Net Realizable Value. Important Cost Formula .
AS 3: Cash Flow Statement Cash Flow statement Cash and cash Equivalent Types of Cash Flow x Cash flow from operating activities x Cash flow from investing activities x Cash flow from financial activities .
Events occurring after the Balance Sheet Date. Marked as a note under the Balance Sheet for future reference. Contingencies.AS 4: Contingencies and events occurring after the Balance Sheet Date. .
AS 5: Net Profit or Loss for the Period. All income and expenses should be included in the determination of net profit or loss for the period unless an accounting standard requires or permits otherwise Prior period items. . The change in the accounting policy should be made only if adoption of different policy is required or if the change is for the improvement of enterprise. Prior Period Items and Changes in Accounting Policies.
Depreciation cannot be applied to: Forests and plantation Minerals. natural gas etc. oils. Expenditure on R&D .AS 6: Depreciation Accounting. Depreciation assets are: expected to be used more then one AY have a limited useful life Used in the production of supply and goods.
AS 7: Construction Contracts The standard deals with the treatment of revenue and cost associated with construction contracts. A construction contract is a contract for the construction of an asset or of a combination of assets which together constitute a single project. Types of construction contracts: Fixed price contract Cost plus contract .
Cost of material and services consumed. and other related cost of personals.AS 8: Accounting for research and development: This standard deals with the treatment of costs of research and development in financial statements. Cost incurred for research and development mainly includes the following: Salaries . wages . Overhead costs Payment to outside bodies for R&D .
AS 9: Revenue recognition This standard deals with the bases for the recognition of revenue in the statement of profit and loss of an enterprise. It is only concerned with the recognition of revenue arising in the course of ordinary activities of the enterprise which are ± The sale of goods The rendering of services The use by others of enterprise resources yielding interest . . royalties and dividends.
from which future economic benefits are expected to flow to the enterprise.AS 10: Accounting for Fixed Assets ASSET is a resource : Controlled by the enterprise as a result of past events. Fixed Asset Tangible Fixed Assets Intangibles Capital Work In Progress .
AS 11: Effects of changes in Foreign Exchange Rate An entity has to present its financial statements in terms of currency of the country. although it might have transactions in terms of foreign currency. . Non-Monetary Items: measured at exchange rate on the date of transaction. Monetary Items : measured at year end exchange rate.
assistance which cannot be reasonably valued. GOVT. and Govt. grants. . in cash or kind to an enterprise for past and future. GOVT. : Govt. Transactions which cannot be distinguished from normal trading transactions. Exceptions : Govt. compliance with certain conditions.AS 12: Accounting for Government Grants This standard is applicable to govt. agencies. and similar local. GRANTS : Assistance by govt. national or international bodies.
AS 13: Accounting for investments It deals with accounting for investments in the financial statement of enterprise and related disclosure. Definition: Investments Current investments Long term investments Fair value Market value Investment property. . investment of retirement benefit plans. life insurance etc. it does not deals with operating or financial leases.
AS 14: Accounting for Amalgamations This statement deals with accounting for amalgamations and the treatment of any resultant goodwill or reserves. but not with cases of acquisitions. Definitions: Amalgamation Transferor company Transferee company Types of amalgamation: Nature of merger Nature of purchase Accounting approach: Pooling interest method Purchase method .
Retirement benefits usually consists of:PF Pension Gratuity etc. Definition: Retirement benefits schemes Defined contribution schemes Defined benefit schemes Pay-as-you-go . except employee share-based payments.AS15: Accounting for Retirement benefits in the Financial Statements of Employers Introduction: This standard prescribe accounting & disclosure for all employee benefits.
AS 16: Borrowing Costs Borrowing costs are interest and other costs incurred by an enterprise in connection with the borrowing of funds. Borrowing cost may include different factors. .
Objectives .AS17: Segment Reporting This standard is made for all those enterprises which produce more than one product or which operates in different geographical locations Factors that should be considered.
This Standard is mandatory in nature for different organizations. .AS 18: Related Party Disclosure Parties are considered to be related if at any time during the reporting period one party has the ability to control the other party or exercise significant influence over the other party in making financial and/or operating decisions.
This Standard should be applied in accounting for all leases other than: lease agreements to explore for or use natural resources. the appropriate accounting policies and disclosures in relation to finance leases and operating leases. manuscripts. plays.AS 19: Leases The objective of this Standard is to prescribe. lease agreements to use lands. metals and other mineral rights. such as oil. licensing agreements for items such as motion picture films. gas. . timber. for lessees and lessors. video recordings. patents and copyrights.
AS 20: Earnings per Share The Objective is to prescribe principles for determination and presentation of earnings per share which will improve comparison of performance among different enterprises for the same period and among different accounting periods for the same enterprise. . To enhance the quality of financial reporting.
that are presented by parent (Holding enterprise) to provide financial information about the economic activities of the group.AS 21: Consolidated Financial Statements The objective of this statement is to lay down principles and procedures for presentation and preparation of consolidated financial statements. .
.AS 22:Accounting for Taxes on Income Came into effect from 1st April. Mandatory in nature for two types of enterprises. Applicable for all enterprises . 2001.
L.T.T.A or D. Prescribe accounting treatment for taxes on income in accordance with the matching concept: Matching of taxes with the corresponding revenue and expenses since taxable income significantly varies with the accounting income Reasons Timing Difference Permanent Differences Timing difference results in D. .
T.A treated on the basis of PRUDENCE i.A & D.L.T.A & C.T.TREATMENT AND DISCLOSURE D.L should be disclosed under separate heading. D.L should be distinguished from C. D. . Evidence supporting future taxable income should also be disclosed. Time period of 7 yrs.T.T.A & D.e. availability of sufficient taxable income.
What is an Associate? Defining Sufficient Influence. .AS 23-ACCOUNTING FOR INVESTMENT IN ASSOCIATED IN CONSOLIDATED BALANCE SHEET To prescribe principles & procedures for recognizing the effects of investment on financial position & operating result.
In case of use of different accounting policies adopted should also be disclosed.DISCLOSURES Use of Equity Method for calculating investments. Investors share of profit / loss to be disclosed. . Names of associates. Investments to be distinguished as long term investments. reporting dates should also be disclosed. Disclosure of not using Equity Method. Goodwill / Capital reserve should be included in the carrying amount of investments. but should be disclosed.
Mandatory for all discontinuing operations.4.By abandonment. What is a Discontinuing Operation? 1.By Piecemeal 3.2004 To establish principles for reporting information on discontinuing operations.AS 24-ACCOUNTING FOR DICONTINUING OPERATIONS Came into effect on 1. .By disposing it entirety. 2.
.DISCLOSURES Description of discontinuing operations. Date & period in which discontinuance is expected to complete. Amount of revenue & expenses attributable to discontinuing operations. Amount of net cash flow attributable to Operating. Amount of assets & liabilities to be disposed off. Investing & Financing activities.
creditors. and others to understand an enterprise's capacity to generate earnings and cash flows.AS 25: Interim Financial Reporting The objective of this Standard is to prescribe the minimum content of an interim financial report and to prescribe the principles for recognition and measurement in a complete or condensed financial statements for an interiperiod. its financial condition and liquidity. Timely and reliable interim financial reporting improves the ability of investors. .
The Standard also specifies how to measure the carrying amount of intangible assets and requires certain disclosures about intangible assets.AS 26: Intangible Assets The objective of this Standard is to prescribe the accounting treatment for intangible assets that are not dealt with specifically in another Accounting Standard. and only if. . This Standard requires an enterprise to recognise an intangible asset if. certain criteria are met.
income and expenses in the financial statements of venturers and investors. this Standard is mandatory in nature where the enterprise prepares and presents the consolidated financial statements. The objective of this Standard is to set out principles and procedures for accounting for interests in joint ventures and reporting of joint venture assets.AS 27: Financial Reporting of Interests in Joint Ventures This Standard is mandatory in respect of separate financial statements of an enterprise. In respect of consolidated financial statements of an enterprise. . liabilities.
the asset is described as impaired and this Standard requires the enterprise to recognise an impairment loss. If this is the case.AS 28: Impairment of Assets The objective of this Standard is to prescribe the procedures that an enterprise applies to ensure that its assets are carried at no more than their recoverable amount. . An asset is carried at more than its recoverable amount if its carrying amount exceeds the amount to be recovered through use or sale of the asset.
Contingent Liabilities and Contingent Assets The objective of this Standard is to ensure that appropriate recognition criteria and measurement bases are applied to provisions and contingent liabilities and that sufficient information is disclosed in the notes to the financial statements to enable users to understand their nature. . timing and amount.AS29: Provisions. The objective of this Standard is also to lay down appropriate accounting for contingent assets.
Abhijeet Amrita Aditi Prashant Anjali Thank You! Aahna Abhishek Bhuvan Ajay Amit Amarjit .
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