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To standardize diverse accounting

practices with a view to eliminate,
incomparability of information
contained in the financial statements
of various enterprises and that users
of financial statements can make
well-informed decisions.
|ccounting Standards

Pronouncements by the premier accounting body of
the country relating to various aspects of
Ô  Ô 

  Ô of accounting transactions and events
¢ |ccounting Standards are
mandatory in nature
¢ |dequate disclosure is required
for any deviation
|ccounting Standard cont.

¢ ndian |ccounting Standard

¢ S G||P
¢ nternational |ccounting Standard

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Disclosure of |ccounting Policies
(|S 1)

 | | $ are
usually not specifically stated
Disclosure is necessary if they are not followed.
The fundamental accounting assumptions are:-

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The accounting policies refer to the specific

accounting principles and the methods of applying
those principles adopted by the enterprise in the
preparation and presentation of financial statements.
' amples of the areas in which different accounting
policies may be adopted by different enterprises.
Methods of depreciation, Valuation of investments
depletion and amortization
Treatment of retirement
Treatment of e penditure during benefits
Recognition of profit on
Conversion or translation of long-term contracts
foreign currency items
Valuation of fi ed assets
Valuation of inventories
Treatment of contingent
Treatment of goodwill liabilities.

V inancial statements should represent a true

and fair view of the state of affairs of the
enterprise as at the balance sheet date and of
the profit or loss for the period ended on that
The major considerations governing selection and application
of accounting policies are:-
  n view of the uncertainty attached to future
events, profits are not anticipated but recognized only when
realized though not necessarily in cash. Provision is made for
all known liabilities and losses even though the amount cannot
be determined with certainty and represents only a best
estimate in the light of available information.

 The accounting treatment and
presentation in financial statements of transactions and events
should be governed by their substance and not merely by the
legal form.
a  inancial statements should disclose all
"material" items, i.e. items the knowledge of which might
influence the decisions of the user of the financial statements.

¢    |   . To ensure

proper understanding of financial statements, it is
necessary that all significant accounting policies
adopted in the preparation and presentation of
financial statements should be disclosed.
|ny change in an accounting policy which has a
material effect should be disclosed. The amount by
which any item in the financial statements is
affected by such change should also be disclosed to
the e tent ascertainable. Where such amount is not
ascertainable, wholly or in part, the fact should be
indicated. f a change is made in the accounting
policies which has no material effect on the
financial statements for the current period but
which is reasonably e pected to have a material
effect in later periods, the fact of such change
should be appropriately disclosed in the period in
which the change is adopted.

Disclosure of accounting policies or of

changes therein cannot remedy a
wrong or inappropriate treatment of
the item in the accounts.
Valuation of nventories (|S 2)
¢ Determination of the value (and any write down thereof to net
realizable value) at which inventories are carried in the financial
statements until the related revenues are recognized.

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¢ nventories should be valued at the lower of cost
and net realisable value.

¢ Cost of nventories
The cost of inventories should comprise all costs
of purchase, costs of conversion and other costs
incurred in bringing the inventories to their
present location and condition
¢ The financial statements should disclose:
the accounting policies adopted in measuring
inventories, including the cost formula used; and

the total carrying amount of inventories and its

classification appropriate to the enterprise
Cash low Statements
(|S 3)
The ability of the enterprise to generate cash and
cash equivalents and the needs of the enterprise to
utilize those cash flows are provided in the cash
flow statement.
The cash flow statement classifies cash flows
during the period as operating, investing and
financing activities.
Contingencies and 'vents occurring after
the Balance Sheet date (|S 4)
| contingency is a condition or situation, the ultimate outcome of which, gain or
loss, will be known or determined only on the occurrence, or nonoccurrence, of
one or more uncertain future events.

'vents occurring after the balance sheet date are those significant events, both
favourable and unfavourable, that occur between the balance sheet date and the
date on which the financial statements are approved by the approving authority

Two types of events can be identified:

those which provide further evidence of conditions that e isted at the balance
sheet date
those which are indicative of conditions that arose subsequent to the balance
sheet date.
¢ Provisions for contingencies are not made in
respect of general or unspecified business risks
since they do not relate to conditions or situations
e isting at the balance sheet date.
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ßet Profit or Loss for the period, Prior Period
items and Changes in |ccounting Policies (|S 5)
The objective of this Statement is to prescribe the classification and
disclosure of certain items in the statement of profit and loss so
that all enterprises prepare and present such a statement on a
uniform basis. This enhances the comparability of the financial
statements of an enterprise over time and with the financial
statements of other enterprises. |ccordingly, this Statement
requires the classification and disclosure of e traordinary and
prior period items, and the disclosure of certain items within profit
or loss from ordinary activities. t also specifies the accounting
treatment for changes in accounting estimates and the disclosures
to be made in the financial statements regarding changes in
accounting policies.
Depreciation |ccounting (|S 6)
Depreciation has a significant effect in determining and
presenting the financial position and results of
operations of an enterprise. Depreciation is charged in
each accounting period by reference to the e tent of
the depreciable amount, irrespective of an increase in
the market value of the assets.

|ssessment of depreciation and the amount to be charged

in respect thereof in an accounting period are usually
based on the following three factors:
i. historical cost
ii. e pected useful life of the depreciable asset; and
iii. estimated residual value of the depreciable asset
Construction Contracts (|S 7)
The objective of this Statement is to prescribe the
accounting treatment of revenue and costs associated
with construction contracts. The primary issue in
accounting for construction contracts is the allocation of
contract revenue and contract costs to the accounting
periods in which construction work is performed. This
Statement uses the recognition criteria established in the
ramework for the Preparation and Presentation of
inancial Statements to determine when contract revenue
and contract costs should be recognized as revenue and
e penses in the statement of profit and loss.
Requirements of S'B
Clause 32 of Listing agreement:
|nnual report (including Cash low Statements and
Consolidated Statements) to be provided to all
shareholders and to member of the e change on
The Company will make disclosures in compliance with
the |ccounting Standards on Related Party Disclosures
in its annual report
Disclosure of loans/ advances and investments in its own
shares by the listed companies, their subsidiaries,
associates and so on
Requirements of S'B
Clause 41 of the Listing |greement
urnish naudited quarterly financial results
urnish segment-wise revenue, results and
capital employed
Clause 50 of the Listing |greement
The company will mandatorially comply with
all the |ccounting Standards issued by