Project paper submitted in substitution of Campus End Term Exam for MAC-I
INTERNATIONAL V/S INDIAN ACCOUNTING STANDARD
1
INDEX 1.0
INTRODUCTION
3
2.0
INTERNATIONAL ACCOUNTING STANDARD
4
3.0
INDIAN ACCOUNTING STANDARD
5
4.0
AS VIS-À-VIS IAS
6
5.0 5.0
THE THE INDI INDIAN AN ACCO ACCOUN UNTI TING NG STAN STANDA DARD RDSS ADOPTED IN MY ORGANIZATION
8
6.0
COMPARISON OF A. S. WITH I. A. S.
26
7.0 7.0
ANAL ANALYS YSIS IS OF COMP COMPAR ARIS ISON ON OF STAN STANDA DARD RDSS IGAAP VS IFRS
36
8.0
CONCLUSION
40 40
9.0
BIBLIOGRAPHY
41
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INTRODUCTION: Accounting Accounting standards, standards, based on a meaningfu meaningfull conceptual conceptual framework, framework, are a pre-requis pre-requisite ite to achieving achieving intra-coun intra-country try and inter-cou inter-country ntry uniformit uniformity y in accountin accounting g procedure procedure & disclosur disclosuree practices for accounting items & events. Accoun Accountin ting g Standa Standards rds are used used as one of the the main main compul compulsor sory y regula regulator tory y mechan mechanism ismss for preparation of general-purpose financial reports and subsequent audit of the same, in almost all countries of the world. Accounting standards are concerned with the system of measurement and disclosure rules for preparation and presentation of financials statements. Accounting standards are devised to furnish useful information to different users of the financial statements, to such as shareholde shareholders, rs, creditors, creditors, lenders, lenders, management management,, investors, investors, suppliers suppliers,, competitor competitors, s, researchers researchers,, regulatory bodies and society at large and so on. In fact, such statements are designed and prescribed so as to improve & benchmark the quality of financial reporting. The rapid growth of international trade and internationalization of firms, the Developments of new communication technologies, the emergence of international competitive forces is perturbing the financial environment to a great extent. Under this global business scenario, the residents of the business community are in badly need of a common accounting language that should be spoken by all of them across the globe. A financial reporting system of global standard is a prerequisite for attracting foreign as well as present and prospective investors at home alike that should be achieved through harmonization of accounting standards. In India, India, the the Statem Statement entss on Accoun Accountin ting g Stand Standard ardss are issued issued by the Instit Institut utee Of Charte Chartered red Accountants of India (ICAI) to establish standards that have to be complied with to ensure that financial statements are prepared in accordance with generally accepted accounting standards in India (India GAAP ). Adopting IAS in India, it is taking average 6.13 years for one accounting stand standard ard.. The deviat deviation ionss of Indian Indian Accoun Accountin ting g Standa Standards rds from from Intern Internati ationa onall Accoun Accountin ting g Standards are mainly due to the legal and/ or regulatory framework prevailing in the country & state of economic environment in the country. However, to reap the benefits of globalization & libera liberaliz lizati ation, on, it is necess necessary ary the Indian Indian Accoun Accountin ting g Standa Standards rds may be conver converged ged with with Intern Internati ationa onall Accoun Accountin ting g Standa Standards rds.. Hence, Hence, the the purpos purposee of presen presentt study study is to analyz analyzee the comparison between Indian Accounting Standards with International Accounting Standards. *****
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INTERNATIONAL ACCOUNTING STANDARDS (IAS) Accoun Accountin ting g bodies bodies throu through gh out the world world are striv striving ing to achiev achievee a reason reasonabl ablee degree degree of uniformity in the accounting policies by prescribing certain accounting standard with respect to collection and presentation of accounting information. Between 1973 and 2001 the International Accounting Standards Committee (IASC) released Intern Internati ationa onall Accoun Accountin ting g Standa Standards rds.. Betwee Between n 1997 1997 and 1999 1999 the IASC IASC restru restructu ctured red their their organization. These changes resulted in the formation of the International Accounting Standards Board (IASB). These changes came into effect on April 1st 2001. The IASB approved the IASB Resolution on IASC Standards at their meeting in April 2001, which confirmed the status of all IASC Standards and SIC Interpretations in effect as of 1 April 2001. The IASB aims to develop a single set of high quality global accounting standards that require transparent and comparable information in general purpose financial statements. The international standards have assumed great importance in the recent times for the following reasons: a.
Globaliza Globalization tion of the the economy economy has led to companie companiess expanding expanding their their operation operationss across the the borders and this calls for uniformity in accounts of units located in different countries.
b. Foreign Foreign investor investorss would give give more weight weight age to the the accounts accounts of those those companies companies which which are based on international accounting standard
If there is any conflict between the international accounting standard and the local standards or the local laws and regulations, the local local standards, laws and regulations regulations will prevail.
International Financial Reporting Standards (IFRS) On its formation in April 2001 the IASB announced that the IASC Foundation Trustees agreed that accounting standards issued by IASB would be designated "International Financial Reporting Standa Standards rds". ". On May 23rd 23rd 2002 2002 the IASB IASB issued issued publishe published d a press press releas releasee announ announcin cing g the publication of the Preface to International Financial Reporting Standards which provided 'a brief description of the purpose and function of the main structures of the new arrangements for setting global standards'. The first IFRS was published in June 2003 (IFRS 1, First-time Adoption of International Financial Reporting Standards).
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INDIAN ACCOUNTING STANDARDS: In India, India, the the Statem Statement entss on Accoun Accountin ting g Stand Standard ardss are issued issued by the Instit Institut utee Of Charte Chartered red Accountants of India (ICAI) to establish standards that have to be complied with to ensure that financial statements are prepared in accordance with generally accepted accounting standards in India (India GAAP ). From 1973 to 2000 the IASC has issued 32 accounting standards. These standards, as a matter of fact, most of the countries in the world, which are interested, and confidence in adopting these standards may be followed. But it is observed that many countries are not adopting the standards in the presentation of accounting information. Adopting IAS in India, it is taking average 6.13 years for one accounting standard. This points out the poor research work, and development in the a ccounting field. While formulating Indian Accounting Standards, changes from the corresponding IAS/ IFRS are made only in those cases where these are unavoidable considering: •
Legal and/ or regulatory framework prevailing in the country.
•
To reduce or eliminate the alternatives so as to ensure comparability.
•
State of economic environment in the country
•
Level of preparedness of various interest groups involved in implementing the accounting standards.
One of the major reason for the prevailing divergent accounting practices is the Accounting Standards, the provisions of the Income Tax Act 1961 and Indian Companies Act 1956 do not go together. Indian Accounting Standards (ASs) are formulated on the basis of the IFRSs. While While formulating ASs, the endeavor of the ICAI remains to converge with the IFRSs. The ICAI has till date issued 29 ASs corresponding to IFRSs. Some recent ASs, issued by the ICAI, are totally at par with the corresponding IFRSs, e.g., the Standards on ‘Impairment of Assets’ and ‘Construction Contracts’
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ANNEXURE-I THE LIST OF INDIAN ACCOUNTING ACCOUNTING STANDARDS VIS-À-VIS VIS-À-VIS INTERNATIONAL ACCOUNTING STANDARDS Sl No
Accounting Standard recommended by the NACAS No.
Title of the Standard
International Accounting Standards (IASs) / International Financial Reporting Standards (IFRSs) No. Title of the Standard
1. 2. 3. 4.
AS 1 AS 2 AS 3 AS 4
Disclosure of of Ac Accounting Po Policies IAS 1 Valuation of Inventories IAS 2 Cash Flow Statements IAS 7 Contingencies and Events Occurring IAS IAS 10 1 after the Balance Sheet Date Net Profit or Loss for the Period, Prior IAS IAS 8 Period Items and Changes in Accounting Policies Depreciation Accounting
5.
AS 5
6.
AS 6
7. 8.
AS 7 AS 8
9. 10. 11.
AS 9 AS 10 AS 11
12.
AS 12
Construction Contracts Accounting for Research and Development [Withdrawn pursuant to AS 26 becoming mandatory] Revenue Recognition Accounting for Fixed Assets The Effects of Changes in Foreign Exchange Rates Accounting for Governmen ment Gran rants
13.
AS 13
Accounting for Investments
14. 15. 16. 17. 18. 19. 20. 21.
AS 14 AS 15 AS 16 AS 17 AS 18 AS 19 AS 20 AS 21
Accounting for Amalgamations Employee Benefits Borrowing Costs Segment Reporting Related Party Disclosures Leases Earnings Per Share Consolidated Financial Statemen ments
IFRS 3 IAS 19 IAS 23 IAS 14 IAS 24 IAS 17 IAS 33 IAS 27
22. 23.
AS 22 AS 23 23
Accounting for Taxes on Income Accounting fo for In Investments in in Associates in Consolidated Financial
IAS 12 IAS IAS 28
IAS 11
IAS 18 IAS 16 IAS IAS 21 21 IAS 20
Presentation of Fi Financial St Statements Inventories Cash Flow Statements Even Events ts Aft After er the the Bal Balan ance ce She Sheet et Date Date Acco ccounti unting ng Poli Policcies ies, Chan Change gess in in Accounting Estimates and Errors Corresponding IAS has been withdrawn since the matter is now covered by IAS 16 and IAS 38 Construction Contracts Corresponding IAS has also been withdrawn. Revenue Property, Plant and Equipment The The Eff Effec ects ts of Chan Change gess in in For Forei eign gn Exchange Rates Accounting for Governmen ment Gran rants and Disclosure of Government Assistance Corresponding IAS has been withdrawn since the matter is now covered by IAS 32, 39, 40 and IFRS 7 Business Combinations Employee Benefits Borrowing Costs Segment Reporting Related Party Disclosures Leases Earnings Per Share Consolidated and Separat rate Financial Statements Income Taxes Inve Invest stme ment ntss in in Ass Assoc ocia iate tess
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24.
AS 24
25. 26. 27.
AS 25 AS 26 AS 27 27
28. 29. 29.
AS 28 AS 29
Statements Discontinuing Operations 4
IFRS IFRS 5
Interim Financial Reporting Intangible Assets Financial Rep Repo orting of of In Interes rests in in Joint Ventures Impairment of Assets Pro Provisio ision ns, Cont Contin inge gen nt Liab Liabil ilit itie iess an and Contingent Assets
IAS 34 IAS 38 IAS IAS 31 IAS 36 IAS 37 IAS IAS 38 38 IAS IAS 15 IAS IAS 22 22 IAS IAS 26 IAS IAS 29 29 IAS 30
IAS IAS 32 IAS IAS 35 IAS IAS 39 IAS IAS 40 IAS 41 41
NonNon-cu curr rren entt Asse Assets ts Hel Held d for for Sale Sale and and Discontinued Operations Interim Financial Reporting Intangible Assets Inte Intere rest stss in Join Jointt Vent Ventu ures res Impairment of Assets Provis Provision ions, s, Contin Contingen gentt Liabil Liabiliti ities es and Contingent Assets Intan ntang gible ible Asset ssetss Info Inform rmat atio ion n refl reflec ecti ting ng the the eff effec ects ts of of changing prices Busi Busine ness ss Comb Combin inat atio ions ns Acco Accoun unti ting ng & Rep Repor orti ting ng by by Reti Retire reme ment nt benefit plans Fina Financ ncia iall rep repor orti ting ng in Hyperinflationary Hyperinflationary economies Disclo Disclosur sures es in the the Fina Financi ncial al Statem Statement entss of Banks & similar financial institutions Fina Financ ncia iall Inst Instru rumen ments ts : Dis Discl clos osur uree & Presentation Disc Discon onti tinu nuin ing g Oper Operat atio ions ns Fina Financ ncia iall Instr Instrum umen ents ts:: Recog Recogni niti tion on & Measurement Inves nvesttment ment Pro Prope pert rty y Agriculture
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THE INDIAN ACCOUNTING STANDARDS ADOPTED IN MY ORGANIZATION The following Indian Accounting Standards are being adopted in my Organization:
I) Accounting Standard (AS) 1 Disclosure of Accounting Policies The following the text of the Accounting Standard –I issued by the accounting standard board, the institute of charted accountant of India on “ disclosure of the accounting policies”. The standard deals with the significant accounting policies followed in preparing financial statements.
(This Accounting Standard includes paragraphs set in bold italic type and plain type, which have equal authority. Paragraphs in bold italic type indicate the main principles. This Accounting Standard should be read in the context of the General Instructions contained in part A of the Annexure to the Notification Notification.) .)
Introduction
1. This Standard deals with the disclosure of significant accounting policies followed followed in preparing and presenting financial statements. 2. The view presented in the financial statements of an enterprise of its state of affairs and of the profit or loss can be significantly affected by the accounting policies followed in the preparation and pre presen sentat tation ion of the fin financ ancial ial sta statem tement ents. s. The acc accoun ountin ting g po polic licies ies fol follow lowed ed var vary y fro from m enterprise to enterprise. Disclosure of significant accounting policies followed is necessary if the view presented is to be properly appreciated. 3. The disclosure of some of the accounting policies followed in the preparation and presentation of the financial statements is required by law in some cases. 4. The Institute of Chartered Accountants of India has, in Standard issued by it, recommended the disclosure of certain accounting policies, e.g., translation policies in respect of foreign currency items. 5. In recent years, a few enterprises in India have adopted the practice of including in their annual reports to shareholders a separate statement of accounting policies followed in preparing and presenting the financial statements. 6. In general, however, accounting accounting policies are not at present present regularly and fully disclosed in in all financial statements. Many enterprises include in the Notes on the Accounts, descriptions of some of the significant accounting policies. But the nature and degree of disclosure vary considerably between the corporate and the non-corporate sectors and between units in the same sector. 7. Even among the few enterprises that presently include in their annual reports a separate statement state ment of accou accountin nting g poli policies, cies, cons considerab iderable le varia variation tion exists. The state statement ment of accou accountin nting g policies forms part of accounts in some cases while in others it is given as supplementary information. 8. The purp purpose ose of this Standard is to promo promote te better understand understanding ing of finan financial cial statements statements by establishing through an accounting standard the disclosure of significant accounting policies and the manner in which accounting policies are disclosed in the financial statements. Such disclosure would also facilitate a more meaningful comparison between financial statements of different enterprises.
Considerations in the Selection of Accounting Policies 16. The primary consideration in the selection of accounting policies by an enterprise is that the financial statements prepared and presented on the basis of such accounting policies should
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represent a true and fair view of the state of affairs of the enterprise as at the balance sheet date and of the profit 17. For this purpose, the major considerations governing the selection and application of accounting policies are:— a. Prudence In view of the uncertainty attached to future events, profits are not anticipated but recognised only when realised 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. b. Substance over Form 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. c. Materiality Financial statements should disclose all “material” items, i.e. items the knowledge of which might influence the decisions of the user of the financial statements.
Disclosure of Accounting Policies
18. 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. 19. Such disclosure should form part of the financial statements. 20. It would be helpful to the reader of financial statements if they are all disclosed as such in one place instead of being scattered over several statements, schedules and notes. 22. Any change in an accounting policy which has amaterial 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 extent ascertainable. ascertainable. Where such amount is not ascertainable, ascertainable, wholly or in part, part, the fact should be indicated. If 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 expected 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. 23.. Di 23 Disc sclo losu sure re of ac acco coun unti ting ng po poli lici cies es or of ch chan ange gess th ther erei ein n ca cann nnot ot re remed medy y a wr wron ong g or inappropriate treatment of the item in the accounts.
MainPrinciples
24. All significant accounting policies adopted in the preparation and presentation of financial statements should be disclosed. 25. The disclosure of the significant accounting policies as such should form part of the financial statements and the significant accounting policies should normally be disclosed in one place. 26. Any change in the accounting policies which has a material effect in the current period or which is reasonably expected to have have a material effect in later periods should be disclosed. In the case of a change in accounting policies which has a material effect in the current period, the amount by which any item in the financial statements is affected by such change should also be disclosed to the extent ascertainable. Where such amount is not ascertainable, wholly or in part, the fact should be indicated. 27. If the fundamental accounting assumptions, viz. Going Concern, Consistency and Accrual are followed in financial statements, specific disclosure is not required. If a fundamental accounting assumption is not followed, the fact should be disclosed.
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II) Statements of Accounting Standards (AS 2) Revised Valuation of Inventories (In this Accounting Standard, the standard portions have been set in bold italic type. These should be read in the context of the background material which has been set in normal type, and in the context of the 'Preface to the Statements of Accounting Standards'.) The following is the text of the revised Accounting Standard (AS) 2, 'Valuation of Inventories', issued by the Council of the Institute of Chartered Accountants of India. This revised Standard supersedes Accounting Standard (AS) 2, 'Valuation of Inventories', issued in June, 1981. The revised standard comes into effect in respect of accounting periods commencing on or after 1.4.1999 and is mandatory in nature.
Objective A primar primary y issue issue in accoun accountin ting g for invent inventori ories es is the determ determina inatio tion n of the value value at which which inventories are carried in the financial statements until the related revenues are recognised. This Statement deals with the determination of such value, including the ascertainment of cost of inventories and any write-down thereof to net realisable value.
Scope 1. This Statement should be applied in accounting for inventories other than: (a) work in progress arising under construction contracts, including directly related service contracts (see Accounting Standard (AS) 7, Accounting for Construction Contracts); (b) work in progress arising in the ordinary course of business of service providers; (c) shares, debentures and other financial instruments held as stock-in-trade; and (d) producers' inventories of livestock, agricultural and forest products, and mineral oils, ores and gases to the extent that they are measured at net realisable value in accordance with well established practices in those industries.
2. The inventories referred to in paragraph 1 (d) are measured at net realisable value at certain stages of production. This occurs, for example, when agricultural crops have been harvested or mineral oils, ores and gases have been extracted and sale is assured under a forward contract or a government guarantee, or when a homogenous market exists and there is a negligible risk of failure to sell. These inventories are excluded from the scope of this Statement.
Definitions 3. The following terms are used in this Statement with the meanings specified:
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Inventories are assets: (a) held for sale in the ordinary course of business; (b) in the process of production for such sale; or (c) in the form of materials or supplies to be consumed in the production process or in the rendering of services. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
III) Statements of Accounting Standards (AS 3) Revised Cash Flow Statements (In this Accounting Standard, the standard portions have been set in bold italic type. These should be read in the context of the background material which has been set in normal type, and in the context of the 'Preface to the Statements of Accounting Standards'.) The following is the text of the revised Accounting Standard (AS) 3, 'Cash Flow Statements', issued issued by the Counci Councill of the Instit Institute ute of Charte Chartered red Accoun Accountan tants ts of India. India. This This Standa Standard rd supersedes Accounting Standard (AS) 3, 'Changes in Financial Position', issued in June, 1981. In the initial years, this accounting standard will be recommendatory in character. During this period, this standard is recommended for use by companies listed on a recognised stock exchange and other commercial, industrial and business enterprises in the public and private sectors.
Objective Inform Informati ation on about about the cash cash flows flows of an enterp enterpris risee is useful useful in provi providin ding g users users of financ financial ial statements with a basis to assess the ability of the enterprise to generate cash and cash equivalents and the needs of the enterprise to utilise those cash flows. The economic decisions that are taken by users require an evaluation of the ability of an enterprise to generate cash and cash equivalents and the timing and certainty of their generation. The Statement deals with the provision of information about the historical changes in cash and cash equivalents of an enterprise by means of a cash flow statement which classifies cash flows during the period from operating, investing and financing activities.
Scope 1. An enterprise should prepare a cash flow statement and should present it for each period for which financial statements are presented.
2. Users of an enterprise's financial statements are interested in how the enterprise generates and uses cash and cash equivalents. This is the case regardless of the nature of the enterprise's activities and irrespective of whether cash can be viewed as the product of the enterprise, as may be the case with a financial enterprise. Enterprises need cash for essentially the same reasons,
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however however different different their principal principal revenue-prod revenue-producing ucing activities activities might be. They need cash to conduct their operations, to pay their obligations, and to provide returns to their investors.
Definitions 5. The following terms are used in this Statement with the meanings specified: Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. Cash flows are inflows and outflows of cash and cash equivalents. Operating activities are the principal revenue-producing activities of the enterprise and other activities that are not investing or financing activities. Investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents. Financing activities are activities that result in changes in the size and composition of the owners' capital (including preference share capital in the case of a company) and borrowings of the enterprise.
IV) Statements of Accounting Standards (AS 5) Revised Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies (In this Accounting Standard, the standard portions have been set in bold italic type. These should be read in the context of the background material which has been set in normal type, and in the context of the 'Preface to the Statements of Accounting Standards'.) The following is the text of the revised Accounting Standard (AS) 5, 'Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies', issued by the Council of the Institute of Chartered Accountants of India. This revised standard comes into effect in respect of accounting periods commencing on or after 1.4.19 1.4.1996 96 and is mandat mandatory ory in nature nature.. It is clarif clarified ied that that in respec respectt of accoun accountin ting g period periodss commen commencin cing g on a date date prior prior to 1.4.19 1.4.1996, 96, Accoun Accountin ting g Standa Standard rd 5 as origi original nally ly issued issued in November, 1982 (and subsequently made mandatory) will apply.
Objective 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. Accordingly, this Statement requires
12
the classification and disclosure of extraordinary and prior period items, and the disclosure of certain certain items within profit or loss from ordinary ordinary activities. activities. It also specifies specifies the accounting accounting treatment for changes in accounting estimates and the disclosures to be made in the financial statements regarding changes in acc ounting policies.
Scope 1. This Statement should be applied by an enterprise in presenting profit or loss from ordinary activities, extraordinary items and prior period items in the statement of profit and loss, in accounting for changes in accounting estimates, and in disclosure of changes in accounting policies.
2. This Statement deals with, among other matters, the disclosure of certain items of net profit or loss for the period. These disclosures are made in addition to any other disclosures required by other Accounting Standards. 3. This Statement does not deal with the tax implications of extraordinary items, prior period items, changes in accounting estimates, and changes in accounting policies for which appropriate adjustments will have to be made depending on the circumstances.
Definitions 4. The following terms are used in this Statement with the meanings specified: Ordinary activities are any activities which are undertaken by an enterprise as part of its busine business ss and such such relate related d activi activitie tiess in which which the enterp enterpris risee engage engagess in furthe furtheran rance ce of, incidental to, or arising from, these activities. Extraordinary items are income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the enterprise and, therefore, are not expected to recur frequently or regularly. Prior period items are income or expenses which arise in the current period as a result of errors or omissions in the preparation of the financial statements of one or more prior periods. Accounting policies are the specific accounting principles and the methods of applying those principles adopted by an enterprise in the preparation and presentation of financial statements.
Net Profit or Loss for the Period 5. All items of income and expense which are recognised in a period should be included in the determination of net profit or loss for the period unless an Accounting Standard requires or permits otherwise.
6. Normally, all items of income and expense which are recognised in a period are included in the determination of the net profit or loss for the period. This includes extraordinary items and the effects of changes in accounting estimates.
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7. The net profit or loss for the period comprises the following components, each of which should be disclosed on the face of the statement of profit and loss: (a) profit or loss from ordinary activities; and (b) extraordinary items.
V) Statements of Accounting Standards (AS 6) Revised Depreciation Accounting The following is the text of the revised Accounting Standard (AS) 6, 'Depreciation Accounting', issued by the Council of the Institute of Chartered Accountants of India.
Introduction 1. This Statement deals with depreciation accounting and 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 statement also does not apply to land unless it has a limited useful life for the enterprise. 2. 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.
Definitions 3. The following terms are used in this Statement with the meanings specified: 3.1 Depreciation is a measure of the wearing out, consumption or other loss of value of a depreciable asset arising from use, effluxion of time or obsolescence through technology and market changes. Depreciation is allocated so as to charge a fair proportion of the depreciable amount in each accounting period during the expected useful life of the asset. Depreciation includes amortisation of assets whose useful life is predetermined. 3.2 Depreciable assets are assets which
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(i) are expected to be used during more than one accounting period; and (ii) have a limited useful life; and (iii) are held by an enterprise for use in the production or supply of goods and servic services, es, for rental rental to other others, s, or for admini administr strati ative ve purpo purposes ses and not not for the purpose of sale in the ordinary course of business. 3.3 Useful life is either (i) the period over which a depreciable asset is expected to be used by the enterprise; or (ii) the number of production or similar units expected to be obtained from the use of the asset by the enterprise. 3.4 Depreciable amount of a depreciable asset is its historical cost, or other amount substituted for historical cost in the financial statements, less the estimated residual value.
VI) Statements of Accounting Standards (AS 7) Accounting for Construction Contracts The following is the text of the Accounting Standard (AS) 7 issued by the Institute of Chartered Accountan Accountants ts of India India on 'Accounti 'Accounting ng for Construction Construction Contracts'. Contracts'. The Standard deals with accounting for construction contracts in the financial statements of contractors. In the initial years, this accounting standard will be recommendatory in character. During this period, this standard is recommended for use by companies listed on a recognised stock exchange and other large commercial, industrial and business enterprises in the public and private sectors.
Introduction 1. This Statement deals with accounting for construction contracts in the financial statements of enterprises undertaking such contracts (hereafter referred to as 'contractors'). The Statement also applies to enterprises undertaking construction activities of the type dealt with in this Statement not as contractors but on their own account as a venture of a commercial nature where the enterprise has entered into agreements for sale. 2. The feature which characterises a construction contract dealt with in this Statement is the fact that the date at which the contract is secured and the date when the contract activity is completed fall into different accounting periods. The specific duration of the contract performance is not used as a distinguishing feature of a construction contract. Accounting for such contracts is essentially a process of measuring the results of relatively long-term events and allocating those results to relatively short-term accounting periods. 3. For the purposes of this Statement, a construction contract is a contract for the construction of an asset or of a combination of assets which together constitute a single project. Examples of activity covered by such contracts include the construction of bridges, dams, ships, buildings and complex pieces of equipment. 4. Contracts for the provision of services come within the scope of this Statement to the extent that they are directly related to a contract for the construction of an asset. Examples of such
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servic servicee contra contracts cts are contra contracts cts for the servi services ces of projec projectt manage managers rs and archit architect ectss and for technical engineering services related to the construction of an asset.
Explanation 5. The principal problem relating to accounting for construction contracts is the allocation of revenues and related costs to accounting periods over the duration of the contract.
VII) Statements of Accounting Standards (AS 9) Revenue Recognition The following is the text of the Accounting Standard (AS) 9 issued by the Institute of Chartered Accountants of India on 'Revenue Recognition'. In the initial years, this accounting standard will be recommendatory in character. During this period, this standard is recommended for use by companies listed on a recognised stock exchange and other large commercial, industrial and business enterprises in the public and private sectors.
Introduction 1. This Statement deals with the bases for recognition of revenue in the statement of profit and loss of an enterprise. The Statement is concerned with the recognition of revenue arising in the course of the ordinary activities of the enterprise from — the sale of goods, — the rendering of services, and — the use by others of enterprise resources yielding interest, royalties and dividends. 2. This Statement does not deal with the following aspects of revenue recognition to which special considerations apply: (i) Revenue arising from construction contracts; (ii) Revenue arising from hire-purchase, lease agreements; (iii) Revenue arising from government grants and other similar subsidies; (iv) Revenue of insurance companies arising from insurance contracts. 3. Examples of items not included within the definition of "revenue" for the purpose of this Statement are: (i) Realised gains resulting from the disposal of, and unrealised gains resulting from the holding of, non-current assets e.g. appreciation in the value of fixed assets;
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(ii) Unrealised holding gains resulting from the change in value of current assets, and the natural increases in herds and agricultural and forest products; (iii) (iii) Realis Realised ed or unreal unrealise ised d gains gains result resulting ing from from chang changes es in foreig foreign n excha exchange nge rates rates and adjustments arising on the translation of foreign currency financial statements; (iv) Realised gains resulting from the discharge of an obligation at less than its carrying amount; (v) Unrealised gains resulting from the restatement of the carrying amount of an obligation.
Definitions 4. The following terms are used in this Statement with the meanings specified: 4.1 Revenue is the gross inflow of cash, receivables or other consideration arising in the c ourse of the ordinary activities of an enterprise from the sale of goods, from the rendering of services, and from the use by others of enterprise resources yielding interest, royalties and dividends. Revenue is measured by the charges made ma de to customers or clients for goods supplied and services rendered to them and by the charges and rewards arising from the use of resources by them. In an agency relati relations onship hip,, the revenu revenuee is the amoun amountt of commis commissio sion n and not the gross gross inflow inflow of cash, cash, receivables or other consideration. 4.2 Completed service contract method is a method of accounting which recognises revenue in the statement of profit and loss only when the rendering of services under a contract is completed or substantially completed. 4.3 Proportionate Proportionate completion method is a method of accounting which recognises revenue in the statement of profit and loss proportionately with the degree of completion of services under a contract.
Explanation 5. Revenue recognition is mainly concerned with the timing of recognition of revenue in the statement of profit and loss of an enterprise. The amount of revenue arising on a transaction is usuall usually y determ determine ined d by agree agreemen mentt betwee between n the partie partiess invol involved ved in the trans transact action ion.. When When uncertaint uncertainties ies exist regarding regarding the determinat determination ion of the amount, or its associated associated costs, costs, these uncertainties may influence the timing of revenue recognition.
VIII) Statements of Accounting Standards (AS 10) Accounting for Fixed Assets The following is the text of the Accounting Standard 10 (AS 10) issued by the Institute of Chartered Accountants of India on 'Accounting for Fixed Assets'. In the initial years, this accounting standard will be recommendatory in character. During this, this standard is recommended for use by companies listed on a recognised stock exchange and other large commercial, industrial and business enterprises in the public and private sectors.
17
Introduction 1. Financial statements disclose certain information relating to fixed assets. In many enterprises these assets are grouped into various categories, such as land, buildings, plant and machinery, vehicles, furniture and fittings, goodwill, patents, trade marks and designs. This statement deals with accounting for such fixed assets except as described in paragraphs 2 to 5 below. 2. This statement does not deal with the specialised aspects of accounting for fixed assets that arise under a comprehensive system reflecting the effects of changing prices but applies to financial statements prepared on historical cost basis. 3. This This statem statement ent does does not not deal deal with with accoun accountin ting g for the follow following ing items to which which specia speciall considerations apply: (i) forests, plantations and similar regenerative natural resources; (ii) wasting assets including mineral rights, expenditure on the exploration for and extraction of minerals, oil, natural gas and similar non-regenerative resources; (iii) expenditure on real estate development; and (iv) livestock. Expenditure on individual items of fixed assets used to develop or maintain the activities covered in (i) to (iv) above, but separable from those activities, are to be accounted for in accordance with this Statement. 4. This statement does not cover the allocation of the depreciable amount of fixed assets to future periods since this subject is dealt with in Accounting Standard 6 on 'Depreciation Accounting'. 5. .This statement does not deal with the treatment of government grants and subsidies, and assets under leasing rights. It makes only a brief reference to the capitalisation of borrowing costs and to asse assets ts acqu acquir ired ed in an amal amalga gama mati tion on or merg merger er.. Thes Thesee subj subjec ects ts requi require re more more exte extens nsiv ivee consideration than can be given within this Statement.
Definitions 6. The following terms are used in this Statement with the meanings specified: 6.1 Fixed asset is an asset held with the intention of being used for the purpose of producing or providing goods or services and is not held f or sale in the normal course of business 6.2 Fair market value is the price that would be agreed to in an open and unrestricted market between knowledgeable and willing parties dealing at arm's length who are fully informed and are not under any compulsion to transact. 6.3 Gross book value of a fixed asset is its historical cost or other amount substituted for historical cost in the books of account of financial statements. When this amount is shown net of accumulated depreciation, it is termed as net book value.
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Explanation 7. Fixed assets often comprise a significant portion of the total assets of an enterprise, and therefore are important in the presentation of financial position. Furthermore, the determination of whether an expenditure represents an asset or an expense can have a material effect on an enterprise's reported results of operations.
IX) Statements of Accounting Standards (AS 11) Accounting for the Effects of Changes in Foreign Exchange Rates (In this Accounting Standard, the Standard portions have been set in bold italic type. These should be read in the context of the background material which has been set in normal type, and in the context of the 'Preface to the Statements of Accounting Standards'.) The following is the text of Accounting Standard (AS) 11, 'Accounting for the Effects of Changes in Foreign Exchange Rates', issued by the Council of the Institute of Chartered Accountants of India. This Standard will come into effect in respect of accounting periods commencing on or after 1.4.1995 and will be mandatory in nature.
Objective An enterprise may have transactions in foreign currencies or it may have foreign branches. Foreign currency transactions should be expressed in the enterprise's reporting currency and the financial financial statements statements of foreign foreign branches branches should should be translated translated into the enterprise enterprise's 's reporting reporting currency in order to include them in the financial statements of the enterprise. The principal issues in accounting for foreign currency transactions and foreign branches are to decide which exchange rate to use and how to recognise in the financial statements the financial effect of changes in exchange rates.
Scope 1. This Statement should be applied by an enterprise : (a) in accounting for transactions in foreign currencies; and (b) in translating the financial statements of foreign branches for inclusion in the financial statements of the enterprise.
Definitions 2. The following terms are used in this Statement with the meanings specified : Reporting currency is the currency used in presenting the financial statements.
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Foreign currency is a currency other than the reporting currency of an enterprise. Exchange rate is the ratio for exchange of two currencies as applicable to the realisation of a specific asset or the payment of a specific liability or the recording of a specific transaction or a group of inter-related transactions. Average rate is the mean of the exchange rates in force during a period. Forward Forward rate is the exchange rate established established by the terms of an agreement agreement for exchange of two currencies at a specified future date. Closing rate is the exchange rate at the balance sheet date. Monetary Monetary items are money held and assets and liabilities liabilities to be received received or paid in fixed or determinable amounts of money, e.g., cash, receivables, payables. Non-moneta Non-monetary ry items are assets and liabilit liabilities ies other than monetary items e.g. fixed fixed assets, assets, inventories, investments in equity shares. Settlement date is the date at which a receivable is due to be collected or a payable is due to be paid. Recoverable amount is the amount which the enterprise expects to recover from the future use of an asset, including its residual value on disposal.
X) Statements of Accounting Standards (AS 13) Accounting for Investments The following is the text of Accounting Standard (AS) 13, 'Accounting for Investments', issued by the Council of the Institute of Chartered Accountants of India.
Introduction 1. This Statement deals with accounting for investments in the financial statements of enterprises and related disclosure requirements. 2. This Statement does not deal with: (a) the bases bases for recogn recogniti ition on of intere interest, st, divide dividends nds and rental rentalss earned earned on inve invest stme ment ntss whic which h are are cove covere red d by Acco Accoun unti ting ng Stan Standa dard rd 9 on Reve Revenu nuee Recognition; (b) operating or finance leases; (c) investments of retirement benefit plans and life insurance enterprises; and
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(d) mutual funds and/or the related asset management companies, banks and public financial institutions formed under a Central or State Government Act or so declared under the Companies Act, 1956.
Definitions 3. The following terms are used in this Statement with the meanings assigned:
Investments are assets held by an enterprise for earning income by way of dividends, interest, and rentals, for capital appreciation, or for other benefits to the investing enterprise. Assets held as stock-in-trade are not 'investments'. A current investment is an investment that is by its nature readily realisable and is intended to be held for not more than one year from the date on which such investment is made. A long term investment is an investment other than a current investment. An investment property is an investment in land or buildings that are not intended to be occupied substantially for use by, or in the operations of, the investing enterprise.
Fair value is the amount for which an asset could be exchanged between a knowledgeable, willin willing g buyer buyer and a knowle knowledge dgeab able, le, willin willing g seller seller in an arm's arm's length length transa transacti ction. on. Under Under appropriate circumstances, market value or net realisable value provides an evidence of fair value. Market value is the amount obtainable from the sale of an investment in an open market, net of expenses necessarily to be incurred on or before disposal.
XI) Accounting Standard 16 BORROWING COSTS (In this Accounting Standard, the standard portions have been set in bold italic type. These should be read in the context of the background material which has been set in normal type, and in the context of the ‘Preface to the Statements of Accounting Standards’.) The following is the text of Accounting Standard (AS) 16, ‘Borrowing Costs’, issued by the Council of the Institute of Chartered Accountants of India. This Standard comes into effect in respect of accounting periods commencing on or after 1-4-2000 and is mandatory in nature. Paragraph 9.2 and paragraph 20 (except the first sentence) of Accounting Standard (AS) 10, ‘Accounting for Fixed Assets’, stand withdrawn from this date.
Objective The objective of this Statement is to prescribe the accounting treatment for borrowing costs.
Scope
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1. This Statement should be applied in accounting for borrowing costs.
2. This Statement does not deal with the actual or imputed cost of owners’ equity, including preference share capital not classified as a liability. Definitions 3. The following terms are used in this Statement with the meanings specified: Borrowing costs are interest and other costs incurred by an enterprise in connection with the borrowing of funds. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale.
4. Borrowing costs may include: (a) interest and commitment charges on bank borrowings and other short-term and long-term borrowings; (b) amortisation of discounts or premiums relating to borrowings; (c) amortisation of ancillary costs incurred in connection with the arrangement of borrowings; (d) finance charges in respect of assets acquired under finance f inance leases or under other similar arrangements; and (e) exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. 5. Examples of qualifying assets are manufacturing plants, power generation facilities, inventories that require a substantial period of time to bring them to a saleable condition, and investment properties. Other investments, and those inventories that are routinely manufacture manufacturedd or otherwise otherwise produced produced in large quantities quantities on a repetitive repetitive basis over a short period of time, are not qualifying assets. Assets that are ready for their intended use or sale when acquired also are not qualifying assets. Recognition 6. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset should be capitalized as part of the cost of that asset. The amount of borrowing borrowing costs costs eligible eligible for capitali capitalizatio zation n should should be determined determined in accordanc accordancee with this Statement. Other borrowing costs should be recognized as an expense in the period in which they are incurred.
7. Borrowing costs are capitalized as part of the cost of a qualifying asset when it is probable that they will result in future economic benefits to the enterprise and the costs can be measured reliably. Other borrowing costs are recognized as an expense in the period in which they are incurred. 22
XII) Accounting Standard 19 Leases (In this Accounting Standard, the standard portions have been set in bold italic type. These should be read in the context of the background material which has been set in normal type, and in the context of the ‘Preface to the Statements of Accounting Standards’.) The following is the text of Accounting Standard (AS) 19, ‘Leases’, issued by the Council of the Institute of Chartered Accountants of India. This Standard comes into effect in respect of all assets leased during accounting periods commencing on or after 1.4.2001 and is mandatory in nature from that date. Accordingly, the ‘Guidance Note on Accounting for Leases’ issued by the Institute in 1995, is not applicable in respect of such assets. Earlier application of this Standard is, however, encouraged.
Objective The objective of this Statement is to prescribe, for lessees and lessors, the appropriate accounting policies and disclosures in relation to finance leases and operating leases.
Scope 1. This Statement should be applied in accounting for all leases other than: a. lease lease agreements agreements to explore explore for or or use natural natural resources resources,, such as oil, gas, gas, timber, timber, metals and other mineral rights; and b. licensing licensing agreeme agreements nts for items items such as motion motion picture picture films, films, video video recording recordings, s, plays, plays, manuscripts, patents and copyrights; and c. leas leasee agre agreeme ement ntss to use use lan lands ds..
2. This This Statem Statement ent applies applies to agreem agreement entss that that transf transfer er the right right to use use assets assets even thoug though h substa substanti ntial al servi services ces by the lessor lessor may be called called for in connec connectio tion n with with the the operat operation ion or maintenance of such assets. On the other hand, this Statement does not apply to agreements that are contracts for services that do not transfer the right to use assets from one contracting party to the other.
Definitions 3. The following terms are used in this Statement with the meanings specified: A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time. A finance lease is a lease that transfers substantially all the risks and rewards incident to ownership of an asset. An operating lease is a lease other than a finance lease. A non-cancellable lease is a lease that is cancellable only: 1. upon upon the occurr occurrenc encee of some remot remotee conting contingenc ency; y; or
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2. with with the the permi permissi ssion on of of the the lesso lessor; r; or or 3. if the lessee lessee enters enters into into a new lease lease for the the same or an an equivalent equivalent asset asset with with the same lessor; or 4. upon payment payment by the the lessee lessee of an additi additional onal amount amount such such that, that, at inception, inception, continuation of the lease is reasonably certain. The inception of the lease is the earlier of the date of the lease agreement and the date of a commitment by the parties to the principal provisions of the lease. The lease term is the non-cancellable period for which the lessee has agreed to take on lease the asset together with any further periods for which the lessee has the option to continue the lease of the asset, with or without further payment, which option at the inception of the lease it is reasonably certain that the lessee will exercise. Minimum lease payments are the payments over the lease term that the lessee is, or can be required, to make excluding contingent rent, costs for services and taxes to be paid by and reimbursed to the lessor, together with: a. in the case case of the lessee lessee,, any residual residual value value guarant guaranteed eed by or or on behalf behalf of the lessee lessee;; or b. in the case case of the the lessor, lessor, any any residua residuall value guaranteed guaranteed to the lessor lessor:: i. by or on on beh beha alf of the the les lesse see; e; or ii. by an inde indepen penden dentt third third party party fina financi nciall allyy capab capable le of meet meeting ing this this guar guaran antee tee.. However, if the lessee has an option to purchase the asset at a price which is expected to be sufficiently lower than the fair value at the date the option becomes exercisable that, at the inception of the lease, is reasonably certain to be exercised, the minimum lease payments comprise minimum payments payable over the lease term and the payment required to exercise this purchase option. Fair value is the amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm's length transaction. Economic life is either: a. the period period over over which an an asset asset is expected expected to be be economical economically ly usable usable by one or or more users; or b. the number number of producti production on or similar similar units expecte expected d to be obtained obtained from the asset asset by one or more users. Useful life of a leased asset is either: a. the period period over over which the the leased leased asset asset is expected expected to be used by by the lessee; lessee; or b. the number number of producti production on or similar similar units expecte expected d to be obtained obtained from the use use of the asset by the lessee. Residual value of a leased asset is the estimated fair value of the asset at the end of the lease term. Guaranteed residual value is: a. in the case case of the lessee lessee,, that part part of the residua residuall value which which is guarant guaranteed eed by the the lessee or by a party on behalf of the lessee (the amount of the guarantee being the maximum amount that could, in any event, become payable); and
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b. in the case case of the lessor lessor,, that part part of the residu residual al value value which is is guaranteed guaranteed by or on behalf of the lessee, or by an independent third party who is financially capable of discharging the obligations under the guarantee. Unguaranteed residual value of a leased asset is the amount by which the residual value of the asset exceeds its guaranteed residual value. Gross investment in the lease is the aggregate of the minimum lease payments under a finance lease from the standpoint of the lessor and any unguaranteed residual value accruing to the lessor. Unearned finance income is the difference between: a. the gross gross inves investme tment nt in in the the leas lease; e; and and b. the the pre prese sent nt valu valuee of of i. the mini minimum mum lea lease se payme payments nts under under a fina finance nce leas leasee from from the stan standpo dpoint int of of the lessor; and ii. any ungu unguara arante nteed ed resid residual ual valu valuee accrui accruing ng to the the lesso lessor, r, at the the inter interest est rat ratee implicit in the lease. Net investment in the lease is the gross investment in the lease less unearned finance income. The interest rate implicit in the lease is the discount rate that, at the inception of the lease, causes the aggregate present value of a. the minimum minimum lease lease payments payments under under a finance finance lease lease from the stand standpoint point of the lessor; lessor; and b. any unguarante unguaranteed ed residual residual value value accruing accruing to the lessor lessor,, to be equal to the the fair value value of the leased asset. The lessee's incremental borrowing rate of interest is the rate of interest the lessee would have to pay on a similar lease or, if that is not determinable, the rate that, at the inception of the lease, the lessee would incur to borrow over a similar term, and with a similar security, the funds necessary to purchase the asset. Contingent rent is that portion of the lease payments that is not fixed in amount but is based on a factor other than just the passage of time (e.g., percentage of sales, amount of usage, price indices, market rates of interest). 4. The definition of a lease includes agreements for the hire of an asset which contain a provision giving the hirer an option to acquire title to the asset upon the fulfillment of agreed conditions. These agreements are commonly known as hire purchase agreements. Hire purchase agreements include agreements under which the property in the asset is to pass to the hirer on the payment of the last installment and the hirer has a right to terminate the agreement at any time before the property so passes.
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COMPARI COMPARISON SON OF INDIAN INDIAN ACCOUN ACCOUNTIN TING G STANDA STANDARD RDSS WITH WITH INTERNATIONAL ACCOUNING STANDARDS
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IFRS AS by / Position under IAS / IFRS ICAI IAS AS-1 IASAS-1 IAS-11 Disc Disclo losu sure re of Acco Account untin ingg Pol Polic icie iess IAS 1, inte interr alia, lia, dea deals with ith over overaall consi onside derration tions, s, including fair presentation, off-setting, comparative information. IAS 1 prescribed mi minimum st structure of of fi financial statements and contains guidance on related issues viz. current liabilities etc. Under IAS 1, financial statements includes Statement showing changes in equity Under der IA IAS 1, 1, th there ere is is a pre presum sumpti ption tha that app appli liccatio ation n of IFRS would lead to fair presentation IAS 1 requires specific disclosure for departures from IFRS IAS IAS 1 requ requir ires es disc disclo losu sure re of crit critic ical al judg judgem emen ents ts made made by management in applying accounting policies IAS IAS 1 prohib prohibits its any items items to to be disclo disclosed sed as extrao extraordi rdinar nary y items.
AS-2 AS -2
Position as per Indian GAAP
AS 1 doe does not not deal deal with the these aspe aspeccts. ts.
AS 1 does no not pr prescribe an any mi minimum structure. AS 1 does not prescribe any such statement to be prepared. Ther here is is no no su such pres presu umpt mption ion und undeer AS AS 1. 1. There is no such specific provision in AS 1. Ther Theree is is no no suc such h spe speci cifi ficc dis discl clos osur uree requirement in AS 1 AS 5 speci specific ficall ally y requ require iress discl disclosu osure re of of certain items as Extra-ordinary items.
IASIAS-22 Valu Valuat atio ionn of of Inv Inven ento tori ries es:: IAS 2 pres prescr crib ibes es sam same cos costt for form mula ula to to be be us used for all inve invent ntor orie iess havi having ng a simi simila larr natu nature re and and use use to to the the ent entit ity. y.
AS 2 requi equirres that hat the the formu ormulla use used d in in dete determ rmin inin ing g the the cos costt of of an item item of of inv inven ento tory ry needs to be selected with a view to providing the fairest possible approximation to the cost incurred in bringing the item to its present location and condition.However, there is no stipulation for use of same cost formula in AS 2 as compared to IFRS
There are certain additional requirement in IAS 2 which are not contained in AS 2 which are as under: 1. Purchase of inventory on deferred settlement terms excess over normal price is to be accounted as interest over the period of financing. 2. Measurement criteria are not applicable to commodity broker-traders. 3. Exchange differences are not includible in inventory valuation. 4. Inventory pledged as security for liabilities requires separate disclosure.
AS-3 S-3
IAS-7 S-7 Cash Flo Flow w St State atement ents: Bank Bank over overdr draf afts ts are are to to be be tre treat ated ed as a com compo pone nent nt of cash cash / cash equivalents under IAS 7. IAS IAS 7 allo allows ws inte intere rest st and and div divid iden end d pai paid d to to be be cla class ssif ifie ied d either either under under Operat Operating ing Activ Activiti ities es or Financ Financing ing Activ Activiti ities. es. IAS IAS 7 requ require iress addit addition ional al disc disclos losure ure of cash cash paym payment entss by a lessee relating to finance lease under Financing Activities. IAS IAS 7 deals deals with with issue issuess relat relating ing to disc disclos losure ure in cash cash flow flow statem atemen entt in in co consol nsolid idaated ted fin finaancia nciall st state atement ents viz viz.. Undis distrib tribut uteed prof profiits of asso ssociat ciatee & mi minor nority ity in intere terest stss,
AS 3 has has no such such stip stipul ulat atio ion n AS 3 man manda date tess dis discl clos osur uree of of inte intere rest st and and divide dividend nd paid paid under under Finan Financia ciall Acti Activit vities ies only. only. No such such disclo disclosur sures es requ require ired d under under AS 3. 3. AS 3 was was issu issued ed prio priorr to to AS 21, hence hence issu issues es relat elatin ing g to to con conso sollida idate finan inanccial ial st statem atemen entts are not not de dealt alt wit with. h.
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Forex cash flows of foreign subsidiary etc. IAS 7 proh prohiibit bits sepa separa rate te dis disclos closur uree of ext extraor raordi din nary ary items in Cash Flow Statements. In case case of acqu acquis isit itio ion n of of sub subsi sidi diar ary, y, IAS IAS 7 requ requir ires es two two Additional disclosures on acquisitions viz. Cash/ cash equivalents of acquired subsidiary and all other assets acquired.
AS 4
IAS 10
AS 4 spe speci cifi fica call lly y req requi uire ress suc such h dis discl clos osur uree as as the same is mandated by statutory requirement. AS 4 has has no such such stip stipul ulati ation. on.
AS 4 requ requir ires es adj adjus ustm tmen ents ts to to figu figure ress stat stated ed in in fina financ ncia iall stat statem emen ents ts for for eve event ntss occu occurr rrin ing g afte after r the balance sheet date, if such events relate to conditions existing at the balance sheet date.
IAS IAS 8 Prio Priorr Peri Period od Item Itemss and and Chan Change gess in Acc Accou ount ntin ingg Poli Polici cies es:: In case of change in accounting policy IAS 8 requires retrospective effec effectt to be give given n by by adju adjust sting ing openin opening g retai retained ned earnin earnings. gs. The def defiiniti nition on of prio priorr pe period riod Item Itemss is is br broad oader unde underr IAS 8 as com compa parred to to AS AS 5 sin since IAS IAS 8 cove overs all the items in the financial statements. IAS IAS 8 requ requir ires es retr retros ospe pect ctiv ivee res resta tate teme ment nt of prio priorr per perio iod d figures figures by restatem restatement ent of opening opening balances balances of assets, assets, liabilities liabilities and equity for the earliest period practicable. IAS IAS 8 requ requir ires es disc disclo losu sure re of any any impe impend ndin ing g cha chang ngee in in accounting policy viz. change mandated by a new accounting standard which is yet to come into effect. IAS IAS 8 pro prohi hibi bits ts disc disclo losu sure re of of any any ite items ms as as extr extraa-or ordi dina nary ry item.
AS- 6
No such such prov provis isio ion n in in AS AS 3
Cont Contin inge genc ncie iess and and Even Events ts occu occurr rrin ingg aft after er the the Balance Sheet Date: IAS IAS 10 10 pro provi vide dess tha thatt pro propo pose sed d div divid iden end d sho shoul uld d not not be shown as liability. IAS IAS 10 10 requ require iress date date of author authoriza izatio tion n for for issue issue of financ financial ial statements to be specifically mentioned in the financial statements itself. IAS IAS 10 als also o requ requir ires es dis discl clos osur uree of con conti ting ngen entt liab liabil ilit ity y to to be upd updat ated ed in in the the ligh lightt of new new inf infor orma mati tion on rec recei eive ved d afte afterr the balance sheet date.
AS 5
AS 3 mand andate ates suc such disc isclos losure. ure.
No corres pon pon Depr Deprec ecia iati tion on Acc Accou ount ntin ingg (AS (AS 6): 6): case of chan change ge in meth method od of depr deprec ecia iati tion on,, IAS IAS 16 ding In case IAS requires effect to be given prospectively. (cover ed by Change ge in in meth method od of of depr deprec ecia iati tion on is is trea treate ted d as chan change ge in in IAS Chan which accounting estimate under IAS 16. discus IAS IAS 16 16 req requi uire ress est estim imat atio ion n of of Res Resid idua uall val value ue with withou outt s consid ider erin ing g infl inflat atio ion n effe effect ctss i.e, i.e, res resid idua uall valu valuee has has to be about cons assets esti estima mate ted d assu assumi ming ng tha thatt the the asse assett wer weree alre alread ady y of the the age age ) and and in in the the cond condit itio ion n exp expec ecte ted d at the the end end of its its use usefu full lif lifee
AS 5 requires only prospective change in accoun accountin ting g polic policy y with with approp appropria riate te disc disclos losure ures. s. AS 5 cove overs only nly inc incom omees and and expe xpense nses in in the defi defini niti tion on of prio priorr per periiod items tems.. AS 5 req requi uire ress pri prior or peri period od item itemss to to be be included included in the determina determination tion of net profit profit or loss for the current period. AS 5 doe doess not not requ requir iree suc such h dis discl clos osur uree
AS 5 req requi uire ress sepa separa rate te dis discl clos osur uree of extraordinary items.
AS 6 requ requir ires es retr retros ospe pect ctiv ivel ely y re-c re-com ompu puta tati tion on of depreciation and any excess or deficit on such re-computation is required to be adjusted in the period in which such change is effected. AS 6 con consi side ders rs this this as cha chang ngee in acco accoun unti ting ng policy Ther Theree is is no no suc such h sti stipu pula lati tion on in AS 6 alt altho houg ugh h it pres prescr crib ibes es use use of of rea reali lisa sabl blee valu valuee of of simi simila lar r asse assets ts,, whi which ch hav havee rea reach ched ed the the end end of of thei theirr use usefu full liv lives es and and have have oper operat ated ed unde under r conditions similar to the asset as one of the
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basis of estimating residual value.
AS-7 (Rev (Revis is ed)
AS -9
IAS -11 -11
Cons Constr truc ucti tion on Con Contr trac actt (AS (AS 7): 7): Contr ontrac actt Reve Revenu nuee unde underr IAS IAS 11 is meas measur ured ed at the the fair fair value of the consideration received or receivable.
AS 7 does does not not refe referr to fair fair valu valuee and and stat states es that Contract revenue is measured at the consideration received or receivable
IAS18 Revenu venuee Recogn cogniition tion (AS (AS 9): 9): Under der IA IAS 18, 18, reven evenue ue from rom sa sale of good goodss can canno nott be be recognised when entity retains continuing managerial ownership or effective control over the goods sold. In case case of reve revenu nuee fro from m ren rende deri ring ng of serv servic ices es,, IAS IAS 18 allows only percentage of completion method. IAS IAS 18 18 req requi uire ress eff effec ecti tive ve inte intere rest st meth method od pres prescr crib ibed ed in Under Under IAS IAS 18, 18, paym payment entss recei received ved in in advanc advancee for good goodss yet yet to be manufactu manufactured red or third third party party sales, sales, cannot cannot be recogn recognized ized as rev reveenue nue un until til suc such h go goods ods ar are del deliivere vered d to to the the buy buyer.
AS 9 doe does not not conta ontain in any such uch st stipul ipulat atio ion. n.
AS 9 all allow owss com compl plet eted ed serv servic icee con contr trac actt method or proportionate completion method. AS 9 req requi uire ress int inter eres estt inc incom omee to to be be rec recog ogni nise sed d on a time proportion basis. AS 9 per permit mitss recog recognit nition ion when when the the goods goods are are manufact manufactured, ured, identifi identified ed and ready ready for deli delive verry in in suc such h ca cases. ses.
IASAS-10 16 Account ountin ingg for for Fixe Fixedd Ass Asset ets: s: Under der IAS IAS 16, 16, if subs subseq eque uent nt cost osts are incur curred for repla replacem cement ent of a part part of an an item item of of fixed fixed assets assets,, such such cost costss are are req requi uire red d to to be be cap capit ital aliz ized ed and and sim simul ulta tane neou ousl sly y the the replaced part has to be de-capitalized. AS-11 (Revise d)
AS 10 prov proviides des that hat only nly that hat expe expend ndit itur uree which which incr increas eases es the the futur futuree benef benefits its from from the the exis existting ing ass asset et bey beyond ond its its prev previo ious usly ly asse assess ssed ed standard of performance is included in the gross book value, e.g., an increase in capacity.
IAS21 Effe Effect ctss of of cha chang nges es in Fore Foreig ignn Exc Excha hang ngee Rat Rates es:: The The rev revis ised ed IAS IAS 21 21 mak makes es no dist distin inct ctio ion n bet betwe ween en an integr tegraal for forei eign gn ope operati ration on and and no non-i n-inte ntegral gral for foreign ign operation as done in AS 11. In fact, the factors of distinction between an integral operation and a non-integral operation are incorporated as considerations for determining functional currency. Revis Revised ed IAS 21 requir requires es an enti entity ty to determ determine ine functi functiona onall currency and measure results and financial position in that currency. Functional currency is the currency of the primary economic environment. Under Under the revis revised ed IAS IAS 21 stat states es that that if functi functiona onall curre currency ncy of a forei foreign gn oper operati ation on is is othe otherr than than repo reporti rting ng curr currenc ency, y, the the provis provision ionss of trans translat lation ion of such such oper operati ation on are are simila similarr to that that prescribed for a non-integral foreign operation under AS 11. If financ financial ial statem statement entss are are prese presente nted d in any other other curre currency ncy other than functional currency, the revised IAS 21 requires Assets /Liabilities to be translated at Closing Rate and Income / Expenses at Average Rate.
AS 11 prov provid ides es sepa separa rate te trea treatm tmen entt for for inte integr gral al ope operatio ations ns and nonnon-in inte teg gral ral ope operratio ations ns..
There There is no concep conceptt of of func functio tional nal curre currency ncy under AS 11.
Absenc Absencee of functi functiona onall curr currenc ency y conce concept pt does does not not enab enable le AS AS 11 11 to to provi provide de for for such such a stipul stipulati ation. on. AS 11 does does not contai contain n any any guidan guidance ce on on this this issue.
IASAS-12 20 Government Grants: The The con conce cept pt of of ext extra ra-o -ord rdin inar ary y ite item m is is del delet eted ed unde underr all all standards of IFRS.
AS 12 requ requir ires es disc disclo losu sure re of gov gover ernm nmen entt grants for financial support / compensation
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In case case of nonnon-mo mone neta tary ry asse assets ts acqu acquir ired ed at nomi nomina nall / conc conces essi sion onal al rat rate, e, IAS IAS 20 per permi mits ts acc accou ount ntin ing g eith either er at at fai fairr value or at acquisition cost In resp respec ectt of grant grant relat related ed to a spec specifi ificc fixed fixed asset asset beco becomin ming g refun refundab dable, le, IAS IAS 20 20 requ require iress retr retrosp ospect ective ive re-com re-comput putati ation on of depr deprec ecia iati tion on and and pre presc scri ribe bess cha charg rgin ing g off off the the def defic icit it in the the per period iod in in whi whicch suc such h gr grant ant be become comess ref refun unda dabl blee. IAS 20 requir requires es separa separate te disclos disclosure ure of unfulfi unfulfilled lled condition conditionss and other contingencies if grant has been recognised.
for losses as extra-ordinary items in P&L. AS 12 requ requir ires es acco accoun unti ting ng at acqu acquis isit itio ion n cost cost.. AS 12 12 requir requires es enter enterpri prise se to comp compute ute deprec depreciat iation ion prospe prospecti ctivel vely y as as a result result of which which the the rev revis ised ed book book valu valuee is is pro provi vide ded d ove overr the the resid esidua uall use usefful life ife. AS 12 12 has no such such disclo disclosure sure requireme requirement. nt.
IFRS AS-14 3 Accoun untting for Amalgamations: (IFRS 3 supers edes IAS 22)
IFRS 3 allow llowss only nly pur purchas chasee meth metho od. Opti ption of pool poolin ing g method given under IAS 22 has been withdrawn. IFRS IFRS 3 requires requires valuation valuation of of assets assets & liabil liabilitie itiess at Fair Fair Value. Value.
AS 14 allow llowss both both Pool Poolin ing g of Inte Interrest Method and Purchase Method. AS 14 requir requires es valuatio valuation n at carryi carrying ng value. value.
IFRS 3 req requi uirres Good Goodw will ill to to be be te tested sted for for im impair pairme ment nt.. IFRS IFRS 3 requires requires recogniti recognition on of negative negative goodwill goodwill immed immediate iately ly in P&L A/c. IFRS 3: Re Revers versee Acq Acqui uisi sittion ion is is acc accou ount nted ed ass assumi uming acquirer is the acquiree. IFRS IFRS 3 requ requir ires es val valua uati tion on of of Fin Finan anci cial al Ass Asset etss to to be deal dealtt with as per IAS 39. Under Under IFR IFRS S 3, provi provisio sional nal valu values es can can be used used provid provided ed they they are updated retrospectively within 12 months with actual values.
AS 14 14 re requir quires es amor amorttizat izatio ion n of of Goo Goodw dwil illl AS 14 requires requires it it to be credited credited to Capital Capital Reserve AS 14 14 do does not not de deal wi with reve everse acquis quisit itiion AS 14 con conta tain inss no such such sim simil ilar ar pro provi visi sion on.. There There is no no such such provis provision ion in in AS 14. 14.
IASAS-16 23 Borrowing Costs : IAS IAS 23 23 pre presc scri ribe bess bor borro rowi wing ng cost costss to to be be rec recog ogni nize zed d as as expe expens nsee as benc benchm hmar ark k trea treatm tmen ent. t. It requ requir ires es capi capita tali liza zati tion on as an allowed alternative. IAS IAS 23 23 req requi uire ress dis discl clos osur uree of of cap capit ital aliz izat atio ion n rat ratee use used d to to determine the amount of borrowing costs.
AS 16 mand mandat ates es capi capita tali liza zati tion on of of bor borro rowi wing ng cost costs. s. AS 16 does does not not req requi uire re such such disc disclo losu sure re..
IASAS-17 14 Segment Reporting: IAS 14 pre prescr scribes bes trea reatme tment of reve revenu nuee, exp expeense nses, prof profit it/l /los oss, s, ass asset etss and and liab liabil ilit itie iess in in rela relati tion on to to Ass Assoc ocia iate tess & Joint Ventures in consolidated financial statements. IAS 14 encour encourages ages reportin reporting g of verticall vertically y integrat integrated ed activitie activitiess as separa separate te segm segment entss but but does does not mandat mandatee the the disc disclos losure ure.. IAS IAS 14 14 prov provide idess that that a busi busines nesss segm segment ent can be treate treated d as as reportable segment only if, inter alia, majority of its revenue is earned from sales to external customers. Unde Underr IAS IAS 14, 14, if if a repo report rtab able le segm segmen entt cea cease sess to to mee meett thre thresh shol old d req requi uire reme ment nts, s, than than also also it rema remain inss rep repor orta tabl blee for one year if the Management judges the segment to be of continuing significance. significance. In case case of chan change ge in iden identi tifi fica cati tion on of segm segmen ents ts,, IAS IAS 14 requi require ress resta restatem tement ent of prior prior period period segme segment nt inform informati ation. on. In cas casee it is is not not prac practi tica cabl ble, e, IAS IAS 14 req requi uire ress discl disclos osur uree of
AS 17 is sile silent nt on the the aspe spect of treat reatme ment nt in cons consol olid idat ated ed fina financ ncia iall stat statem emen ents ts.. AS 17 does does not make make any disti distinctio nction n between between vertic verticall ally y inte integra grated ted segmen segmentt and and other other segmen segments ts AS 17 does does not not contai contain n any any such such stip stipula ulatio tion. n.
Unde Underr AS AS 17, 17, thi thiss is is man manda dato tory ry irre irresp spec ecti tive ve of the the jud judgm gmen entt of of Man Manag agem emen ent. t.
AS 17 requ requir ires es only only disc disclo losu sure re of the the nat natur uree of the change change and the financ financial ial effec effectt of the chan change ge,, if rea reaso sona nabl bly y dete determ rmin inab able le..
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data for both the old and new bases of segmentation.
IASAS-18 24 Relat lated Par Partty Di Disclo sclosu surres: es: The The def defin init itio ion n of of rel relat ated ed part party y und under er IAS IAS 24 24 inc inclu lude dess Post employment benefit plans (e.g. gratuity fund, pension fund) of the enterprise or of any other entity, which is a related party of the enterprise. The The defi defini niti tion on of of Key Key mana manage geme ment nt per perso sons ns (KM (KMPs Ps)) unde underr IAS 24 include includess any director director wheth whether er executi executive ve or otherwise otherwise i.e. No Non-executive di directors ar are al also re related pa party. Furth Further, er, under under IAS IAS 24, 24, if if any any perso person n has has indir indirect ect author authority ity and and res respo pons nsib ibil ilit ity y for for pla plann nnin ing, g, dir direc ecti ting ng and and con contr trol olli ling ng the activities of the enterprise, he will be treated as a key management person (KMP) The The defi definit nition ion of rela related ted party party unde underr IAS IAS 24 includ includes es clos closee members of the families of KMPs as related party as well as of persons who exercise control or significant influence. influence. IAS IAS 24 24 req requi uire ress com compe pens nsat atio ion n to to KMP KMPss to to be be disc disclo lose sed d category-wise including share-ba -based payments. IAS IAS 24 24 mand mandate atess that that no disclo disclosur suree shou should ld be made made to the effect that related party transactions were made on arms length basis unless terms of the related party transaction can be substantiated No conces concessio sion n is is prov provide ided d under under IAS IAS 24 24 wher wheree disc disclos losure ure of informat information ion would would conflict conflict with with the duties duties of confidenti confidentialit ality y in terms of statute or regulating authority. Unde Underr IAS IAS 24, 24, the the def defin init itio ion n of "con "contr trol ol"" is rest restri rict ctiv ivee as it req requi uire ress powe powerr to gove govern rn the the fin finan anci cial al and and ope opera rati ting ng policies of the management of the enterprise The The defi defini niti tion on of of "con "contr trol ol"" unde underr IAS IAS 24 is is rest restri rict ctiv ivee on the count count that that it does does not inclu include de cont control rol over over compo composit sition ion of Board of Directors The disclo disclosure sure requir requiremen ementt under IAS IAS 24 are applica applicable ble when when related related party party relations relationship hip exists exists as on the date date of balance balance sheet IAS IAS 24 24 req requi uire ress dis discl clos osur uree of of ter terms ms and and con condi diti tion onss of of outstanding items pertaining to related parties. IAS IAS 24 24 does does not define define "signi "signific ficant ant influe influence nce"" which which is to be cons conside idered red whil whilee determ determini ining ng rela related ted par party ty rela relatio tionsh nship. ip.
AS 18 does does not not inc inclu lude de this this rela relati tion onsh ship ip..
AS 18 18 read read wit with h ASIASI-18 18 exc exclu lude dess non-execut non-executive ive direct directors ors from from the the definit definition ion of of keymanagement pe persons. AS 18 18 does does not not spec specifi ifical cally ly cove coverr indir indirect ect auth author orit ity y and and res respo pons nsib ibil ilit ity. y.
AS 18 18 cover coverss only only rela relativ tives es of of KMPs KMPs
AS 18 read read with with ASI ASI 23 23 req requi uire ress dis discl clos osur uree of of remuneration paid to key management persons but does not mandate category-wise disclosures. disclosures. AS 18 contai contains ns no such such stip stipula ulatio tion. n.
AS 18 provid provides es exempt exemption ion from from disc disclos losure ure in such cases. cases. Unde Underr AS 18, 18, the the def defin init itio ion n is is wid wider er as as it refe refers rs to to pow power er to gove govern rn the the fin finan anci cial al and and /or operating policies of the management. AS 18 18 incl includ udes es con contr trol ol ove overr comp compos osit itio ion n of Board Board of Dire Directo ctors rs in in the the defin definiti ition on of of "contr "control" ol" Under Under AS 18 the the standard standard applies applies if relat related ed party party relations relationship hip exist exist at any time time during during the year year.N .No o suc such h dis discl clos osur uree req requi uire reme ment nt is contained in AS 18. AS 18 prescr prescribe ibe a rebu rebutta ttable ble presum presumpti ption on of signif significa icant nt influ influenc encee if 20% 20% or or more more of the the voting any party holds power.
IASAS-19 17 Leases Under Under IAS-17 IAS-17 it has has been been clari clarifie fied d that that land land and buildi buildings ngs elements of of a lease of land and buildings need to be considered sepa separa rate tely ly.. The The land land ele eleme ment nt is is norm normal ally ly an ope opera rati ting ng lease lease unles unlesss title title passe passess to the the lesse lesseee at the the end end of the the lease lease term. term. The The build building ingss eleme element nt is is class classifi ified ed as as an opera operatin ting g or fina financ ncee lea lease se by appl applyi ying ng the the clas classi sifi fica cati tion on crit criter eria ia..
AS-19 AS-19 - " Accou Accounti nting ng for for Leases Leases"" at it stands stands at present does not deal with lease agreements to use use land lands. s. Hen Hence ce,, the the clas classi sifi fica cati tion on cri crite teri riaa are are applic applicabl ablee only only to to buildi buildings ngs as a sepa separat ratee asset. asset. To be be in line line with with IAS IAS-17 -17,, a suit suitabl ablee modi modifi fica cati tion on is requ requir ired ed in AS-1 AS-19 9 to brin bring g leas leasee agreements for use of land within the purview and prescribe separate classification
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The The defi defini niti tion on of of resi residu dual al val value ue is is not not incl includ uded ed in in IAS IAS 17. 17. IAS 17 specif specifical ically ly exclude excludess lease lease accounti accounting ng for for investme investment nt property and biological assets. IAS 17 17 do does not not pr prohi ohibit bit upw upwaard re revis vision ion in in va value lue of of un-guaranteed residual value during the term of lease. In case case of sal salee & lea lease se back back,, IAS IAS 17 requ requir ires es exce excess ss of of sale sale proce proceeds eds over over the the carr carryin ying g amoun amountt to be def deferr erred ed and and amortised over lease term. IAS IAS 17 17 does does not requir requiree any any separa separate te disclo disclosur suree for for asse assets ts acquired under finance lease segregated from assets owned. IAS IAS 17 17 pre prescr scribe ibess init initial ial direc directt costs costs incurr incurred ed by by less lessor or to be inc inclu lude ded d in lea lease se rec recei eiva vable ble amou amount nt in in case case of of fina financ ncee leas leasee and and in the the car carry ryin ing g amo amoun untt of of the the asse assett in in cas casee of of oper operat atin ing g lea lease se and and doe doess not not mand mandat atee any any acco accoun unti ting ng policy related disclosure. IAS IAS 17 17 req requi uire ress ass asset etss giv given en on oper operat atin ing g lea lease sess to to be be pres presen ente ted d in the the Bal Balan ance ce Shee Sheett acc accor ordi ding ng to to the the natu nature re of the asset.
criteria for land as stated in revised IAS-17. AS 19 19 defi define ness resi residu dual al val value ue.. There There is no such exclusion exclusion under under AS 19. 19. AS 19 19 pe permits mits only only dow downwa nward re revisi vision on AS 19 requ requir ires es exce excess ss or defi defici cien ency cy bot both h to to be be deferr deferred ed and and amor amortis tised ed over over the lease lease term term in proportion to the depreciation of the leased asset. AS 19 mandat mandates es such such separ separate ate disclo disclosur sure. e.
AS 19 requi requires res initia initiall dire direct ct cost cost incu incurre rred d by less lessor or to to be eit eithe herr char charge ged d off off at the the time time of of incu incurr rren ence ceor or to to be be amo amort rtis ised ed ove overr the the leas leasee peri period od andr andreq equi uire ress dis discl clos osur uree for for acco accoun unti ting ng policy relatingthereto in the financial statements of lessor. AS 19 requ requir ires es asse assets ts give given n on on ope opera rati ting ng leas leasee to to be be pre prese sent nted ed in Bala Balanc ncee She Sheet et unde under r Fixed Assets.
IASAS-20 33 Earni ning ngss pe per Sh Share (E (EPS): IAS 33 requir requires es separa separate te disclos disclosure ure of basis basis and and dilute diluted d EPS EPS for for cont contin inui uing ng oper operat atio ions ns and and dis disco cont ntin inue ued d ope opera rati tion ons. s. IAS IAS 33 33 dea deals ls with with comp comput utat atio ion n of of EPS EPS in case case of Shar Sharee based payment transactions. IAS IAS 33 33 pre presc scri ribe bess tre treat atme ment nt of writ writte ten n put put opti option onss and and forward purchase contracts in computing EPS. IAS IAS 33 req requi uire ress chan change gess in acc accou ount ntin ing g poli policy cy to to be giv given en retrospective effect for computing EPS, which means EPS to be adjusted for prior periods presented. IAS IAS 33 does does not not requir requiree disclo disclosur suree of EPS EPS with with and with without out extra-ordinary item IAS IAS 33 33 doe doess not not deal deal with with the the tre treat atme ment nt of appl applic icat atio ion n money held pending allotment. IAS IAS 33 33 req requi uire ress dis discl clos osur uree of of ant antii-di dilu luti tive ve inst instru rume ment ntss even though they are ignored for the purpose of computing dilutive EPS. IAS IAS 33 33 doe doess not not requ requir iree disc disclo losu sure re of norm normal al face face valu valuee of share
AS 20 20 does does not requires requires any such separate separate comp comput utat atio ion n or or disc disclo losu sure re.. AS 20 does does not not con conta tain in any any such such prov provis isio ion. n. AS 20 is sile silent nt on this this aspe aspect ct.. AS 20 20 does does not not pre presc scri ribe be suc such h trea treatm tmen ent. t.
AS 20 20 requir requires es EPS EPS / DPS DPS with with and with without out extra-ordinary items to be disclosed separately. Unde Underr AS AS 20, 20, appl applic icat atio ion n mon money ey held held pend pendin ing g allotment should be included in the computation of diluted EPS. AS 20 does does not not man manda date te such such disc disclo losu sure re..
Disc Disclo losu sure re of norm normal al face face val value ue is requ requir ired ed under AS 20
IASAS-21 27 Cons Consol olid idat ated ed Fina Financ ncia iall Stat Statem emen ents ts (CFS (CFS): ): Unde Underr IAS IAS 27, 27, it it is is man manda dato tory ry to prep prepar aree CFS CFS and and an an entity should pr prepare se separate fi financial st statements in in addition to CFS only if local regulations so require. Unde Underr IAS IAS 27, 27, exe exemp mpti tion on from from prep prepar arat atio ion n fro from m CFS CFS if certain conditions are fulfilled. Under IAS 27, a subsidiary cannot be excluded from
Unde Underr AS AS 21, 21, it it is is not not mand mandat ator ory y to prep prepar aree CFS. Ther Theree is is no no suc such h exe exemp mpti tion on unde underr AS AS 21. 21. Under AS 21, a subsidiary can be excluded
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consolidation under any circumstances.
Under der IA IAS 27 27 whi while le det determi ermini ning ng wheth hetheer ent entit ity y ha has power to govern financial and operating policies of another entity, potential voting rights currently exercisable should be considered. Unde Underr IAS IAS 27, 27, the the def defin init itio ion n of "con "contr trol ol"" is rest restri rict ctiv ivee as it req requi uire ress powe powerr to gove govern rn the the fin finan anci cial al and and ope opera rati ting ng policies of the management of the enterprise Use Use of of uni unifo form rm acco accoun unti ting ng pol polic icie iess for for like like tran transa sact ctio ions ns while pr preparing CF CFS is is ma mandatory un under IA IAS 27 27. Under der IAS IAS 27, 27, minor nority ity inte nterest rest has to be disc isclos losed within thin equit quity y but but sepa separrate ate fr from par parent ent sha sharrehold holder erss equity. Under Under IAS 27, Goodwi Goodwill ll / capita capitall reser reserve ve on on cons consoli olidat dation ion is co computed on on fair values of assets / liabilities Unde Underr IAS IAS 27, 27, 3 mon month ths' s' time time gap gap is is per permi mitt tted ed betw betwee een n Bala Balanc ncee She Sheet et date datess of of fin finan anci cial al stat statem emen ents ts of subs subsid idia iary ry and parent. IAS IAS 27 pres prescr crib ibes es tha thatt def defer erre red d tax tax adju adjust stme ment nt as as per per IAS IAS 12 should be made in respect of timing difference arising out of elimination of unrealised profit. IAS IAS 27 req requi uire ress draw drawin ing g up of of fina financ ncia iall stat statem emen ents ts as as on the the dat datee of of acq acqui uisi siti tion on for for com compu puti ting ng pare parent nt's 's port portio ion n of equity in a subsidiary.
IAS IAS 27 27 does does not requir requiree addi additio tional nal disclo disclosur suree of of list list of all subsid subsidiar iaries ies includ including ing the name, name, countr country y of incorp incorpora oratio tion, n, proportion of of ow ownership in interest an and if if di different, proportion of voting power held.
from consolidation if (1) the subsidiary is acquired and held with an intention to dispose; or (2) the subsidiary operates under severe long term restrictions impairing its ability to transfer funds to parent. AS 21 21 do does not not pr provi ovide for such uch eve even ntua tualit lity.
Unde Underr AS 21, 21, the the def defin init itio ion n is is wid wider er as as it refe refers rs to to pow power er to gove govern rn the the fin finan anci cial al and and or operating policies of the management. AS 21 give givess exe exemp mpti tion on from from foll follow owin ing g uni unifo form rm accounting po policies if if th the sa same is is no not pr practicable Unde nder AS AS 21, 21, minor nority ity inter terest has has to to be sepa separa rate tely ly disc disclo lose sed d fr from liabi iabillity ity and and equity of parent shareholder. Under Under AS AS 21, 21, Good Goodwil willl / capita capitall reser reserve ve on on consolidation is co computed on on the ba basis of carrying value of assets/ liabilities. Unde Underr AS AS 21, 21, six six mon month thss tim timee gap gap is is allo allowe wed. d. AS 21 is is sile silent nt on on this this asp aspec ect. t.
Unde Underr AS 21, 21, for for comp comput utin ing g pare parent nt's 's por porti tion on of equi equity ty in a sub subsi sidi diar ary y at at the the dat datee on on whi which ch investment is made, the financial statements of immediately preceding period can be used as a basis of consolidation if it is impracticable to draw financial statement of the subsidiary as on the date of investment. AS 21 requi requires res addit addition ional al disc disclos losure ure of list list of all subsid subsidiar iaries ies includ including ing the name, name, coun country try of incorporation, pr proportion of of ownership interest and if different, proportion of voting power held.
IASAS-22 12 Account ountin ingg for for Tax Taxes on Incom ncomee: IAS IAS 12 is bas based ed on Bal Balan ance ce She Sheet et app appro roac ach h and and ther theref efor oree temp tempor orar ary y diff differ eren ence ce (fo (forr e.g. e.g. Dif Diffe fere renc ncee on any any upwa upward rd revaluation of assets, assets, leads to creation creation of deferred tax tax liability) liability) Under Under IAS 12, 12, deferred deferred tax tax liability liability for for differen differences ces associat associated ed with investments in subsidiaries, as associates an and Joint Ventures may not be provided, if the parent is able to control the timing of reversal and it is probable that difference will not reverse in foreseeable future.
AS 22 is is base based d on inco income me stat statem emen entt appr approa oach ch and and onl only y tim timin ing g diff differ eren ence cess lead leadss to creation creation of deferred tax tax asset or liability. liability. AS 22 provide providess no such except exception ion as it does does not deal with temporary differences
AS-23 AS-23 IASIAS- Accou Accounti nting ng for Associ Associate ate in Consol Consolida idated ted Financ Financial ial
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28 Statement: Under Under IAS-28 IAS-28,, Pote Potenti ntial al voti voting ng righ rights ts curr current ently ly exer exercis cisabl ablee to be considered in assessing significant influence. As per per IAS IAS 28, 28, dif diffe fere renc ncee betw betwee een n Bala Balanc ncee shee sheett date date of of inve invest stor or and and asso associ ciat atee can can not not be more more than than thre threee mon month th.. In case case unif unifor orm m acc accou ount ntin ing g poli polici cies es are are not not fol follo lowe wed d by investor investor & Investe Investee, e, neces necessary sary adjustme adjustments nts have to be be made made while while prepari preparing ng consolida consolidated ted financ financial ial statem statements ents of of investor investor.. While hile reco recogn gniz izin ing g loss losses es of asso associ ciat ates es / joi joint nt vent ventur ures es unde underr IAS IAS 28, 28, car carry ryin ing g amou amount nt of inve invest stme ment nt in equi equity ty and other long term interests to to be considered
AS-23 AS-23 is silent silent on this this..
Unde Underr AS 23, 23, no peri period od is is spec specif ifie ied. d. Onl Only y cons consis iste tenc ncy y is mand mandat ated ed Unde Underr AS AS 23, 23, if it is not not pra pract ctic icab able le to make make such adjustmen adjustments, ts, exemption exemption is given, given, provide provided d appropria appropriate te disclosur disclosures es are made. made. Unde Underr AS AS 23, 23, loss losses es are are to to be be rec recog ogni nise sed d to to thee theext xten entt of of inv inves estm tmen entt plu pluss inc incur urre red d obligations pluspayments made to towards guaranteed obligations. For For ide ident ntif ific icat atio ion n of of goo goodw dwil illl / capi capita tall res reser erve ve , IAS IAS-2 -28 8 AS-2 AS-23 3 pre presc scri ribe bess his histo tori rica call cos costt bas basis is on envisages net fair value basis on acquisition acquisition , for computation of goodwill. Under Under IAS 28 it it is necess necessary ary to subj subject ect the invest investmen ments ts in in If declin declinee in value value of of inves investm tment ent in an asso associa ciate te asso associ ciat ates es / join jointt vent ventur ures es to the the test test of impa impair irme ment nt . ispe isperm rman anen ent, t, prov provis isio ion n for for dim dimin inut utio ion n to be made.Impairment made.Impairment testing is not required under AS23. While defining defining Significant Significant influence under IAS IAS 28 participation participation As per AS-23, AS-23, participation participation in the financial financial in th the fi financial an and op operating po policy de decisions and / or op operating po policy de decisions is is is envisaged. required
IASAS-25 34 Inter nterim im Fin Finan anccial ial Rep Repor orti ting ng:: Under IA IAS 34, mi minimum co components of of In Interim Financial Report includes - Statement showing changes in Equity Under Under IAS 34, in case case of any any chan change ge in in accou accounti nting ng poli policy cy,, figu figure ress of of prio priorr int inter erim im peri period odss of of the the curr curren entt fin finan anci cial al year ear and com compara parabl blee figur igurees of corre orresp spon ondi ding ng pre previou viouss periods to be restated. Under Under IAS 34, separa separate te guid guidanc ancee is availa available ble for treatm treatment ent of Provision for Leave encashment, Interim Period Manufacturing Cost Variances, Foreign Currency Translation Gains and Losses.
IAS AS 26 38
No su such di disclosure is is re required un under AS AS 25 25.
AS 25 requ require iress resta restatem tement ent of figure figuress of prio priorr inte interi rim m per perio iods ds of the the cur curre rent nt fina financ ncia iall year onl only AS 25 does does not addres addresss these these issues issues specifically.
Intangible Assets: Ther Theree is is no no pre presu sump mpti tion on und under er IAS IAS 38 38 as as reg regar ards ds use usefu full life of an intangible asset IAS IAS 38 does does not not excl exclud udee inta intang ngib ible le asse assets ts aris arisin ing g in in insu insura ranc ncee ente enterp rpri rise se from from cont contra ract ct with with poli policy cy hold holder er Unde Underr IAS IAS 38, 38, inta intang ngib ible le ass asset etss havi having ng "In "Inde defi fini nite te use usefu full life" cannot be amortized. Indefinite useful life means where, based on analysis, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflow for the entity. Indefinite is not equal to Infinite. Such assets should be tested for impairment at each Balance sheet date and separately disclosed
Unde Underr AS AS 26, 26, ther theree is a reb rebut utta tabl blee pre presu sump mpti tion on that the useful life of intangible assets will not exceed 10 years. Inta Intang ngib ible le asse assets ts aris arisin ing g in insu insura ranc ncee ent enter erpr pris isee from from cont contra ract ct with with poli policy cyho hold lder er are are excluded from scope of AS-26. Ther Theree is no no such such res restr tric icti tion on in in AS 26
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IAS IAS 38 38 doe doess not not requ requir iree any any impa impair irme ment nt test testin ing g if if the there re are no indications of impairment.
Unde Underr IAS IAS 38, 38, if if Int Intan angi gibl blee Ass Asset et is 'hel 'held d for for sale sale'' the then n amortization should be stopped. Under Under IAS IAS 38, 38, R&D R&D expen expendit diture ure that that rela relates tes to to an in proce process ss R&D project acquired separately or in a business combination shall be accounted as per normal principles considering the research phase and development phase. Under Under IAS IAS 38, 38, Revalu Revaluation ation Model is allow allowed ed for for account accounting ing Intangible Asset provided active market exists.
AS 26 requ requir ires es test test of impa impair irme ment nt to be applied even if there is no indication of that the asset is impaired for following assets: Intangible asset not yet available for use -Intangible asset amortised over > 10 years. Ther Theree is no such such stip stipul ulat atio ion n und under er AS 26. 26. AS 26 26 is silen silentt on this. this.
AS 26 26 does does not permit permit reval revaluatio uation n model. model.
IASAS-27 31 Finan Financi cial al Rep Repor orti ting ng of of Inte Intere rest stss in Join Jointt Vent Ventur ures es:: Unde Underr IAS IAS 31, 31, when when the the inv inves estm tmen ents ts are are mad madee by vent ventur uree capital organization, mutual funds, unit trusts and similar entities when those investments are classified as held for trading and accounted for as per IAS 39. IAS IAS 31 31 not not to app apply ly if pare parent nt is exem exempt pt from from prep prepar arin ing g CFS CFS under under IAS IAS 27. 27. Sim Simila ilarr exem exempti ption on for for inve investo storr satis satisfy fying ing same conditions as parent. IAS IAS 31 per permi mits ts bot both h prop propor orti tion onat atee cons consol olid idat atio ion n meth method od and equity method for re recognizing in interest in in a jointly controlled entity in CFS. Equity method prescribed in IAS 31 is similar to that prescribed in AS 23.
Ther Theree is no no such such pro provi visi sion on und under er AS AS 27. 27.
Ther Theree is no such such spec specif ific ic prov provis isio ion n und under er AS 27 AS 27 27 perm permit itss only only pro propo port rtio iona nate te con conso soli lida dati tion on method.
IASAS-28 36 Impai pairment of Assets: Unde Underr IAS IAS 36, 36, for for dete determ rmin inin ing g net net sell sellin ing g pri price ce,, cos costt of of dispos sposaal to to be redu reducced only nly in case casess whe where re asse assett is intended to be disposed off. IAS IAS 36 36 doe doess not not perm permit it reve revers rsal al of of imp impai airm rmen entt los losse ses. s. IAS IAS 36 36 sug sugge gest stss onl only y bot botto tomm-up up appr approa oach ch for for all alloc ocat atio ion n of goodwill in case of a cash-generating unit.
AS 28: 28: For For dete determ rmin inin ing g net net sell sellin ing g pri price ce,, cost ost of dispo isposa sall to be be redu reducced from from fair value alue of assets in all cases. AS 28 perm permit itss rev rever ersa sall of of imp impai airm rmen entt los losse ses. s. AS 28 allo allows ws both both bott bottom om up and and top top down down methods
IASAS-29 37 Provis Provision ions, s, Contin Contingen gentt Assets Assets and Conti Continge ngent nt Liabi Liabilit lities ies IAS 37 permits discounting of provisions. IAS IAS 37 37 req requi uire ress tha thatt pro provi visi sion onss for for oner onerou ouss con contr trac acts ts to be recognized IAS IAS 37 37 req requi uire ress pro provi visi sion onin ing g on on the the basi basiss of of con const stru ruct ctio ion n obligation on restructuring. restructuring. IAS 37 37 re requires di disclosure of of Co Contingent As Assets in in Financial Statements. IAS IAS 37 37 pro provi vide dess cer certa tain in basi basiss and and stat statis isti tica call met metho hods ds to be followed followed for for arriving arriving at the best best estimate estimate of the expendi expenditure ture for which provision is recognised. IAS IAS 37 define definess only only oblig obligati ation on but but does does not define define presen presentt obligation and possible obligation.
AS 29 does not permit any discounting AS 29 does does not not man manda date te it. it. AS 29 proh prohib ibit itss the the same same.. AS 29 29 al allows su such di disclosure on only in in approving authority report. AS 29 does does not not con conta tain in any any such such guid guidan ance ce and relies relies on judgemen judgementt of managemen management. t. AS 29 29 defin defines es pres present ent obliga obligatio tion n and and possi possibl blee obligation as well.
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ANAL ANALYS YSIS IS OF COMP COMPAR ARIS ISON ON OF STAN STANDA DARD RDSS IGAAP IGAAP VS IFRS Comparison of frameworks •
Historical Costing – Both IGAAP and IFRS permits revaluation in contrast to Historical
Cost convention.
•
True & Fair View: Under Under IFRS and IGAAP IGAAP framework, framework, there is an assumptio assumption n that
adoption of IFRS /IGAAP leads to a true and fair presentation.
•
Comparative Position : under IGAAP and IFRS, comparative financial figures figures are to be
provided for one previous years.
•
Over-riding of Standards – In rare cases, IFRS permits that a company may withhold
application of IFRS if it is felt that application of IFRS would defeat the very objective of Financial reporting. The reason reason has to be disclosed. There is no such provision provision in IGAAP.
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•
Reporting Elements : IFRS prescribes the minimum structure and content of financial
statement statement including including Statement Statement of Changes Changes in equity equity (in addition addition to Balance Balance sheet, sheet, Income Income statement, statement, Cash flow statement statement , notes comprising comprising significant significant accounting accounting Policy Policy and other explanatory notes). notes). These are not required required under IGAAP.
Comparison of Balance Sheet
A balance sheet is a statement of assets and liabilities.
•
The The IGAA IGAAP P prov provid ides es two two form format at of Bala Balanc ncee Shee Sheett-
Horizontal and Vertical format ( Part I of schedule schedule VI to the Companies Companies Act, 1956) 1956)
Vertical Vertical format format require requiress details details of of each item item in separate separate
schedule, read with notes. IFRS does not prescribe any format .
•
IFRS IFRS does not
prescr prescribe ibe any format format,, but stipulat stipulates es
minimum minimum line items like PPE, Investmen Investmentt property, property, Intangible Intangible assets, assets, Financial assets, Biological assets, inventory, receivables etc. Additional line items, subheadings and subtotals shall be presented on the face of BS if relevant. The order of presentation within the group or otherwise in not mandatory.
•
IGAAP does not prescribe any current and non current
classification. The line items are listed in increasing order of liquidity as sources and application of funds.
Unde Underr IAS, IAS, An orga organi nisa sati tion on has has an opti option on to adop adoptt Curr Curren entt or Non Non curr curren entt classification of assets and liabilities . Deferred Tax Assets not to be shown as Current assets, if Current /non current classification adopted. ( IAS 1.53 ). Some items like Biological assets, Tax Liability, Minority Interest have to be disclosed on the Balance Sheet (IAS 1.66)
•
IFRS IFRS permi permits ts an enterp enterpris risee to disclo disclose se any long long term term intere interest st bearin bearing g liability due due for settlement within within 12 months,as months,as long term liability’ liability’ if the
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same same is like likely ly to be refi refina nanc nced ed and and can can be supp suppor orte ted d by adeq adequa uate te documentary evidence
Comparison of Income statement
•
Format: Under Indian GAAP no format is prescribed , but minimum line items have
been specified in Part II of schedule VI to Companies Act, Act, 1956 including Aggregate Turnover, Turnover, Gross Service revenue for Commission paid to Sole selling agent, Brokerage and discount on sales, depreciation, consumption of stores and spare parts, power and fuel, rent, repairs, rates and taxes etc.
IFRS IFRS does does not prescr prescribe ibe any standa standard rd format format for income income statem statement ent but but prescr prescribe ibess minimum disclosure includes revenue, finance costs, share of post tax results of JV and associ associate atess using using equity equity method method,, pre tax gain/l gain/los osss on asset asset dispos disposal, al, discon discontin tinued ued operation tax charge, and Net profit or loss etc.
•
Addi Additi tion onal al disc disclo losu sure re:: Indi Indian an GAAP GAAP requi require ress disc disclo losu sure re of seve severa rall addi additi tion onal al
information by way of notes like Licensed and installed capacity, actual production details, details of imports, forex earnings and outgo, Net Profit computation u/s 349 etc
Additional disclosure under IFRS include amount of dividend and DPS declared or proposed (IAS 1.95) , Share in profit /loss of associates under equity method, profit/loss attributable to minority interest interest (IAS 1.82) .
•
Indian GAAP requires any item of expenditure which exceeds 1% of total revenue or Rs
5000/- whichever is higher should be shown as a distinct items and should not be clubbed as Miscellaneous expenses.
•
Indian GAAP requires separate disclosure of exceptional and non recurring items.
•
Under IFRS , the reporting entity has an option to prepare income statement either by
nature of expenses or by Function (Cost of sales method ) (IAS 1.84)
•
Under IFRS , Income is defined as Revenue and gains and expenses are defined to
include losses and are decreases in economic activity that result in decrease in equity.
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•
Change in accounting accounting policy policy : Under IGAAP IGAAP effect for change in accounting policy is
given with prospective effect , if the same is material. Only in case of change in method of depreciation, the same has to be applied with retrospective effect. Other disclosures required like need for change etc
IFRS requires retroactive application for the earliest period practical and adjustment of opening opening retained retained earning. earning. Exemption Exemption given for prospecti prospective ve applicati application, on, if resulting resulting adjustment are not reasonably determinable
Prior period items
: IGAAP (AS 5.15,19) requires separate disclosure of prior period in
the current financial statement either as part of current years results or as an alternative approach after determination of current net profit or loss. No restatement of retained earnings are required.however complete disclosure of prior period and its impact on financial statements should be disclosed.
IFRS requires that a prior period item/error should be corrected by retrospective effect by restatement of opening balance of assets, liabilities or equities for the earliest period practicable. Entity should also disclose nature of error and the amount of correction for each financial line item.
•
Discounting : IFRS provides that where the inflow of cash is significantly deferred
without interest, discounting is needed. While there is no concept of discounting under IGAAP.
•
Others :There are significant differences in the 3 GAAP on measurement and disclosure
of various heads of Income and Expenditure including forex losses, extinguishment of debts, Employee benefits, ESOP, Dividend Tax, Loss on investments etc. leading to reconciliation issues between IGAAP results vis a vis IFRS.
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CONCLUSION: In the present era of globalization and liberalization, the World has become an econ econom omic ic vill villag age. e. The The glob global aliz izat atio ion n of the the busi busine ness ss worl world d and and the the attendant structures and the regulations, which support it, as well as the development of e-commerce make it imperative to have a single globally accepted financial reporting system. A number of multi-national companies are are esta establ blis ishi hing ng thei theirr busi busine ness sses es in vari variou ous s coun countr trie ies s with with emer emergi ging ng econom economies ies and vice vice vers versa a. The The enti entiti ties es in emer emergi ging ng econ econom omie ies s are are increasin increasingly gly accessi accessing ng the global markets markets to fulfill fulfill their capital capital needs by getting their securities listed on the stock exchanges outside their country. Capital markets are, thus, becoming integrated consistent with this Worldwide wide tren trend. d. Indi Indian an comp compan anie ies s are are also also bein being g list listed ed on over overse seas as stoc stock k exchanges. Sound financial reporting structure is imperative for economic well-being and effective functioning of capital markets.
The forces of globalization prompt more and more countries to open their doors to foreign investment and as businesses expand across borders the need need arises arises to recogn recognize ize the the benefi benefits ts of having having comm commonl only y accep accepted ted and understoo understood d financia financiall reporting reporting standard standards. s. In this scenario scenario of globaliza globalization tion,, India cannot insulate itself from the developments taking place worldwide. In Indi India, a, so far far as the the ICAI ICAI and and the the Gove Govern rnme ment ntal al auth author orit itie ies s such such as the the National Advisory Committee on Accounting Standards established under the Comp Compan anie ies s Ac Act, t, 19 1956 56,, and and vari variou ous s regu regula lato tors rs such such as Secu Securi riti ties es and and Exchange Board of India and Reserve Bank of India are concerned, the aim has always been to comply with the IFRSs to the extent possible with the objective to formulate sound financial reporting standards. The ICAI, being a member of the International Federation of Accountants (IFAC), considers the IFRSs and tries to integrate them, to the extent possible, in the light of the laws, customs, practices and business environment prevailing in India. The Prefac Preface e to the Statem Statement ents s of Accoun Accountin ting g Standa Standard rds s , issu issued ed by the the ICAI ICAI,, categorically recognizes the same. Although, the focus has always been on developing high quality standards, resulting in transparent and comparable
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fina financ ncia iall stat statem emen ents ts,, devi deviat atio ions ns from from IFRS IFRSs s were were made made wher where e it was was consi consider dered ed
that that these these were not consis consisten tentt with with the laws laws and busin business ess
environment prevailing within the country. Now, as the world globalizes, it has has beco become me imp imperat erativ ive e for for Indi India a also also to make make a form formal al stra strate tegy gy for for conv conver erge genc nce e with with IFRS IFRSs s with with the the obje object ctiv ive e to harmo harmonis nise e with with global globally ly accepted accounting standards. standards . *****
9.0 BIBLIOGRAPHY: Websites: http://www.icai.org http://www.iasb.org http://en.wikipedia.org/ http://www.iasplus.com
References: The Institute of Charted Accountants India, Oct’10, 2007 “Concept Paper on Convergence with IFRSs in India”. The Charted Accountant, Feb 2005, “Indian Accounting Standards and IFRSs : A Comparative Study.” Prof Vishwanathan Bharathan, May’2005, “ Indian and International Accounting Standard practices.” *****
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