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Koppula.chandrasekher 1st M.B.A-13491E0037 QIS COLLEGE OF Engineering & Technology Venga mukala palem,ongole-523002, Prakasam (Dt), A.PE-Mail@[email protected]
Introduction Accounting standards Objectives of ACCOUNTING STANDARDS Need for ACCOUNTING STANDARDS ACCOUNTING STANDARDS IN INDIAOBJECTIVES OF ACCOUNTING STANDARD BOARD31 ACCOUNTING STANDARDSComparison of Accounting PrinciplesAccounting standard Disclosure of Accounting PoliciesValuation of InventoriesThe financial statements should disclose:Depreciation accountingDefinitionsIt does not deal with revenue arising from: It deals with:It is not applicable to :
Business community across the globe needs common accounting language.
Difficult to compare financial statements of various enterprises due to different methods & principles.
To make these methods & principles uniform & comparable, standards are evolved.
Written documents issued by the expert institutes or other regulatory bodies covering various aspects of measurement, treatment, presentation and disclosure of accounting transactions.
Contain detailed rules to be adopted for accounting treatment of various items before presentation of financial statements.
Norms of accounting policies & practices Furnish useful information to users of financial
statements such as shareholders, creditors, lenders, management, competitors, researchers, society at large.
To eradicate variations in the treatment of accounting aspects and make the presentation standardized.
Harmonize diverse accounting policies to facilitate intra-firm & inter-firm comparison
Bring about uniformity, rationalization , comparability, transparency & adaptability in financial statements
Efficient functioning of economy Financial reports should provide true & fair view Help users for decision making purpose
SIGNIFICANCE OF AS:
Facilitate uniform preparation and reporting of financial statements
Raise the standard of audit Government officials find accounting reports useful
if they are concerned with economic planning, market analysis etc.
Institute Of Chartered Accountants of India (ICAI) constituted the Accounting Standards Board (ASB)
While formulating the AS, the ASB gives due consideration to International Accounting Standards (IASs) issued by IFRSs
The AS are issued under the authority of the Council of ICAI
ASB provides interpretations & guidance on issues arising from AS & review them at periodical intervals
To conceive of & suggest areas in which AS need to be developed
To assist the Council of the ICAI in evolving and establishing AS in India
Examine how far relevant IAS/IFRS can be adapted To review at regular intervals, the AS as per
changing conditions & if necessary, revise the same To provide from time to time interpretations &
guidance on AS To carry out other functions relating to AS
No. of ASNo. of AS TITLE of ASTITLE of AS
AS-1AS-1 Disclosure of accounting Disclosure of accounting policiespolicies
AS-2AS-2 Valuation of inventoriesValuation of inventories
AS-3AS-3 Cash flow statementsCash flow statements
AS-4AS-4 Contingencies & events occurring after B/S Contingencies & events occurring after B/S datedate
AS-5AS-5 Net profit/loss for the period, prior Net profit/loss for the period, prior period items & changes in accounting period items & changes in accounting policiespolicies
AS-6AS-6 Depreciation accountingDepreciation accounting
AS-7AS-7 Construction contractsConstruction contracts
AS-8AS-8 Accounting for R&DAccounting for R&D
AS-9AS-9 Revenue recognitionRevenue recognition
AS-10AS-10 Accounting for fixed assetsAccounting for fixed assets
AS-11AS-11 The effects of changes in foreign exchange ratesThe effects of changes in foreign exchange rates
AS-12AS-12 Accounting for government grantsAccounting for government grants
AS-13AS-13 Accounting for investmentsAccounting for investments
AS-14AS-14 Accounting for amalgamationsAccounting for amalgamations
AS-15AS-15 Accounting for retirement benefits in the Accounting for retirement benefits in the financial statements of employersfinancial statements of employers
AS-16AS-16 Borrowing costBorrowing cost
AS-17AS-17 Segment reportingSegment reporting
AS-18AS-18 Related party disclosuresRelated party disclosures
AS-19AS-19 leasesleases
AS-20AS-20 Earning per shareEarning per share
AS-21AS-21 Consolidated financial statementsConsolidated financial statements
AS-22AS-22 Accounting for taxes on incomeAccounting for taxes on income
AS-23AS-23 Accounting for investments in Accounting for investments in associates in consolidated financial associates in consolidated financial statementsstatements
AS-24AS-24 Discontinuing operationsDiscontinuing operations
AS-25AS-25 Interim financial reportingInterim financial reporting
AS-26AS-26 Intangible assetsIntangible assets
AS-27AS-27 Financial reporting of interests in Financial reporting of interests in joint venturesjoint ventures
AS-28AS-28 Impairment of assetsImpairment of assets
AS-29AS-29 PROVISIONS, CONTINGENT PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT LIABILITIES AND CONTINGENT ASSETSASSETS
AS-30AS-30 FINANCIAL INSTRUMENTFINANCIAL INSTRUMENT
AS-31AS-31 FINANCIAL INSTRUMENT FINANCIAL INSTRUMENT PRESENTATIONPRESENTATION
Indian GAAP IAS US GAAP
Approach “all inclusive” “all inclusive” “all inclusive”
Comprehensive Income
NA Is applicable Is applicable
Extraordinary Items
Required to present separately from ordinary a/c in P&L a/c
NA Is applicable same as in Indian GAAP
Indian GAAP IAS US GAAP
Accounting Policy
Refers to specific accounting principles & methodology of applying them
Is similar to the Indian GAAP definition
Uses the term,
“accounting principles” to refer to accounting policy
Disclosures An entity is required to disclose the accounting policy at one place
An entity is required to disclose the accounting policy separately
The practice is same as in IAS
o Deals with disclosure of significant accounting policies followed in preparing and presenting financial statements
o Affects the view of an enterprise statement
o Recommended translation policies in respect of foreign currency items
o Included in annual reports to shareholders
o Facilitates a more meaningful comparison between financial statements of different enterprises.
Determination of the value at which inventories are carried in the financial statements until the related revenues are recognized.
(a) the accounting policies adopted in measuring inventories,including the cost formula used; and(b) the total carrying amount of inventories and its classificationappropriate to the enterprise
This Statement deals with depreciation accounting and applies to all depreciable assets, except
(i) forests, plantations.(ii) wasting asset extraction of minerals, oils, natural gas .(iii) expenditure on research and development.(iv) goodwill.(v) live stock.
DepreciationDepreciable assetsUseful lifeDepreciable amount
• Gross amount of each depreciable asset • Revaluation of depreciable assets• Change in method
Revenue is the gross inflow of cash, receivables or other consideration arising in the course 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.
It does not deal with revenue arising from:
• construction contracts• hire-purchase• lease agreements• government grants and other similar subsidies• revenue of insurance companies arising from insurance contract
Sale of GoodsRendering of Services Proportionate completion method Completed service contract methodThe Use by Others of Enterprise Resources Yielding Interest, Royalties and Dividends
It mainly deals with accounting of fixed assets like:1. Land2. Building3. Plant and machinery4. Vehicles5. Furniture 6. Goodwill7. Patents8. Trademarks9. Design.
1. Forests ,plantations and similar regenerative natural resources.
2. Wasting fixed assets including mineral rights, expenditure on exploration for or the extraction of minerals, oil, natural gas and similar non-regenerative resources.
3. Expenditure on real estate development.4. Livestock.
Gross and the net book values of fixed assets at the beginning and end of an accounting period showing additions, disposals, acquisitions and other movements. Expenditure incurred on account of fixed assets in the course of construction or aqusition.
