accounting standards in india8 final ppt

8/3/2019 Accounting Standards in India8 Final PPT

1/52

Click to edit Master subtitle style

5/4/12

AccountingStandards In India


2/52


5/4/12

Presented By-

MohammedDanish Shaikh (M-4155)

Farhan Khan (M-4161)

Sania Shaikh (M-4139)

Prutha Jagtap (M-3015)

Vikita Shah (M-4138)


3/52

5/4/12

Introduction


4/52

5/4/12

Objectives


5/52

5/4/12

AccountingStandard (AS)11


6/52

5/4/12

Definition Of AS-11The following terms are used in this statements: Reporting Currency.

Foreign Currency.

Exchange Rate.

Average Rate.


7/52

5/4/12

Contd Closing Rate.

Monetary Items.

Non-Monetary Items.

Settlement Date.

Recoverable Amount.


8/52

5/4/12

Objective Of AS-11


9/52

5/4/12

Scope Of AS-11This statement should applied by n enterprise;

(a) In accounting for transaction in foreign currencies;and

(a) In translating financial statement of foreignbranches for inclusion in the financial statements ofthe enterprise.


10/52

5/4/12

Accounting

Standard (AS)17


11/52

5/4/12

INTRODUCTIONAlso known as Segment Reporting.

Issued by the Council of the Instituteof Chartered Accountants of India.

Commencing on or after 1.4.2001.


12/52


5/4/12

DEFINATION :REPORTABLE SEGMENTS :

An enterprise may be engaged in N

Number of products /areas .but only some of thesegments need to be compulsorily disclosed in thefinancial statements. Such mandatory disclosedsegments are known as reportable segment.


13/52


5/4/12

Some example of

segmental disclosure :Name ofcompanies

industry segments

AXIS BANK Banking Treasury

Corporate andRetail banking,others

Tata chemical Ltd Fertilizers and

chemical

Inorganic chemical

fertilizer

Dabur India Ltd Pharmacy FMCG, AyurvedicProducts, others


14/52


5/4/12

Objectives :

To inform about the different types of products andservices of an enterprise and,

To inform financial condition of different geographical areas inwhich it operates.

To better understand the performance of the enterprise.


15/52


5/4/12

Benefit to users :

Better understanding of the performance of theenterprise;

Assess the risks and returns of the enterprise.

Make more informed judgments about the enterprise

as a whole.


16/52


5/4/12

Accounting Standard(AS) 22

Accounting for Taxes on Income


17/52

5/4/12

CONCEPT

Accounting Standard (AS) 22, Accountingfor Taxes on Income, issued by the Council ofthe Institute of Chartered Accountants of

India, comes into effect in respect of All thecompanies commencing on or after 1-4-2001.

Income Tax Charge shall Match the IncomesDisclosed in Books of Accounts Irrespective ofTime When It is Payable As Per Income TaxLaws


18/52

5/4/12

OBJECTIVES

Prescribe accounting treatment for taxes onincome.

Differentiate taxable income from accounting

income.


19/52

5/4/12

SCOPE

This Statement should be applied in accountingfor taxes on income. This includes thedetermination of the amount of the expense or

saving related to taxes on income in respect of an

accounting period and the disclosure of such anamount in the financial statements.

For the purposes of this Statement, taxes on

income include all domestic and foreign taxeswhich are based on taxable income.

This Statement does not specify when, or how,an enter rise should account for taxes that are


20/52

5/4/12

IMPOARTANT RELATED

CONCEPTSAccounting income is the net profit or loss for

a period, as reported in the statement of profit

and loss, before deducting income tax expenseor adding income tax saving.

Taxable income is the amount of the income

for a period, determined in accordance with thetax laws, based upon which income tax payable

(recoverable) is determined.


21/52

5/4/12

CONTD.

Timing differences are the differences betweentaxable income and accounting income for aperiod that originate in one period and are

capable of reversal in one or more subsequent

periods.

Permanent differences are the differences

between taxable income and accounting income

for a period that originate in one period and donot reverse subsequently.


22/52

5/4/12


23/52

5/4/12

Tax expense is the aggregate of current tax and

deferred tax charged or credited to the statementof profit and loss for the period. Tax expense may

result into tax saving as well

Current tax is the amount of income taxdetermined to be payable (recoverable) in respect

of the taxable income for a period.

Deferred tax ,means a future tax liability or asset,

resulting from temporary differences or timingdifferences between the accounting value of assets

and liabilities and their value for tax purposes.

CONTD.


24/52

5/4/12

CURRENT TAX ASSETS ANDLIABILITIES

Current tax for the current and prior periods

should be recognized as a liability to the extent

that it has not yet been settled, and as an asset

to the extent that the amounts already paidexceed the amount due.

The benefit of a tax loss which can be carried backto recover current tax of a prior period should berecognized as an asset.


25/52

5/4/12

DEFFERED TAX ASSETS ANLIABILITIES

There may be difference how certain items ofexpenditure are treated for tax purposes and how

a company actually treats them in its accounts.

This gives rise to Deffered Tax Asset and Libility.

It is the result of Timing Differences. Permanent

differences do not result in deferred tax assets ordeferred tax liabilities.

Deductable Temporary difference give rise to


26/52

5/4/12

In other words

Accounting income > taxable income=deffered tax

liability.

Taxable income > accounting income=Deffered tax

asset

Deffered Tax asset(Debit) and Deffered tax

Liability(Credit)


27/52

5/4/12

MEASUREMENT

Current tax should be measured at theamount expected to be paid to (recoveredfrom) the taxation authorities, using the

applicable tax rates and tax laws.

Deferred tax assets and liabilities should be

measured using the tax rates and tax lawsthat have been enacted or substantivelyenacted by the balance sheet date.

P t ti d


28/52

5/4/12

Presentation and

DisclosureAn enterprise should offset current tax assetsand current tax liabilities if the enterprise:

(a)has a legally enforceable right to set off the recognized

amounts; and(b)intends to settle the asset and the liability on a net

basis.

( )An enterprise should offset deferred tax assetsand deferred tax liabilities if:

(a)the enterprise has a legally enforceable right to set off

assets against liabilities representing current tax; and


29/52

5/4/12

Accounting

Standard (AS)30


30/52

5/4/12

OBJECTIVE

Main objective is to establish principles forrecognising and measuring financial

instruments whose definition encompass mostitems of financial assets, financial liabilities in

an entity's balance sheet.


31/52

5/4/12

APPLICATION


32/52

5/4/12

DEFINITION

A financial instrument is any contract thatgive rise to both:

(a) a financial assets of one entity and

(b) a financial liability or equity instrument ofanother


33/52

5/4/12

DERIVATIVES


34/52

5/4/12

EMBEDDED DERIVATIVE


35/52

5/4/12

CLASSIFICATION OF

FINANCIAL INSTRUMENT


36/52

5/4/12

RECOGNITION AND DERECOGNITION

Initial Recognition

Derecognition of financial Assets

Derecognition of financial Liability


37/52

5/4/12

MEASUREMENTS

Fair value

Measured at original invoice amount

Measured at amortised cost


38/52

5/4/12

Accounting Standard

(AS)31&32


39/52

5/4/12

INTRODUCTIONAccounting Standard (AS) 31 and 32,

Financial Instruments: Presentation and

Disclosure, issued by the Council of the

Institute of Chartered Accountants of India,comes into effect in respect of accounting

periods commencing on or after 1-4-2009 andwill be recommendatory in nature for an initial

period of two years.


40/52

5/4/12

This Accounting Standard will become

mandatory in respect of accounting periods

commencing on or after 1-4-2011 for all

commercial, industrial and business entitiesexcept to a Small and Medium-sized Entity, as

defined ahead.


41/52

5/4/12

ENTITIES

Whose equity or debt securities are not listed

or are not in the process of listing on any

stock exchange, whether in India or outside

India;

Which is not a bank (including co-operative

bank), financial institution or any entitycarrying on insurance business;

whose turnover (excluding other income)

does not exceed rupees fifty crore in


42/52


43/52

5/4/12

PRINCIPLE:AS 31

The principles in this Standard complement

the principles for recognizing and measuring

financial assets and financial liabilities in

Accounting Standard (AS) 30, FinancialInstruments: Recognition and Measurement

and for disclosing information about them inAccounting Standard (AS) 32, Financial

Instruments: Disclosures.


44/52

5/4/12

DEFINATIONS

The following terms are used in this Standard

with the meanings specified:

A financial instrument is any contract thatgives rise to a financial asset of one entity

and a financial liability or equity instrument of

another entity.


45/52

5/4/12

An equity instrument is any contract thatevidences a residual interest in the assets of

an entity after deducting all of its liabilities.

Fair value is the amount for which an asset

could be exchanged, or a liability settled,

between knowledgeable, willing parties in anarms length transaction.


46/52

5/4/12

OBJECTIVES:AS 32

The objective is to provide disclosures on:

The significance of financial instruments for

the entity.

The nature and extent of risks arising fromfinancial instruments to which the entity is

exposed.

Both qualitative and quantitative disclosuresare required.

Nature and extent of


47/52

5/4/12

Nature and extent of

risk arising from

financial instrumentQualitative disclosures:

For each type of risk arising from financial

instruments disclose:The exposures and how they were generated

Objectives, policies and processes formanaging the risks and methods to measure

the risk.

Any changes to the above from the previousperiod


48/52

5/4/12

Quantitative disclosures:

For each risk arising from financialinstruments, disclose:

Quantitative data about the risk exposure asprovided to key management personnel.

Detailed disclosures to the extent notdisclosed already from the point above.

If the year-end disclosures areunrepresentative for the year, disclose

additional information that is representative

Q antitati e


49/52

5/4/12

Quantitative

disclosuresCredit risk

Maximum credit exposure, description of

collateral, information about credit quality.

Analysis of financial assets past due andimpaired.

Collateral and credit enhancements obtained.


50/52

5/4/12

Liquidity risk:Maturity analysis of financial liabilities

showing remaining contractual maturities

Description of how liquidity risk is disclosed

Expected maturities can also be disclosed if

different from contractual maturities (e.g.demand deposits).


51/52

5/4/12

CONCLUSION

q The basic purpose of accounting standards is

to facilitate the provision of financialinformation about entities to enable investors,

analysts, creditors and the entitiesthemselves to make informed decisions about

the allocation of resources.

q Accounting standards are essentially aboutdisclosure and, in many respects, are at the

heart of market efficiency.


52/52

accounting standards in india8 final ppt

Documents