BY Priyanka (Leader) Kalpana Bhangre Rohit Kadam Chirag Shah Vinayak Nair Suchi Gala Anam Shaikh Suman Yadav Viral Patel Prahlad Kulkarni Sunil

Written Documents issued by Government or Regulatory Body

In India, issued by ICAI on 21st April,1977

Initiated by Kumar Mangalam Birla, chairman committee of Corporate Governance for Financial Disclosures

Also initiated by Chair person of NACAS

Standardise the diverse Accounting Policies

Add the reliability to the Financial Statement

Eradicate baffling variation in treatment of accounting aspects

Facilitate inter-firm and intra-firm comparison

In India, 32 Accounting Standards as IAS under NACAS

As per International, there are 41 Accounting Standards called as IFRS

Adopted by 8 countries in the world 70 to 80 countries planning to adhere

IFRS Clause 50 added to the listing

agreement mandatory

Accounting StandardsAccounting Standards InitiationInitiation

1. AS 1 to AS 151. AS 1 to AS 15 1979 to 19951979 to 1995

2. AS 16 to AS 292. AS 16 to AS 29 2000 to 20072000 to 2007

3. AS 30 to AS 323. AS 30 to AS 32 Later part of 2007Later part of 2007

Specific policies adapted to prepare AS

Should be disclosed at one place Deals with disclosure of accounting

policies Purpose :-1. Better understanding of AS2. Better comparison analysis3. Mostly needed w.r.t Depreciation

Used for computation of Cost of inventories and to show in Balance Sheet till it is sold

Consists of :-1. Raw Materials2. Work in progress3. Finished goods4. Spares, etc

Determination of Cost of Inventories

Cost of purchase (Purchase price, duties & taxes, freight inwards)

Cost of conversion Determination of Net realisable

value Comparison of cost and net

realisable

Incoming and outgoing of cash Act as barometer to judge surplus

and deficit Explain Cash flow under 3 heads :-1. Cash flow from operating activities2. Cash flow from financing activities3. Cash flow from investing activities

Events occurring between the preparation of balance sheet date and date on which financial statement are accepted

Non adjusting events do not effect balance sheet but there are appropriately disclosed

E.g. Adjusting events Generally uses Conservative concepts of

Accounting like Bankruptcy, frauds & errors.

Net profit or loss for the period Prior period item Changes in accounting estimates

and policies Net profit/loss for period Consists of

2 component1. Profit and loss of ordinary activities2. Profit and loss of extra ordinary

activities

Occurs due to obsolescence Distribution of total cost to its

useful life A non-cash expenditure Different methods of computation1. Straight line method ( SLM )2. Written-down value or diminishing

value (WDV)

AS 7 addresses issue of allocation of revenue & cost attributable to contract activity

Construction Contract are 2 types1.Fixed price Construction Contract2.Cost plus Construction Contract To calculate profit and loss contract

revenue and cost must be calculated Profit/loss is to be calculated separately

for each contract

Includes 1. Salaries, wages and other related costs of

personnel.2. Costs of materials and services consumed.3. A reasonable allocation of overhead costs.4. Payment to outside bodies for research and

development projects related to the enterprise. 5. an appropriate amortisation of the cost of building,

equipment and facilities which have no alternative economic use, to the extent that they are used for research and development.

Means gross inflow of cash and other consideration like arising out of :-

For an item to be recognized as revenue

a) It should be measurable b) There should be reasonably certainty

about its collectability Areas covered a. Sale of goods/service c. Interestb. Dividend d. Royalty

Assets held with the intention of being used for the purpose of producing and providing goods and services

Sometimes the total expenditure of a fixed may be allocated to its component parts & each such part should be depreciated separately

Shown at either Historical or Revalued value

P & L’s on disposal of FA are to be recognized in P & L

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