as vs ind as (old vs new indian accounting standards)
Post on 14-Sep-2014
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DESCRIPTION
This presentation takes one through the differences between Indian GAAP (old) vs IND AS (based on IFRS). All major differences have been covered in addition to IFRS carve outs.TRANSCRIPT
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Indian Accounting Std (old) vs IND AS (New)
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Overview of Significant Differences between IND AS and
Current Indian GAAP
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TOPICS COVERED
Differences with respect to:
• Conceptual Accounting Framework• Accounting Differences• Carve Outs
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ACCOUNTING FRAMEWORK
Historical cost
IFRS: Historical cost, but intangible assets, property plant and equipment (PPE) and
investment property may be revalued. Derivatives, biological assets and most securities must be revalued.
Indian GAAP:Historical cost, but fixed assets, other than intangibles, may be revalued.
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ACCOUNTING FRAMEWORK
First-time adoption of accounting frameworks
IFRS: Full retrospective application with some optional exemptions.
Indian GAAP: particular standards specify the transitional treatment upon the first-time
application of those standards
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LIST OF IND AS, IFRS AND AS
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Ind AS IFRS AS
Ind AS 1 Presentation of Financial Statements
IAS 1 Presentation of Financial Statements
AS 1 Disclosures of Accounting Principles and Policies
Ind AS 2 Inventories
IAS 2 Inventories AS 2 Valuation of Inventories
Ind AS 7 Statement of Cash Flows
IAS 7 Statement of Cash Flows
AS 3 Cash Flow Statements
Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
AS 4 Contingencies and Events occurring after Balance Sheet Date
Ind AS 10 Events after the Reporting PeriodInd AS 10 Appendix A
IAS 10 Events after the Reporting PeriodIFRIC 17 Distribution of Non-cash Assets to owners
AS 5 Net Profit or Loss for the period, Prior Items and Changes in Accounting Policies
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Ind AS 11 Construction ContractsInd AS 11 Appendix A (deferred)Ind AS 11 Appendix B (deferred)
IAS 11 Construction ContractsIFRIC 12 Service Concession ArngmtSIC 29 Disclosure – Service Concession Arrangements
AS 7 Construction Contracts
Ind AS 12 Income TaxesInd AS 12 Appendix A
Ind AS 12 Appendix B
IAS 12 Income TaxesSIC 21 Income Taxes – Recovery of Revalued Non-Depreciable AssetsSIC 25 Income Taxes – Changes in the Tax Status of an Enterprise or its Shareholders
AS 22 Accounting for Taxes on Income
Ind AS 16 Property, Plant and Equipment
IAS 16 Property, Plant and Equipment
AS 10 Accounting for Fixed AssetsAS 6 Depreciation Accounting
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Ind AS 16 Appendix A
IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities
Ind AS 17 LeasesInd AS 17 Appendix A
Ind AS 17 Appendix B
Ind AS 17 Appendix C (Deferred)
IAS 17 LeasesSIC 15 Operating Leases – IncentivesSIC 27 Evaluating the Substance of Transaction involving the Legal Form of a LeaseIFRIC 4 Determining Whether an Arrangement contains a Lease
AS 19 Leases
Ind AS 18 RevenueInd AS 18 Appendix A
Ind AS 18 Appendix B
Ind AS 18 Appendix C
IAS 18 RevenueSIC 31 Revenue – Barter Transactions Involving AdvertisingIFRIC 13 Customer Loyalty ProgrammesIFRIC 18 Transfer of Assets from Customers
AS 9 Revenue Recognition
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Ind AS 19 Employee BenefitsInd AS 19 Appendix A
Ind AS 19 Employee BenefitsInd AS 19 Appendix A
AS 15 Employee Benefits
Ind AS 20 Accounting For Government Grants and Disclosure of Government AssistanceAppendix A Government Assistance – No Specific Relation in Operating Activities
Ind AS 20 Accounting For Government Grants and Disclosure of Government AssistanceAppendix A Government Assistance – No Specific Relation in Operating Activities
AS 12 Accounting for Government Grants
Ind AS 21 The Effects of Changes in Foreign Exchange Rates
Ind AS 21 The Effects of Changes in Foreign Exchange Rates
AS 11 The Effects of Changes in Foreign Exchange Rates
Ind AS 23 Borrowing Costs
Ind AS 23 Borrowing Costs
AS 16 Borrowing Costs
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Ind AS 24 Related Party Disclosure
IAS 24 Related Party Disclosure
AS 18 Related Party Disclosures
No Near Final Draft
IAS 26 Accounting and Reporting by Reporting by Retirement Benefits Plans
No standard
Ind AS 27 / IFRS 10 Consolidated and Separated Financial Statements Ind AS 27 Appendix A
IAS 27 Consolidated Separated and Financial Statements
SIC 12 Consolidation – Special Purpose Entities
AS 21 Consolidated Financial Statements
Ind AS 28 Investment in Associates
IAS 28 Investment in Associates
AS 23 Accounting for Investments in Associates in Consolidated Financial Statements
Ind AS 29 Financial Reporting in Hyperinflationary EconomiesInd AS 29 Appendix A
IAS 29 Financial Reporting in Hyperinflationary Economies
IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies
No standard
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Ind AS 31 Interest in Joint Ventures / IFRS 11Ind AS 31 Appendix A
IAS 31 Interest in Joint Ventures
SIC 13 Jointly Controlled Entities – Non-Monetary Contributions by Venturers
AS 27 Financial Reporting of Interests in Joint Ventures
Ind AS 32 Financial Instruments: PresentationInd AS 32 Appendix B
IAS 32 Financial Instruments: Presentation
AS 31 Financial Instruments : Presentation
Ind AS 33 Earning Per Share
IAS 33 Earning Per Share AS 20 Earnings per Share
Ind AS 34 Interim Financial ReportingInd AS 34 Appendix A
IAS 34 Interim Financial Reporting
IFRIC 10 Interim Financial Reporting and Impairment.
AS 25 Interim Financial Reporting
Ind AS 36 Impairment Of Assets
IAS 36 Impairment Of Assets
AS 28 Impairment of Assets
Ind AS 38 Intangible AssetsInd As 38 Appendix A
IAS 38 Intangible Assets
SIC 32 Intangible Assets – Website Costs
AS 26 Intangible Assets
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Ind AS 37 Provisions, Contingent Liabilities and Contingent AssetsInd AS 37 Appendix A
Ind AS 37 Appendix B
IAS 37 Provisions, Contingent Liabilities and Contingent Assets
IFRIC 5 Rights to Interest Arising from Decommissioning, Restoration and Environmental Rehabilitation FundsIFRIC 6 Liabilities Arising from Participating in a Specific Market – Waste Electrical and Electronic Equipment
AS 29 Provisions, Contingent Liabilities and Contingent Assets
Ind AS 39 Financial Instruments : Recognition and MeasurementInd AsS39 Appendix C
Ind AS 39 Appendix D
Ind AS 39 Appendix E
IAS 39 Financial Instruments : Recognition and Measurement
IFRIC 9 Reassessment of Embedded DerivativesIFRIC 16 Hedges of a net Investment in Foreign OperationIFRIC 19 Extinguishing Financial liabilities with Equity instruments
AS 30 Financial Instruments : Recognition and Measurement
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Ind AS 40 Investment Property
IAS 40 Investment Property
No standard
No near Final Draft IAS 41 Agriculture No standard
Ind AS 101 First Time Adoption of Indian Accounting Standards
IFRS 1 First Time Adoption of International Financial Reporting Standards
No standard
Ind AS 102 Share Based Payment
IFRS 2 Share Based Payment
No standard
Ind AS 103 Business Combination
IFRS 3 Business Combination
No standard
Ind AS 39 Insurance Contracts
IFRS 4 Insurance Contracts
No standard
Ind AS 105 Non-Current Assets Held for Sale and Discontinuing operations
IFRS 5 Non-Current Assets Held for Sale and Discontinuing operations
No standard
Ind AS 106 Exploration for and Evaluation of Mineral Resources
IFRS 6 Exploration for and Evaluation of Mineral Resources
No standard
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Ind AS 107 Financial Instruments : Disclosures
IFRS 7 Financial Instruments : Disclosures
No standard
Ind AS 108 Operating Segments
IFRS 8 Operating Segments
No standard
Not covered in Ind AS It was earlier covered in Exposure Draft
IFRIC 2 Members’ Share in Co-operative Entities and Similar Instruments
No standard
Not covered in Ind ASNot Relevant in India
SIC 7 Introduction of Euro
No standard
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Major Carve Outs
• Revenue Recognition (IND AS 18)– IFRIC 15 – Agreement for construction of real estate has
not been adopted
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Major Carve Outs
• Effects of changes in Foreign Exchange Rates (IND AS 21)– Option to recognise exchange differences on translation of
long term monetary items in equity
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Major Carve Outs
• Related Party Disclosures (IND AS 24)– Overriding nature of statue– Definition of relative as per Co.s Act
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Major Carve Outs
• Business Combinations (IND AS 103) – Recognition of gain on day one accounting for a business
combination in capital reserve as opposed to income statement under IFRS 3
– Guidance on Common Control Transactions
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Major Carve Outs
• Employee Benefits (IND AS 19)– Government bond rate as discount rate– Recognition of acturial gains and losses – Other long term
employee benefits – only in OCI and not P&L or P&L amort
– Frequency of Acturial Valuation
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Major Carve Outs
• Financial Instruments – Rec and Msrmt (IND AS 39)– Change in fair value of a financial liability due to entitiy’s
own credit risk.
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Major Carve Outs
• Investment in Associates (IND AS 28)– Different accounting periods and policies of associates
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Major Carve Outs
• Investment Property (IND AS 40)– Only Cost Model
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Major Carve Outs
• EPS (IND AS 33)– Both Standalone and CFS
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Major Carve Outs
• Govt Grants (IND AS 20)– Non-monetary government grants only at fair value and not at nominal
value
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IND AS 2 VS AS 2Inventories
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IND-AS 2 - Inventories
Fair value of purchases
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Timing of recognition of purchases
IND-AS 2 - Inventories
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Cost of inventories of a service provider
IND-AS 2 - Inventories
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IND AS 8 VS AS 5Changes in Accounting Policies, Estimates, Prior Period Itesm
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IND AS 8 - Acc pol., changes in acc est., errors
Changes in accounting policies
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Changes in method of depreciation
IND AS 8 - Acc pol., changes in acc est., errors
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Prior period items - errors or omissions arising from a failure to use or
misuse of reliable information- Retro
IND AS 8 - Acc pol., changes in acc est., errors
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extraordinary items
IND AS 8 - Acc pol., changes in acc est., errors
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IND AS 10 VS AS 4Events after Balance Sheet Date
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• Proposed dividend
IND AS 10 - Events after reporting date
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IND AS 11 VS AS 7Construction Contracts
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IND AS 11 - Construction Contracts
Service Concession Arrangements (Ex)
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Ex – Service Concession Agrmt.
• A incurs cost of INR 1,000,000 for construction of a road.
• In consideration, A receives a right to charge toll of INR 30 on each vehicle plying on that road for 30 years
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Construction Contracts
Agreements for construction of real estate
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IND AS 18 VS AS 9Revenue Recognition
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IND AS 18 – Revenue Recognition
Multiple element arrangements (Ex)
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Example• A sells a machine with a two year
maintenance service for INR 1,000,000 to a customer.
• A two year maintenance service is provided to other customers at a consideration of INR 200,000.
IND AS 18 – Revenue Recognition
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Linked transactions
Examples – Loan origination fees charged by banks
IND AS 18 – Revenue Recognition
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Customer loyalty programmes
IND AS 18 – Revenue Recognition
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Extended credit
IND AS 18 – Revenue Recognition
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Barter transactions
• Recognition of transactions that were previously not recognised (for example, certain advertising barter transactions);
• Non-recognition of transactions that are currently being recognised (for example, certain oil barter transactions).
IND AS 18 – Revenue Recognition
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• Percentage Completion
IND AS 18 – Revenue Recognition
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IND AS 27/28/31/103 VS AS 14/21/23/27
Business Combination and Consolidations
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Business Combination / Consolidation
Definition of Control– Substance over form– Temporary– SPE
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Business Combination / Consolidation
Contingent Consideration / Acq Date
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Business Combination / Consolidation
• Goodwill – Fair Value of assets & liabilities acquired– Amortisation
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Business Combination / Consolidation
• Minority– Fair Value– Negative
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Business Combination / Consolidation
Uniform Accounting Policy & Time Gaap
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Business Combination / Consolidation
Proportionate Consolidation
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Business Combination / Consolidation
Step up and Step down
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IND AS 16 VS AS 10Property, Plant & Equipment
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IND AS 16 –Property, Plant & Eqpmt
• Overhead allocation
• Component approach
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Site Restoration
IND AS 16 –Property, Plant & Eqpmt
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• Revaluation of assets• Depreciation on the same
IND AS 16 –Property, Plant & Eqpmt
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• Cash Price Equivalent
IND AS 16 –Property, Plant & Eqpmt
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• Residual Value and Useful life
IND AS 16 –Property, Plant & Eqpmt
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IND AS 23 VS AS 16Borrowing Costs
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IND AS 23 - Borrowing Costs (BC)
No period as 12 months
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IND AS 23 - Borrowing Costs (BC)
Consolidation :-– Special case of capitalisation of BC – Group Average borrowing rate
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IND AS 7 VS AS 3Cash Flow Statement
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IND AS 7 - Cash Flow
• Undistributed profits of associates and non-controlling interests’ under operating activities.
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• Ind AS 7 requires to report the aggregate amount of the cash paid or received as consideration for obtaining or losing control
IND AS 7 - Cash Flow
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IND AS 12 VS AS 22Deferred Tax
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IND AS 12
Balance sheet approach (Ex)
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IND AS 12
Examples– on revaluation of PPE; – indexation benefits for freehold land and
investments; – fair value changes for available for sale securities;
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IND AS 12
Deferred Taxes arising in consolidation
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IND AS 12
Reconciliation of current tax as per actual basis and as per applicable statutory rate
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IND AS 17 VS AS 19Leases
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IND AS 17 - Lease
Embedded leases (Ex)
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Ex of an Embedded Lease
• A enters in a purchase contract with B to purchase 1,000 units of product every month at INR 25 per unit.
• Product can only be manufactured on a specific machine owned by B.
• In case of any shortfall in procurement, A will compensate B at the rate of INR 25 per unit of shortfall.
• The entire output from machine is availed by A.
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Leases of land
IND AS 17 - Lease
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• Lease incentives– Initial rent free period ?
IND AS 17 - Lease
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• Lease deposits
IND AS 17 - Lease
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IND AS 19 VS AS 15Employee Benefits
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IND AS 19 - Employee Benefits
• Actuarial gains and losses in OCI– defined benefit plans and other long term
employment benefit plans.
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IND AS 21 VS AS 11Foreign Exchange
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IND AS 21 – Foreign Exchange
• Functional Currency vs Domicile Currency
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IND AS 21 – Foreign Exchange
• Permits FE diff on long term monetary items to be posted to equity. The accumulated diff can be transferred to P/L over the term of such item
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IND AS 21 – Foreign Exchange
• Existing AS 11 permits capitalisation / deferral of Fe Gain/Loss arising from long term monetary items
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IND AS 20 VS AS 12Government Grants
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IND AS 20 – Govt Grants
• No credit to Reserves• No credit to PPE• Concessional Loans• Non-Monetary Grants
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IND AS 24 VS AS 18Related Party
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IND AS 18 – Related Party
• Defines close members of family• KMP of parents• Non-executive directors• Group companies
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IND AS 33 VS AS 20Earning Per Share
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IND AS 33 – EPS
• Amounts debited to Share Premium• Compulsory convertible instruments• Shares held by Trust
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Share Based Payments
• Fair Value Model• Grants to employees of Parent• Shares Held in Trust
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• Intangibles – Life – Finite or Indefinite• Investment Property – Classification• Financial Instruments• Segments• Provisions• Impairments
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Contact Details
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Email: [email protected]: +91 94260 24975
Web: www.aarnasoft.net
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