CrossRef Google Scholar Internally generated goodwill, brands, mastheads, publishing titles, etc. Note 6: AS 21 is mandatory if an enterprise presents consolidated financial statements. Also incorporated in (AS) 23" Accounting for Investments in Associates in Consolidated Financial Statements" as Explanation below para 7 and in (AS) 27 "Financial Reporting of Interests in Joint Ventures" as Explanation below para 28. For enterprises employing less than 50 persons, any method of accrual for accounting long-term employee benefits liability is allowed. The amount of provision should be measure before tax at the best estimate of the expenditure required to settle the present obligation and should not be discounted to its present value. Amounts of earnings used as numerator for computing basic and diluted EPS and their reconciliation with the statement of profit and loss are disclosed. The ultimate purpose of accounting standards is to establish a common set of procedures and rules in preparing financial statements, thereby preventing misunderstandings between and among the preparers and users of accounting information. Also incorporated in (AS) 23 "Accounting for Investments in Associates in Consolidated Financial Statements" as an explanation below para 7 and in (AS) 27 "Financial Reporting of Interests in Joint Ventures" as explanation below para 28). A financial asset or liability is recognised when the entity becomes a party to the instrument contract. From the date of this Standard becoming mandatory for the concerned entities, the following stand withdrawn: Accounting Standard (AS) 4, Contingencies and Events Occurring After the Balance Sheet Date, to the extent it deals with contingencies 3. the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior accounting periods. If an SMC desires to disclose the information not required to be disclosed pursuant to the exemptions or relaxations available to the SMCs, it shall disclose that information in compliance with the relevant accounting standard. The Council of ICAI decided to change the Accounting Standards issued by the ICAI in order to harmonise the language differences between the two sets of accounting standards. In case of change of accounting policies, other than one for which transition is specified by an accounting standard, figures of prior interim periods of current financial year to be restated. Accounting Standard 24: Discontinuing Operations. then, to the other assets of the unit on a pro rata basis based on the carrying amount of each asset in the unit. Incorporated in (AS) 21 "Consolidated Financial Statements" as Explanation below para 6. Accounting Standard (AS) 32, Financial Instruments: Disclosures. If the information is not disclosed, being not practicable, the fact thereof is to be disclosed. Amalgamation in nature of merger be accounted for under Pooling of Interest Method and in nature of purchase be accounted for under Purchase Method. Further, such an SMC need not disclose the information required by paragraph 121(g) of the Standard. accounting standards guidelines relating to the accounting treatment of the figures which are reported in the accounts of companies. be disclosed separately, if material. Where a company, being a SMC, has qualified for any exemption or relaxation previously but no longer qualifies for the relevant exemption or relaxation in the current accounting period, the relevant standards or requirements become applicable from the current period and the figures for the corresponding period of the previous accounting period need not be revised merely by reason of its having ceased to be an SMC. Also incorporated in (AS) 23 "Accounting for Investments in Associates in Consolidated Financial Statements" as an explanation below para 7 and in (AS) 27 "Financial Reporting of Interests in Joint Ventures" as explanation below para 28), i.e., intention at the time of investing is to dispose the relevant investment in the 'near future' or where associates operate under severe long-term restrictions. Contingent asset is a possible asset that arises from past events, the existence of which will be confirmed only by the occurrences or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise. The Standard deals with following related party relationships: (i) Enterprises that directly or indirectly control (through subsidiaries) or are controlled by or are under common control with the reporting enterprise; (ii) Associates, Joint Ventures of the reporting entity; Investing party or venturer in respect of which reporting enterprise is an associate or a joint venture; (iii) Individuals owning voting power giving control or significant influence; (iv) Key management personnel and their relatives; and (v) Enterprises over which any of the persons in (iii) or (iv) are able to exercise significant influence. The entity transfers the asset, while retaining some of the risks and rewards of ownership, but no longer has control of the asset (i.e., the transferee has the ability to sell the asset). Minority interest in the net income to be adjusted against income of the group. Consolidation to be done on a line by line basis by adding like items of assets, liabilities, income and expenses which involves: Elimination of cost to the parent of its investment in each subsidiary and the parent’s portion of equity of each subsidiary at the date of investment. Acquisition cost may be determined considering the fair value of the investments acquired. For example, measurement of deferred tax, valuation of assets, intangibles and financial instruments etc. Major considerations governing selection and application of accounting policies are i) Prudence, ii) Substance over form and iii) Materiality. The ASI 2 is incorporated in para 4 of Accounting Standard 2 of Companies (Accounting Standards) Rules, 2006. Significant restrictions on right of ownership, realisability of investments and remittance of income and proceeds of disposal thereof be disclosed. If an active market exists for the output produced by an asset or a group of assets, the same should be identified as a separate cash-generating unit, even if some or all of the output is used internally. Existence of contingent loss should be disclosed if above conditions are not met, unless the possibility of loss is remote. The estimate of net cash flows to be received (or paid) for the disposal of an asset at the end of its useful life should be the amount that is expected to be obtained from the disposal of the asset in an arm’s length transaction between knowledgeable, willing parties, after deducting the estimated costs of disposal. Accounting Standards in DifferentNations 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 … Level I Enterprises Enterprises which fall in any one or more of the following categories, at any time during the accounting period: Accounting Standards as applicable to different levels. Accounting standards specify how transactions and other events are to be recognized, measured, presented and disclosed in financial statements. When the sensitivity analyses is disclosed as above are unrepresentative of a risk inherent in a financial instrument (for example because the year-end exposure does not reflect the exposure during the year), the entity should disclose that fact and the reason it believes the sensitivity analyses are unrepresentative. changes in estimates of amounts reported in prior interim periods/year, if material. Not applicable to intangibles covered by other AS, financial assets, mineral rights/expenditure on exploration, etc. Limitations. To assess at each balance sheet date whether there are any indication, external or internal as given in AS, that an asset may be impaired and estimate the recoverable amount of the asset. AS 20) as Explanation below para 38. An issuer of loan commitments should apply AS 29 to those loan commitments that are not within the scope of this standard. ", Accounting Standard 10: Accounting for Fixed Assets. the nature and extent of risks arising from financial instruments to which the entity is exposed during the period and at the reporting date, and how the entity manages those risks. rights and obligations under insurance contracts which will be covered by proposed Accounting Standard on Insurance Contract, a contract that is within the scope of Accounting Standard on Insurance Contracts because it contains a discretionary participation feature. Total contract revenue can be measured reliably; It is probable that economic benefits will flow to the enterprise; Contract cost and stage of completion can be measured reliably at reporting date; and. (ASI 20 Revised Incorporated in (AS) 17 "Segment Information’’ (Re. In such case management’s best estimate for future market price of output should be used: Cash-generating units should be identified consistently from period to period for the same asset or types of assets, unless a change is justified. It also requires disclosure about the nature and extent of an entity’s use of financial instruments, the business purposes they serve, the risks associated with them, and management’s policies for controlling those risks. Such grants can be treated as other income or can be reduced from the related expense. The following are the major differences between the Notified AS under the Companies Act, 1956 and the AS, as issued by the ICAI: The relevant Accounting Standard Interpretations issued by the ICAI have been incorporated in the notified AS itself except ASI 12, ASI I23, ASI I27 and ASI I29. Strict conditions must be met before hedge accounting is applied: There is formal designation and documentation of a hedge at inception. They basically are a report card for the company. However, if DTA gets recognised in the first year of amalgamation, the effect shall be through adjustment to goodwill/capital reserve. This is a list of the International Financial Reporting Standards (IFRSs) and official … If associate has outstanding preference shares held outside the group, preference dividends whether declared or not, be adjusted in arriving at the investors share of profit or loss. 1. The purpose of these standards is to ensure that the financial centers of the world, which have become more interconnected than ever, can use a global financial reporting framework that ensures effective regulation of financial markets. This will help you understand AS as a glance of the topic. They should not include estimated future cash inflows or outflows that are expected to arise from: a future restructuring to which an enterprise is not yet committed; or. Venturer to recognise in individual and consolidated financial statements its share of assets, liabilities, incomes and expenses in the jointly controlled operations and also in jointly controlled assets. then, to goodwill allocated to the cash-generating unit, if the requirements of reversal of impairment loss of goodwill are met. Cash flow statement cumulatively for the current financial year to date with a comparative statement of previous year (year to date), controlled by an enterprise as a result of past events; and. Depreciation method used should be disclosed. Incorporated in (AS) 9 "Revenue Recognition" as Explanation below para 10. Borrowing costs that are directly attributable to the acquisition, construction or production of any qualifying asset (assets that takes a substantial period of time to get ready for its intended use or sale) should be capitalised. This includes information about revenues, assets and cost of fixed assets acquired. Accounting treatment will depend upon nature of amalgamation, which shall be as follows: Tax expenses for the period, comprises current tax and deferred tax. Interim reports to include the following: Balance sheet as of the end of current interim period and a comparative balance sheet as of the end of the preceding financial year. The consequent difference in depreciation charge of the subsequent years shall also be treated as a permanent difference. Grants by way of promoter’s contribution are to be credited to Capital Reserves and considered as part of share holders’funds. The Standard comes into effect in respect of accounting periods commencing on or after 1-4-2009 and will be recommendatory in nature for an initial period of two years. // -->