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  1. 1. Koppula.chandrasekher 1st M.B.A-13491E0037 QIS COLLEGE OF Engineering & Technology Venga mukala palem,ongole-523002, Prakasam (Dt), A.P
  2. 2. Introduction Accounting standards Objectives of ACCOUNTING STANDARDS Need for ACCOUNTING STANDARDS ACCOUNTING STANDARDS IN INDIA OBJECTIVES OF ACCOUNTING STANDARD BOARD 31 ACCOUNTING STANDARDS Comparison of Accounting Principles Accounting standard Disclosure of Accounting Policies Valuation of Inventories The financial statements should disclose: Depreciation accounting Definitions It does not deal with revenue arising from: It deals with: It is not applicable to :
  3. 3. INTRODUCTION    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.
  4. 4. ACCOUNTING STANDARDS     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.
  5. 5. OBJECTIVES OF ACCOUNTING STANDARDS    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
  6. 6. NEED FOR ACCOUNTING STANDARDS    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.
  7. 7. ACCOUNTING STANDARDS IN INDIA     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
  8. 8. OBJECTIVES OF ACCOUNTING STANDARD BOARD       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
  9. 9. 31 ACCOUNTING STANDARDS No. of AS TITLE of AS AS-1 AS-2 AS-3 AS-4 AS-5 Disclosure of accounting policies Valuation of inventories Cash flow statements AS-6 AS-7 AS-8 AS-9 Depreciation accounting Construction contracts Accounting for R&D Revenue recognition Contingencies & events occurring after B/S date Net profit/loss for the period, prior period items & changes in accounting policies
  10. 10. CONTINUE.. AS-10 AS-11 AS-12 AS-13 AS-14 AS-15 Accounting for fixed assets AS-16 AS-17 AS-18 AS-19 Borrowing cost Segment reporting Related party disclosures leases The effects of changes in foreign exchange rates Accounting for government grants Accounting for investments Accounting for amalgamations Accounting for retirement benefits in the financial statements of employers
  11. 11. CONTINUE AS-20 AS-21 AS-22 AS-23 AS-24 AS-25 AS-26 AS-27 AS-28 Earning per share Consolidated financial statements Accounting for taxes on income Accounting for investments in associates in consolidated financial statements Discontinuing operations Interim financial reporting Intangible assets Financial reporting of interests in joint ventures Impairment of assets
  13. 13. COMPARISON OF ACCOUNTING PRINCIPLES Indian GAAP IAS US GAAP Approach “all inclusive” “all inclusive” “all inclusive” Comprehensive Income NA Is applicable Is applicable Extraordinary Items Required to NA present separately from ordinary a/c in P&L a/c Is applicable same as in Indian GAAP
  14. 14. COMPARISON OF ACCOUNTING PRINCIPLES 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
  15. 15. ACCOUNTING STANDARD DISCLOSURE OF ACCOUNTING o Deals with disclosure of significant accounting POLICIES policies followed in preparing and presenting financial statements o Affects the view of an enterprise statement Recommended translation policies in respect of foreign currency items o o Included in annual reports to shareholders Facilitates a more meaningful comparison between financial statements of different enterprises. o
  16. 16. VALUATION OF INVENTORIES Determination of the value at which inventories are carried in the financial statements until the related revenues are recognized.
  17. 17. THE FINANCIAL STATEMENTS SHOULD DISCLOSE: (a) the accounting policies adopted in measuring inventories, including the cost formula used; and (b) the total carrying amount of inventories and its classification appropriate to the enterprise
  18. 18. DEPRECIATION ACCOUNTING 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.
  19. 19. DEFINITIONS Depreciation Depreciable assets Useful life Depreciable amount
  20. 20. DISCLOSURE • • • Gross amount of each depreciable asset Revaluation of depreciable assets Change in method
  21. 21. REVENUE RECOGNITION 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.
  22. 22. 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
  23. 23. IT DEALS WITH: Sale of Goods Rendering of Services  Proportionate completion method  Completed service contract method The Use by Others of Enterprise Resources Yielding Interest, Royalties and Dividends
  24. 24. ACCOUNTING FOR FIXED ASSETS It mainly deals with accounting of fixed assets like: 1. Land 2. Building 3. Plant and machinery 4. Vehicles 5. Furniture 6. Goodwill 7. Patents 8. Trademarks 9. Design.
  25. 25. IT IS NOT APPLICABLE TO : 1. 2. 3. 4. Forests ,plantations and similar regenerative natural resources. Wasting fixed assets including mineral rights, expenditure on exploration for or the extraction of minerals, oil, natural gas and similar nonregenerative resources. Expenditure on real estate development. Livestock.
  26. 26. DISCLOSURE: 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.
  27. 27. If you have any queries and suggestions? please send to my Mail ID Mail –id
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