Your SlideShare is downloading. ×
0
Accounting Standards 30, 31 and 32
Accounting Standards 30, 31 and 32
Accounting Standards 30, 31 and 32
Accounting Standards 30, 31 and 32
Accounting Standards 30, 31 and 32
Accounting Standards 30, 31 and 32
Accounting Standards 30, 31 and 32
Accounting Standards 30, 31 and 32
Accounting Standards 30, 31 and 32
Accounting Standards 30, 31 and 32
Accounting Standards 30, 31 and 32
Accounting Standards 30, 31 and 32
Accounting Standards 30, 31 and 32
Accounting Standards 30, 31 and 32
Accounting Standards 30, 31 and 32
Accounting Standards 30, 31 and 32
Accounting Standards 30, 31 and 32
Accounting Standards 30, 31 and 32
Accounting Standards 30, 31 and 32
Accounting Standards 30, 31 and 32
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Accounting Standards 30, 31 and 32

3,349

Published on

I presented on AS 30,31,32 in Students Regional Conference conducted by WIRC-ICAI at Nashik on 9th August,2013. …

I presented on AS 30,31,32 in Students Regional Conference conducted by WIRC-ICAI at Nashik on 9th August,2013.
It covers more about Accounting Standard 30, that is, Financial Instrument: Recognition and Measurement.

0 Comments
4 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
3,349
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
156
Comments
0
Likes
4
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide
  • By Saurabh Wagle (saurabh.wagle@gmail.com)
  • Transcript

    • 1. AS 30, 31 AND 32 by Saurabh Wagle, Thane saurabh.wagle@gmail.com WRO0378562
    • 2. 2 Accounting Standard (AS) Principles that govern current accounting practices In India Accounting Standards are issued by ICAI Central Government notifies AS u/s 211(3C) of Companies Act,1956 Purpose is to – Recognize Measure Present Disclose Enables Comparability, Consistency, Transparency, Uniformity
    • 3. 3 Need for AS on Financial Instrument Globalization of Indian Economy Increasing sophistication of financial products and markets No comprehensive standard before Diverse practice has made comparability of performance difficult
    • 4. 4 •AS 30 - Financial Instruments: Recognition and Measurement •AS 31 - Financial Instruments: Presentation •AS 32 - Financial Instruments: Disclosures
    • 5. 5 Deals with accounting of Financial instruments Issued by ICAI in 2007 Not yet notified by Central Government Framed in accordance with global standards Recommendatory in nature for initial 2 years Mandatory from 1st April,2011 to all entities except to Small and Medium-sized Entity Salient features of AS 30,31 and 32
    • 6. 6 Objective To establish principles for recognizing and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items To present and classify financial assets and financial liabilities To provide disclosures in financial statements so that users can evaluate – The significance of financial instruments for the entity’s financial position and performance and 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
    • 7. 7 Financial Instruments A legal document entered between 2 parties Enforcement to receive Financial Asset and to pay Financial Liability Right for one party to receive money or liquid asset & Obligation for other party to pay money or liquid asset To be recognized when the parties entered into contract
    • 8. 8 Financial Assets Cash; Equity instrument of another entity; A contractual right to receive cash or financial asset; Exchange of financial assets or financial liabilities with another entity under conditions that are potentially favorable to the entity; Contract which will or may be settled in entities own equity instruments that is– A non-derivative instrument where the entity is obliged to receive variable number of entity’s own equity instruments; or A derivative instrument that will or may be settled other than by exchange of a fixed amount of cash or financial asset for a fixed number of entity’s own equity instruments
    • 9. 9 Financial Liabilities  A contractual obligation to deliver cash or another financial asset to another entity;  Exchange of financial assets or financial liabilities with another entity under conditions that are potentially unfavorable to the entity;  A contract that will or may be settled in entity’s own equity instruments and is a non-derivative instrument. Also the entity is oblige to issue variable number of equity instruments of the entity;  A derivative instrument that will be settled other than by exchange of fixed amount of cash or financial asset against fixed number of entity’s own equity instrument.
    • 10. 10 Classification 1. Financial Assets  Fair value through Profit or Loss [FVTPL]  Held to maturity [HTM]  Loans and Receivables [LR]  Available for sale [AFS] 2. Financial Liabilities  Fair value through Profit or Loss [FVTPL]  Financial liabilities at amortized cost [FLAC]
    • 11. 11 Re-Classification of Financial Asstes From FVTPL to any category From HTM to AFS From LR to FVTPL From AFS to FVTPL
    • 12. 12 Measurement of Financial Assets Category Initial Measurement Subsequent Measurement 1. Fair value through Profit or Loss [FVTLP] Record at fair value on acquisition date and transaction cost is to be debited to P & L A/c Change in fair value between two reporting date, whether gain or loss, is be recognized in P & L A/c 2. Held to maturity [HTM] Record at fair value on acquisition date and transaction cost is to be included in the same By applying Amortized cost method- Effective Interest Rate (i.e. IRR/YTM) 3. Loans & Receivables [LR] (a) Short term loan (not more than 1 year): At original invoice value (b) All other : Fair value + Transaction cost (a) Short term loan (not more than 1 year): Continue to be recorded at original invoice value (b) All other : By applying Amortized cost method- Effective Interest Rate (IRR/YTM) 4. Available for sale [AFR] Record at fair value on acquisition date and transaction cost is to be included in the same Change in Fair value between reporting date, whether gain or loss, shall be transferred to investment revaluation reserve or fair value reserve
    • 13. 13 Measurement of Financial Liabilities Category Initial Measurement Subsequent Measurement 1. Fair value through Profit or Loss Record at fair value on acquisition date and transaction cost is to be debited to P & L A/c Change in fair value between two reporting date, whether gain or loss, is be recognized in P & L A/c 2. Financial liabilities at amortized cost (a) Short term loan (not more than 1 year): At original invoice value (b) All other : Fair value + Transaction cost (a) Short term loan (not more than 1 year): Continue to be recorded at original invoice value (b) All other : By applying Amortized cost method- Effective Interest Rate (IRR/YTM)
    • 14. 14 Derivatives If all 3 conditions are satisfied then the instrument can be called as Derivative – Underlying items No or small initial investment Settlement at Future date E.g. :- Forwards, Swaps, Futures, Options Derivatives are always recorded at Marked to Market value
    • 15. 15 Embedded Derivatives A component of hybrid instrument Non-derivative contract with derivative element included The contract in which they are embedded is known as Host contract E.g. :- ABC ltd. holds convertible debentures of XYZ ltd. Host contract = Debenture Embedded derivative = Conversion option Derivative once separate out is compulsory is classified as FVTPL After Separation Host contract shall be classified as HTM/ LR / AFS on the basis of its independently features
    • 16. 16 Hedging The risk management tool aiming to reduce the impact of future potential loss Classification of Hedge Accounting : Fair value hedge Cash flow hedge Hedges of a net investment in an overseas operation Recognition & Measurement depend on classification of hedged instrument
    • 17. 17 Following are the indicators for Impairment – Significant Financial Difficulties of their issuer; Default on interest or principal; Loss of active market; High probability of bankruptcy of issuer or debtors; Granting of concession to a borrowed which would not be offer under business conditions Impairment of Financial Assets
    • 18. 18 Continued…. Category Formula 1. Fair value through Profit or Loss Impairment loss provision is not required 2. Held to maturity Amortized cost on date of Impairment Less: PV of future expected benefits * Discounted rate issued is effective interest rate (IRR) used for amortized cost schedule 3. Loans & Receivables (a) Short term loan (not more than 1 year) – Carrying Amount - Undiscounted future Excepted Cash flow (a) All other – Amortized cost on date of Impairment Less: PV of future expected benefits * Discounted rate issued is effective interest rate (IRR) used for amortized cost schedule 4. Available for sale FV on Preceding Reporting date Less: FV on date of Impairment
    • 19. 19 De-recognition  Financial Assets –  Contractual rights to receive cash flows have expired; or  Financial assets have been transferred  Financial Liabilities –  Obligation specified in the contract is expired
    • 20. 20

    ×