Indian Accounting Standards

1. Mr. M. Manikandan
Assistant Professor,
Department of Commerce,
ANJA College,
Sivakasi.

2. ACCOUNTING STANDARDS

3. Accounting Standards
• Accounting Standards (AS-1 to AS-32) are issued
by the Institute of the Chartered Accountants of
India (ICAI) with assistance of the Accounting
Standards Board (ASB) to establish uniform
standards for preparation of financial statements
in accordance with Indian GAAP (Generally
Accepted Accounting Principles), for recognition,
measurement and disclosures of accounting
transactions.

4. Objectives of Accounting Standards
• To provide guidelines regarding the treatment of
accounting transactions
• To bring the uniformity in the financial
statements
• To standardize the diverse accounting policies
and practices
• To facilitate inter-firm and intra-firm comparison

5. Description of Some
Accounting Standards

6. Indian Accounting Standards
• AS – 1: Disclosure of accounting policies
• AS – 2: Valuation of inventories
• AS – 6: Depreciation accounting
• AS – 7: Accounting for construction contracts
• AS – 10: Accounting for fixed assets
• AS – 26: Intangible assets
• AS – 29: Provisions, contingent liabilities and
contingent assets.

7. AS-1 Disclosure of Accounting Policies
• AS-1 deals with the disclosure of significant
accounting policies which are followed in
preparing and presenting financial statements.
• Accounting Policies refer to the specific
accounting principles and methods of applying
those principles adopted by the enterprise in the
preparation and presentation of financial
statements.

8. AS-2 Valuation of Inventories
• AS-2 deals with the determination of value at
which inventories are carried in the financial
statements, including the ascertainment of cost
of inventories and any write-down thereof to net
realisable value.
• Inventories are assets:
– held for sale in the ordinary course of business;
– in the process of production for such sale; or
– in the form of materials or supplies to be consumed in
the production process or in the rendering of services.

9. • AS-2 not deals with
– work in progress arising under construction contracts
– work in progress arising in the ordinary course of
business of service providers
– shares, debentures and other financial instruments
held as stock-in-trade
– producers’ inventories of livestock, agricultural and
forest products, and mineral oils

10. AS-6 Depreciation Accounting
• AS-6 deals with depreciation accounting issued in
1982 and after revised in 1994
• It applies to all depreciable assets
– Asset expected to used for more than one Accounting
period
– Have a limited useful life
– Assets used for the purpose of production of goods
and services

11. • Assets Except
– Forests, plantations, natural resources, wasting assets,
minerals oils, natural gases, research & development
expenditure, goodwill, livestock & land
• To disclose calculation and accounting treatment
of annual depreciation
• Depreciation is nothing but distribution of total
cost of asset over its useful life.

12. AS-7 Accounting for Construction
Contracts
• AS-7 prescribes the accounting for construction contracts
in the financial statements of contractors.
• A construction contract is a contract specifically
negotiated for the construction of an asset or a
combination of assets that are closely interrelated or
interdependent in terms of their design, technology and
function or their ultimate purpose or use.

13. AS-7 Accounting for Construction
Contracts
Rendering of Goods and Services for
Construction of
An Asset
Deconstruction
of Assets
Demolition of
Assets

14. AS-10 Accounting for Fixed Assets
• AS-10 prescribe the accounting treatment for property,
plant and equipment (PPE).
• It disclose the status of fixed assets in terms of value
• Gross and net book value of assets
• Expenditures incurred on fixed assets
• PPE are tangible items that
– Held for use in the production or supply of goods or
services, for rental to others, or for administrative
purposes; and
– Expected to be used during more than a period of
twelve months.

15. Value of Fixed Assts
Purchase Price
+
Non recoverable taxes
(excise duty and sales tax)
+
Installation cost
+
Delivery charges
+
Startup & commissioning cost
+
Trial run expenses
+
Administrative overheads (Engineers salary)

16. AS-26 Intangible Assets
• AS 26 prescribes the accounting treatment for intangible
assets
• Identifiable non-monetary asset, without physical
substance, held for use in the production or supply of
goods or services, for rental to others, or for
administrative purposes.
Scope Exclusions AS-26
– Financial assets
– Intangible assets covered by other AS
– Mineral rights and expenditure on the exploration for,
or development and extraction of, minerals, oil,
natural gas and similar non-regenerative resources
– Intangible assets arising in insurance enterprises from
contracts with policy holders

17. AS-29 Provisions, Contingent Liabilities
and Contingent Assets
• AS 29 is to ensure that appropriate recognition criteria
and measurement bases are applied to provisions and
contingent liabilities and that sufficient information is
disclosed in the notes to the financial statements to
enable users to understand their nature, timing and
amount.
• The objective of this Standard is also to lay down
appropriate accounting for contingent assets.

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