Accounting Standard 1 discusses the disclosure of accounting policies in financial statements. It states that the choice of accounting policies is the responsibility of management and they must be disclosed in one place, preferably. Any change in an accounting policy that has a material effect on the current or future years must be disclosed along with the amount of impact if it is ascertainable. Fundamental accounting assumptions that are not followed must also be disclosed. The objective in selecting accounting policies is to provide a true and fair view, and major considerations include prudence, substance over form, and materiality.

1. Accounting Standard = 1 “Disclosure of Accounting Policies” Prepared & Presented By Prof. S. S. PETHE 9/9/2011 Prof. S. S. Pethe [CA Coach] [9860544418] 707, SadashivPeth, Pune - 411030 1 Prof. S. S. PETHE

2. As per DRS u/s 217(2AA) of CA,1956 = Preparation of FS = Responsibility of Management Accounting Policy = Principles & Methods (adopted for preparation of FS) For Ex. AS-6 Depreciation/Depletion/Amortisation SLM / WDV AS-7 Exp in Construction Contracts Capital Exp / Deferred Revenue Exp AS-11 Conversion of FC Contracts Separate Reserve / P&L A/c AS-2 Valuation of Inventories FIFO / Weighted AVG Cost etc Basic Objective in Selecting AP (SAP) = Tue & Fair View Major Consideration in SAP = Prudence / Sub Over Form / Materiality Mere Disclosure of AP = Cannot Rectify adoption of wrong AP All AP followed = Disclosed at one place (preferably) Any Change in AP = With Material Effect in Current / Future Period = Disclosed with Amount [If not ascertainable = Fact be Disclosed] IF Any of Fundamental Accounting Assumption (GCA) =/= Followed [should be = Disclosed] [IF Followed = No Disclosure Required] 9/9/2011 PETHE CLASSES, 707, Sadashiv Peth, Pune 2

3. AS-1 AP = P + M = applied in PP of FS Choice of AP = calls for Judgment by M Focus = True & Fair View + GCA + PSM IAS-1 Apart from Min = Structure & Content of FS. It defines Overall Consideration for FS Plus= Statement of Changes in Equity US-GAAP AP => Policy judged by M to be most appropriate to Present Fair View of FP & Results of Operations as per GAAP & adopted to Prepare FS Unusual / Innovative application of GAAP = be Disclosed 9/9/2011 PETHE CLASSES, 707, Sadashiv Peth, Pune 3

4. For Detailed Lecture ON Accounting Standard = 1 “Disclosure of Accounting Policies” Contact : Prof. S. S. PETHE [CA COACH] Mobile: 0-98605-44418 Skype ID: shantanump 9/9/2011 Prof. S. S. Pethe [CA Coach] [9860544418] 707, SadashivPeth, Pune - 411030 4