This accounting standard provides guidelines for classifying and disclosing items in the statement of profit and loss to increase comparability between financial statements of different companies. It requires separate disclosure of ordinary activities, extraordinary items, prior period items, changes in accounting estimates, and changes in accounting policies. The standard defines these terms and specifies disclosure requirements for each category. Companies must disclose the nature and amount of any material items, changes, or policy changes along with their financial impact. The aim is to present financial statements on a uniform basis.

1. ACCOUNTING STANDARD - 5

2. OBJECTIVEOBJECTIVE
To prescribe the classification and disclosure of
certain items in the statement of profit and loss so
that all enterprises prepare and present such a
statement on a Uniform basis.
Increases the Comparability of the Financial
statements.
Requires classification and disclosure of
extraordinary and prior period items, and the
disclosure of certain items within profit or loss
from ordinary activities.

3.  It also specifies the accounting treatment
for changes in accounting estimates and the
disclosures to be made in the FS regarding
changes in accounting policies.
Does not deal with the Tax implications of
extraordinary items, prior period items,
changes in accounting estimates, and
changes in accounting policies for which
appropriate adjustments will have to be
made depending on the circumstances.

4. Disclosure under Following category
Financial Statements
Ordinary Items
Extra-Ordinary Items
Prior Period Items
Changes in Accounting
estimates
Changes in Accounting
Policies

5. RELEVANT DEFINITIONSRELEVANT DEFINITIONS
Ordinary activities are any activities and other
incidental activities which are undertaken by an
enterprise as part of its business.
Extraordinary items are income or expenses that
arise from non recurring events and transactions
and are not expected to recur frequently or
regularly.
Prior period items are income or expenses, which
arise, in the current period as a result of errors or
omissions in the preparation of the financial
statements of one or more prior periods. It is
generally infrequent in nature and can be
distinguished from changes in accounting estimates.

6. Changes in Accounting Estimates:-
An estimate may have to be revised if changes occur in
the circumstances based on which the estimate was made,
or as a result of new information, more experience or
subsequent developments.
The effect of change in an accounting estimate should be
included in the determination of profit and loss in:-
1. The period of the change, if the change effects the
period only;
2. the period of the change and the future periods, if
the change affects the both.
Accounting policies are the specific accounting principles
and the methods of applying those principles in the
preparation and presentation of financial statements.
Only if it is required by statute or for compliance with an
accounting policy.

7. Circumstances give rise to Special DisclosureCircumstances give rise to Special Disclosure
 The write-down of Inventories to net realizable value as
well as the reversal of such write-downs.
 A restructuring of the activities of an enterprise and the
reversal of any provisions for the cost of restructuring.
 Disposals of items of fixed assets.
 Disposals of long-term investments.
 Legislative changes having retrospective Application.
 Litigation Settlements
 Other Reversals of provisions.

8. DISCLOSURE REQUIREMENTSDISCLOSURE REQUIREMENTS
Extraordinary items: The nature and the
amount of each extraordinary item should be
separately disclosed in the statement of profit
and loss in a manner that its impact on current
profit or loss can be perceived.
Ordinary items: When items of income and
expense from ordinary activities are of such
size, nature or incidence that their disclosure is
relevant to explain the performance of the
enterprise for the period, the nature and
amount of such items should be disclosed
separately.

9. DISCLOSUREDISCLOSURE
REQUIREMENTS- CONTD.REQUIREMENTS- CONTD.
Prior period items: The nature and amount of
prior period items should be separately disclosed
in the profit and loss statement in such a way
that their impact on the current profit or loss
can be perceived.
Accounting estimates: The nature and amount of
a change in an accounting estimate which has a
material effect in the current period or which is
expected to have a material effect in subsequent
periods, should be disclosed. If the effect cannot
be quantified, this fact should be disclosed.
 Accounting policies: The effect of any change in
an accounting policy, if material, should be
disclosed in the financial statements of the period
quantifying the impact. Where the effect cannot
be quantified, wholly or in part, the fact should be
disclosed.

10. DISCLOSUREDISCLOSURE
REQUIREMENTS- CONTD.REQUIREMENTS- CONTD.
Prior period items: The nature and amount of
prior period items should be separately disclosed
in the profit and loss statement in such a way
that their impact on the current profit or loss
can be perceived.
Accounting estimates: The nature and amount of
a change in an accounting estimate which has a
material effect in the current period or which is
expected to have a material effect in subsequent
periods, should be disclosed. If the effect cannot
be quantified, this fact should be disclosed.
 Accounting policies: The effect of any change in
an accounting policy, if material, should be
disclosed in the financial statements of the period
quantifying the impact. Where the effect cannot
be quantified, wholly or in part, the fact should be
disclosed.