16 LIST OF THE ACCOUNTING STANDARDS AS ISSUED BY ICAI The council of the

Deficiency or surplus in case of disposal, destruction, demolition etc. be disclosed separately, if material. In cases of addition or extension which becomes integral part of the existing asset depreciation to be provided on adjusted figure prospectively over the residual useful life of the asset or at the rate applicable to the asset. Useful life may be reviewed periodically after taking into consideration the expected physical wear and tear, obsolescence and legal or other limits on the use of the asset. Allocate depreciable amount of a depreciable asset on systematic basis to each accounting year over useful life of asset.

• Impairment loss of a revalued asset should be treated as a revaluation decrease as per AS 10.
• A change in accounting policy on the adoption of an accounting standard should be accounted for in accordance with the specific transitional provisions, if any, contained in that accounting standard.
• Based on the international consensus, the regulators will separately notify the date of implementation of Ind-AS for the banks, insurance companies etc.
• International companies follow the International Financial Reporting Standards , which are set by the International Accounting Standards Board and serve as the guideline for non-U.S.
• Surplus arising out of present value of plan asset being higher than obligation under the plan.
• All commercial, industrial and business reporting enterprises, whose turnover for the immediately preceding accounting period on the basis of audited financial statements exceeds ₹40 lakhs but does not exceed ₹50 crores.

However, all the List Of Accounting Standards As 1~ Of Icai s, including companies, which fall either in Level II or Level III, are not required to disclose diluted earnings per share and information required by para 48 of AS 20. AS 4 – Contingencies and Events Occurring after the Balance Sheet Date – paras 1, 2.3.1, 4(4.1 to 4.4), 5(5.1 to 5.6), 6, 7 (7.1 to 7.3), 9.1 , 9.2, 10, 11, 12 and 16) stand withdrawn. Applicability of the proposed Accounting Standard on financial instruments, paragraphs which deal with contingencies would remain operational to the extent they cover impairment of assets not covered by other Accounting Standards.

India

Ind AS are to be applied by all listed companies, commercial banks, and non-bank finance companies. All other companies in India, primarily unlisted companies can apply Ind AS, but continue to use AS. Insurance companies currently apply AS and are required to comply with Ind AS by 2020. The AS were developed utilizing an older version of IFRS, and ICAI reports that there are plans to update the AS to be in line with current international standards.

The ICAI has taken significant initiatives in the setting and issuing procedure of Accounting Standards to ensure that the standard-setting process is fully consultative and transparent. The ASB considers the International Accounting Standards /International Financial Reporting Standards while framing Indian Accounting Standards and try to integrate them, in the light of the applicable laws, customs, usages and business environment in the country. The composition of ASB includes, representatives of industries , regulators, academicians, government departments etc. Although ASB is a body constituted by the Council of the ICAI, it is independent in the formulation of accounting standards and Council of the ICAI is not empowered to make any modifications in the draft accounting standards formulated by ASB without consulting with the ASB.

Disadvantages of Accounting Standards

It also assesses management performance and the capacity to increase profitability, preserve an entity’s solvency, and fulfill other management obligations. Good management will be consistent in their procedures and rules to avoid confusing the user’s thoughts. Accounting helps get information about a business’s financial position and statements. As a business language, it is considered an information system that must consider and follow a standard for its functioning. There has been sufficient evidence of practical existence in the Vedic times. Even in Kautilya’s Arthashastra, shreds of evidence have been mentioned of the existence of books of accounts in the accountants’ office.

When there is a change in the classification of a https://intuit-payroll.org/ operation from integral to non-integral or vice versa, the translation procedures applicable to the revised classification should be applied from the date of reclassification. ASI 2 is incorporated in para 8.2 of Accounting Standard 10 of the Companies Rules, 2006.

Fundamental Accounting Principles

Section 145 of Income Tax Act, 1961 requires all assesses keeping their books on the basis of the mercantile system of accounting to comply with these two standards. Also, requirements of TAS 1 and TAS 2 are practically same as the corresponding AS 1 and AS 5 issued by the institute. The mandatory compliance of TAS 1 and TAS 2 are nevertheless required for the limited purpose of income tax. The ‘Accounting Standards’ issued by the Accounting Standards Board establish standards which have to be complied by the business entities so that the financial statements are prepared in accordance with generally accepted accounting principles. ♦ Constitution of study groups by ASB to consider specific projects and to prepare preliminary drafts of the proposed accounting standards. The draft normally includes objective and scope of the standard, definitions of the terms used in the standard, recognition and measurement principles wherever applicable and presentation and disclosure requirements. The Financial Accounting Standards Board is a private non-profit organization that is responsible for creating and interpreting financial accounting standards in the United States.

• Good financial reporting not only promotes healthy financial markets, it also helps to reduce the cost of capital because investors can have faith in financial reports and consequently perceive lesser risks.
• If, in the ‘bottom-up’ test, the carrying amount of goodwill could not be allocated on a reasonable and consistent basis to the cash-generating unit under review, the enterprise should also perform a ‘top down’ test.
• Change in accounting policy, which has a material effect, should be disclosed.
• Chartered Accountants are the only individuals permitted to conduct statutory audits after receiving a practicing certified issued by the ICAI.
• If the accounting policies followed are different, the fact should be disclosed together with proportion of such items.

They are also valuable to external stakeholders – such as shareholders, banks, and regulatory institutions – to ensure that relevant information is reported accurately. The technical conventions provide the boundaries between measures of financial reporting, as well as facilitate transparency and accountability. Accounting standards provide guidance for companies to prepare and report useful financial statements in an accurate fashion. In accordance with the Companies Act of 1956 , the Accounting Standards Board operating under the Institute of Chartered Accountants of India is responsible for developing national accounting standards. The standards are approved and granted legislative backing by the Ministry of Corporate Affairs upon the recommendation of the National Advisory Committee on Accounting Standards .

How many Accounting Standards?

The NACAS shall give its recommendation to the Central Government on such matters of accounting policies and standards and auditing as may be referred to it for advice from time to time. Where the statute governing the enterprise requires compliance with the accounting standards, e. Companies, mandatory status of an accounting standard implies that the duty of compliance is primarily on the enterprise presenting the financial statement. It has already been mentioned in unit one of this chapter that the standards are developed by the Accounting Standards Board of the institute and are issued under the authority of its Council.

The reports of the businesses follow the same format, so after reviewing the financial statements of each business, the users of the financial statements can make judgments based on the comparison. It won’t be easy to compare the two firms if they employ distinct accounting procedures.

Where two or more investments are made in a subsidiary, equity of the subsidiary to be generally determined on a step-by-step basis. The tax expense of the parent and its subsidiaries to be aggregated but not netted off and it is not required to recompute the tax expense in context of consolidated information (ASI 26 incorporated in 21 “Consolidated Financial Statements” as an explanation below para 13). Potential equity shares are treated as dilutive when their conversion into equity would result in a reduction in profit per share from continuing operations. The weighted average number of shares for all the periods presented is adjusted for bonus issue, share split and consolidation of shares.