AS-1: This statement deals with the disclosure of significant accounting policies followed in the preparation and presentation of financial statements. The purpose is to promote better understanding of financial statements. Such disclosure facilitates a more meaningful comparison between financial statements of different enterprises.
Some of the areas are:
1. Methods of depreciation & amortisation
2. Valuation of inventories.
3. Conversion of foreign currency items
4. Treatment of goodwill
5. Treatment of retirement benefits
6. Valuation of fixed assets.
7. Treatment of contingent liabilities.
8. Recognition of profit on long - term contracts.
9. Valuation of investments.
AS-2: The objective of this standard is to determine the value at which inventories are carried in the financial statements until the related revenues are recognised.
Inventories are assets in the form of raw materials, stock in process or finished goods. Net realisable value is the estimated selling price less the estimated costs to make the sale.
AS-3: The title of this standard is Cash Flow Statements. The objective is to provide information on the cash flows of an enterprise to the users of the financial statements. Cash flows are inflows and outflows of cash and cash equivalents.
Cash comprises cash on hand and demand deposits. Cash equivalents are short term highly liquid investments that are readily convertible to cash.
AS-4: This is the statement on contingencies and events occuring after the balance sheet date. A contingency is a situation, the gain or loss of which will be determined only on the occurrence or non-occurrence of one or more uncertain future events.
AS-5: It deals with
1) Net profit or loss for the period
2) Prior period items and extra ordinary items.
3) Changes in Accounting policies.
The objective of this standard is to prescribe the classification and disclosure of certain items in the P&L account to ensure uniformity. The standard warrants disclosure of certain extra ordinary and prior period items in the Notes on Accounts to the balance sheet of banks.
AS-5 also specifies regarding treatment and disclosure of changes in accounting policies.
AS-9: This is concerned with the recognition of revenue in the P&L account. Revenue is the gross inflow of cash and other considerations arising from the ordinary activities of an enterprise. This standard requires that the recognition of revenue in P&L account should be proportionate with the degree of completionof services under a contract. It means that if any item of income is not considered to be material, it may be recognised only when received.
AS-15: This standard deals with accounting for retirement benefits in the financial statements of employers. As per the standard, the retirement benefits in the form of PF and other schemes, payable by the employer for a year should be charged to the P&L account for the year. In the case of gratuity and other defined benefit schemes, the accouting treatment depends on the type of arrangement made by the employer. In short the standard requires accounting for all the
liabilities, arising out of retirement,on an acturial basis.
AS-17: The standard establishes principles for reporting the financial information about the different types of products and services and the different geographical areas of operation. It is often called as “segment reporting”. The disclosures required are either primary or secondary. As per the standard, banks have to report their business segment as primary reporting format. The business segments are treasury operations, other banking operations and residual operations. The secondary segment includes domestic and international geographic segments.
AS-18: This standard sets out the disclosure of the names, relationships and transactions between the enterprise and its related parties. Related parties for a bank are its parent /subsidiary/associate/key managenment personnel (KMP) and relatives of KMP. Public Sector banks need not disclose their transactions with subsidiaries as well as RRBs (Regional Rural Banks) sponsored by them. But they have to disclose their transactions with other related parties.
AS-22: This standard deals with accounting for taxes on income. The standard requires that tax expenses for the period, both current and deferred, should be included in the determination of net profit or loss for the period. Current tax is the amount of income tax determined to be payable in respect of taxable income for the period.Current tax is measured as the amount expected to be paid using the applicable tax rates. Deferred tax is the tax effect arising out of time differences.
Time differences are the differences between taxable income and accounting income for a period that originate in one period and are eligible for reversals in subsequent periods.
AS-23: This standard prescribes procedures for recognising investments in associates. An associate is an enterprise in which the investor has significant influence and which is neither a subsidiary nor a joint venture of the investor. The objective of this standard is to ensure that the recognition is based not merely on the proportion of investment but the intention to acquire exercising power.
AS-25: The standard prescribes the minimum content of an interim financial report. Interim financial report is a report containing either a complete set of financial statements or a set of condensed financial statements for an interim period. During the first year of operations of an enterprise, its reporting period may be shorter than a financial year.In such a case, that shorter period is not considered as an interim period.
AS-27: It deals with financial reporting of interests in joint ventures. A joint venture is a contractual agreement whereby two or more parties undertake an economic activity so as to obtain benefits from it. The objective of this standard is to report a venture’s share on each of the assets, liabilities, income and expenses as separate line items in the financial statements.
AS-28: The objective of this standard is to prescribe the procedures that an enterprise applies to ensure that its assets are carried at no more than their recoverable amount. Recoverable amount is the higher of an asset’s net selling price and its value in use.
AS-29: It deals with provisions, contingent liabilities and contingent assets. Provision means a liability of uncertain timing and amount. Contingent Asset or liability means a possible asset or obligation that arises from past events whose existence depends on the occurrence or non- occurrence of some uncertain future events.
Some of the areas are:
1. Methods of depreciation & amortisation
2. Valuation of inventories.
3. Conversion of foreign currency items
4. Treatment of goodwill
5. Treatment of retirement benefits
6. Valuation of fixed assets.
7. Treatment of contingent liabilities.
8. Recognition of profit on long - term contracts.
9. Valuation of investments.
AS-2: The objective of this standard is to determine the value at which inventories are carried in the financial statements until the related revenues are recognised.
Inventories are assets in the form of raw materials, stock in process or finished goods. Net realisable value is the estimated selling price less the estimated costs to make the sale.
AS-3: The title of this standard is Cash Flow Statements. The objective is to provide information on the cash flows of an enterprise to the users of the financial statements. Cash flows are inflows and outflows of cash and cash equivalents.
Cash comprises cash on hand and demand deposits. Cash equivalents are short term highly liquid investments that are readily convertible to cash.
AS-4: This is the statement on contingencies and events occuring after the balance sheet date. A contingency is a situation, the gain or loss of which will be determined only on the occurrence or non-occurrence of one or more uncertain future events.
AS-5: It deals with
1) Net profit or loss for the period
2) Prior period items and extra ordinary items.
3) Changes in Accounting policies.
The objective of this standard is to prescribe the classification and disclosure of certain items in the P&L account to ensure uniformity. The standard warrants disclosure of certain extra ordinary and prior period items in the Notes on Accounts to the balance sheet of banks.
AS-5 also specifies regarding treatment and disclosure of changes in accounting policies.
AS-9: This is concerned with the recognition of revenue in the P&L account. Revenue is the gross inflow of cash and other considerations arising from the ordinary activities of an enterprise. This standard requires that the recognition of revenue in P&L account should be proportionate with the degree of completionof services under a contract. It means that if any item of income is not considered to be material, it may be recognised only when received.
AS-15: This standard deals with accounting for retirement benefits in the financial statements of employers. As per the standard, the retirement benefits in the form of PF and other schemes, payable by the employer for a year should be charged to the P&L account for the year. In the case of gratuity and other defined benefit schemes, the accouting treatment depends on the type of arrangement made by the employer. In short the standard requires accounting for all the
liabilities, arising out of retirement,on an acturial basis.
AS-17: The standard establishes principles for reporting the financial information about the different types of products and services and the different geographical areas of operation. It is often called as “segment reporting”. The disclosures required are either primary or secondary. As per the standard, banks have to report their business segment as primary reporting format. The business segments are treasury operations, other banking operations and residual operations. The secondary segment includes domestic and international geographic segments.
AS-18: This standard sets out the disclosure of the names, relationships and transactions between the enterprise and its related parties. Related parties for a bank are its parent /subsidiary/associate/key managenment personnel (KMP) and relatives of KMP. Public Sector banks need not disclose their transactions with subsidiaries as well as RRBs (Regional Rural Banks) sponsored by them. But they have to disclose their transactions with other related parties.
AS-22: This standard deals with accounting for taxes on income. The standard requires that tax expenses for the period, both current and deferred, should be included in the determination of net profit or loss for the period. Current tax is the amount of income tax determined to be payable in respect of taxable income for the period.Current tax is measured as the amount expected to be paid using the applicable tax rates. Deferred tax is the tax effect arising out of time differences.
Time differences are the differences between taxable income and accounting income for a period that originate in one period and are eligible for reversals in subsequent periods.
AS-23: This standard prescribes procedures for recognising investments in associates. An associate is an enterprise in which the investor has significant influence and which is neither a subsidiary nor a joint venture of the investor. The objective of this standard is to ensure that the recognition is based not merely on the proportion of investment but the intention to acquire exercising power.
AS-25: The standard prescribes the minimum content of an interim financial report. Interim financial report is a report containing either a complete set of financial statements or a set of condensed financial statements for an interim period. During the first year of operations of an enterprise, its reporting period may be shorter than a financial year.In such a case, that shorter period is not considered as an interim period.
AS-27: It deals with financial reporting of interests in joint ventures. A joint venture is a contractual agreement whereby two or more parties undertake an economic activity so as to obtain benefits from it. The objective of this standard is to report a venture’s share on each of the assets, liabilities, income and expenses as separate line items in the financial statements.
AS-28: The objective of this standard is to prescribe the procedures that an enterprise applies to ensure that its assets are carried at no more than their recoverable amount. Recoverable amount is the higher of an asset’s net selling price and its value in use.
AS-29: It deals with provisions, contingent liabilities and contingent assets. Provision means a liability of uncertain timing and amount. Contingent Asset or liability means a possible asset or obligation that arises from past events whose existence depends on the occurrence or non- occurrence of some uncertain future events.
Post a Comment