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A) Regulatory and conceptual framework of Accounting Standard The accounting standards are certain set of old standards that

records particular kinds of financial transactions and other related events in the books of financial statements. The framework for accounting standards is set by International Accounting Standards Committee (IASC) in the past but now the new set of standards has developed since 2001 and it is known as International Financial Reporting Standards (IFRS). The accounting standards are issued by International Accounting Standards Board (IASB). The main objectives of IASB under IFRS Foundation are:  To develop and frame easily understandable, high quality and enforceable accounting standards at global level. It require authenticate, high quality, reliable and comparable information that is used in financial reporting and financial statements so that people can easily understand and participate in capital market at global level and at the same time economists can get help during decision making situations;  To promote the proposed accounting standards in daily applications of people and the organizations;  To help small and medium sized firms and organizations to emerge as success and also support emerging economics for future;  To bring national as well as international accounting standards at a global platform together and also provide high quality accounting standards solutions to the organizations and the economies. Restructuring of IASC IASC restructured the committee and formed IASB in 2001. All standards setting work is done by IASB for IFRS since 2001. All approval related to accounting standard of IFRS is taken by IASB. Under the IFRS Foundation Constitution, the IASB shall:

It carries all responsibility related to technical matters of IASB and it includes formation and issuing of accounting standards at international level, IFRS and Exposure draft. Each

report consist dissenting opinions and all final decisions and approval is taken by International Financial Reporting Interpretation Committee;

It releases Exposure Draft on all assignments and projects and also releases a documents based on discussion for public response on major issues and projects;

It frames and develops technical agenda and project assignments on various technical and non-technical issues and matters of the IASB. IASB may sometime outsource the technical or non-technical research work to local or national standard setters organization.

It has the responsibility to review on response on detail published documents on regular basis.

Forming advisory and analyst group to give suggestions and analyze the working groups on regular basis

Regular consulting on major issues and projects with Advisory Council for forming Accounting Standards, fixing up periodic agenda and prioritizing the work;

It considers all discussion and hearings from public on released and proposed accounting standards. It is not required to take public hearing on every proposed accounting standard.

It considers all field tests to check the workability of the proposed accounting standard on each situation and environment. It checks the practicality of the accounting standards though it is not necessary to check such field test for every accounting standard.

Difference between IFRSs and IASs International Financial Reporting Standards (IFRSs) has broad as well as narrow meaning. In narrow meaning, IFRS issues new numbered series but on the other hand IASB issue different set of number series which distinct it from the International Accounting Standards. In broad meaning, IFRS represent complete body of IASB pronouncement and it includes all approved standards and interpretations by IASs and IASB but on the other hand SIC standards and interpretations are approved by old International Accounting Standards committee.

As per the IASB policy on official website, International Financial Reporting Standards is abbreviated as IFRSs and International Accounting Standards is abbreviated as IASs. Compliance IASB Standards As per IAS 1.7, IFRSs definition comprises:  International Accounting Standards  International Financial Reporting Standards  The Standing Interpretations Committee (SIC) by former board or IFRS Interpretation Committee (IFRIC) for interpretation of standards Compliance IFRSs Standards According to IAS 1.16, any entity or firm which comply its financial statements with approved IFRSs standards shall note out unreserved and explicit statements of such standards and compliances. An entity should not comply its financial statements with IFRSs until and unless it complies with all basic requirements of IFRSs. When an interpretation or a standard applies to any condition, event or transaction, the item with applied accounting policies will be determined by the interpretation or the Standard of that accounting policy. At the same time the guideline issued by IASB for interpretation or the Standard should also be followed. If the interpretation or the Standard does not mention specific event, condition or transaction then according to IAS 8.10-12 following things are required: y In case of absence of an interpretation or the Standard that is applicable to any specific condition, event or transaction; management of the firm should use its own decision in judging the appropriate accounting policy that rise to any information and that is:

1. Relevant to users in taking economic based decisions; and

2. Accountable and reliable in accounting standards and financial statements. The financial statement should be able to represent better position of firm in terms of performance and cash flow information. 3. The financial statements should be complete in each sense, free from biasness and reflect the true picture of event/condition. y In making the interpretation and based on it judge the accounting standard. Management should see the applicability of following resources: 1. The guidelines and the basic requirement in Standards and the interpretation while dealing with similar sort of issues; and 2. The concept, definitions and criteria for income, expenses, assets and liabilities in the Framework. y Management may also use other standard setting bodies that uses similar conceptual and regulatory accounting framework to develop the international level accounting standards. Management can also follow other accounting literature that has been used by other companies and industries that deals with same issues.

B) Accounting for Intangible standards Intangible assets can be defined as asset which cannot be realized, seen, feel or measured physically. It is said to be non-monetary asset that can be identified. Intangible asset is developed over the time with lot of efforts and it is treated as a seperate asset. The intangible asset can be divided into two types: legal intangibles (copyrights, trademarks and patents etc.) and competitive intangibles (structural activities, knowledge activities and leverage activities etc.). Most of the legal intangible assets come under intellectual property right and these legal property are supported and defend by court of law. On the other hand, competitive intangibles are nonownable legally but it may cause direct impact on productivity, effectiveness, opportunity cost and wastage within an organization and hence effect on gross margin, customer satisfaction level, market image and share value of the organization. In todays era, human resource/human capital is the most essential competitive intangibles. Competitive intangibles has direct impact on

future of the organization, it may cause competitive advantage or complete destruction of the organization. Intangible Asset Finance deals with all intangible assets of the organization. Goodwill Goodwill is another name of intangible asset. It is moreover a technical word. Goodwill is taken as separate item in balance sheet of company. The importance of goodwill comes into picture at the time of acquisition by another company. It is the amount the acquiring company has to pay to acquired company as a part of their companys value in the market. Financial accounting General standards The accounting of intangible assets is set by International Accounting Standard Board (IASB) under the section of IAS 38 and these are used by the companies for the financial statements. Those legal intangible assets are not recognized which are developed internally but if it is purchased from third party it will be recognized. According to US GAAP, the intangible assets can be classified into following categories:  Limited-life vs. Indefinite-life intangibles  Purchased vs. Internally created intangibles Recognition and measurement An item to be recognized as intangible asset should meet following criteria:  The core definition of intangible asset  The criteria for being recognized According to the definition of intangible asset, an asset meets the basic criteria when an asset is: 1) Easily identified as separate entity and it can be easily divided from other entity. When it can be easily rented, sold, exchanged, transferred or licensed along with other assets, liabilities or individually. Or;

2) Being generated from legal rights or other contractual rights, irrespective of whether those rights can be separate or transferred from the other entity or from other obligations.

The recognition of intangible asset is only possible when: 1) It is highly possible that the asset will generate economic benefits in future and 2) The asset cost can be identified and measured more effectively.

The measurement of intangible asset is done on the basis of its cost initially. The separately acquired intangible asset has different set of costing and it comprises: 1) The purchase price of asset and it includes non-refundable purchase taxes, import duties and both has to deduct rebates and trade discounts; and 2) Initial cost of preparing that asset for the intended future use.

According to International Financial Reporting Standard (IFRS), if any intangible asset is acquired by any business unit, the intangible assets cost is fair value or current price of that asset on date of acquisition. The only case when the cost of intangible assets cannot be measured or identified in terms of its fair value in the market at the time of acquisition are when the generation of intangible asset arises from contractual rights or other legal rights and either: 1) It is difficult to separate it from other entity; or 2) It is possible to separate it from other entity but it is difficult to show the past transactions of asset somewhere and on the other hand estimation of fair value of asset would be depend on unidentified variables.

Measurement after recognition The measurement of intangible asset is done with the help of either cost model or revaluation model as per accounting policy. Cost Model: According to this method, the cost of asset will remain same throughout its life time less all accumulated amortization and any other impairment losses. Revaluation Model: In this model, if an intangible asset is accounted and valuated using this method, then all other assets comes under this category are also accounted using the same

method, unless these assets do not have any active market. The cost of intangible asset is valued at the time of acquisition once it is recognized less accumulated amortized value and other accumulated impairment losses. A market is said to be active market when following conditions are matched: 1) The traded items in the market are similar by nature (homogenous). 2) Both sellers and buyers can be easily found in the market at any time 3) Public are known with asset prices in the market.

If the amount of the intangible asset is increased after the revaluation process then the increased amount will be credited to equity as a part of revaluation surplus. The increased or decreased amount will be recognized in balance sheet as a profit or loss to the same extent. If it is a profit then the amount will be credited and in case of loss it will be debited from equity under the head of revaluation surplus.

C) Accounting for Leases IAS 17 is defined under accounting for leases and it is specifically for lessees and lessors. These accounting policies and guidelines are strictly applicable to operating leases and finance. Scope The accounting standard IAS 17 is applicable to all sort of lease agreements except oil, minerals, natural gas and same kind of resources and also videos, films, patents, manuscripts, plays and similar kind of items do not come in this accounting standard. IAS 17 does not apply to following leased assets:

property held by lessees that is accounted for as investment property for which the lessee uses the fair value model set out in IAS 40

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Under operating leases, all investment property provided by lessors (IAS 40) Under the finance leases, all biological assets controlled by lessees (IAS 41) Under operating leases, all biological assets controlled by lessors (IAS 41)

Classification of Leases Lease can be broadly divided into two categories: Financial lease and Operating lease. Financial lease: If all the risks and rewards related to lease property is transferred to owner of the property, then it is known as financial lease. Operating lease: All those leases which do not fall under the category of financial lease are known as operating lease. The substance of the transaction decides the nature of lease rather the form of lease. Following situation decides whether lease is a finance lease:
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Once the lease term ends, the ownership is transferred to lessee from lessor The major part of economic life of any leases asset is the lease term, even in case the transfer of title is not taken place.

The nature of lease asset is quite specific by nature and lessee cannot make any modification while using the asset.

Accounting by Lessees The financial statements that are used for lessees are as follows:

All financial leases should be taken under asset at the time of commencement of lease term and financial liability should be considered at low fair value possible.

All financial lease payment should be divided between reduction of previous liabilities and finance charges.

The rate of depreciation for all assets that includes owned as well as leased assets should be same and have same policy. If there is low possibility that lessee will obtain the

control over the leased asset at the end of lease term then depreciation of leased asset should be done in shorter time of lease term.

In case of operating lease, all payments towards lease should be considered as an expense and booked in income statement over the lease term on the basis of straight line method.

Under the agreement, the incentives of a new or modified operating lease should be approved and recognized by lessee as a part of rental expense reduction over the tenure of lease term, irrespective of payments timing or nature of incentives. Accounting by Lessors The financial statements that are used for lessors are as follows:

The lessor should consider the lease asset in receivables of balance sheet at the commencement time of the lease term, and the amount is always equal to the investment amount in the lease.

The financial income related to lease should be based on regular rate of return on net investment by the lessor and it should be outstanding with respect to the financial lease.

As per the nature of asset, the operating lease should be taken into the balance sheet by the lessor. The straight light method should be adopted to calculate the lease income over the specified lease period.

Under the agreement, the incentives of a new or modified operating lease should be approved and recognized by lessor as a part of rental expense reduction over the tenure of lease term, irrespective of payments timing or nature of incentives. The selling profit or loss generated by the dealer or manufacturers lessors should also be accounted and recorded in the same time period once it is been ready for sale. The rate of interest on selling profit should be matched with commercial rate of interest in order to restrict the profit margin.

y Donaldson, Samuel A. Federal Income Taxation Of Individuals: Cases, Problems and Materials (2nd ed.). St. Paul: Thomson West, 2007. pg. 200. y International Accounting Standards Board (2007): International Financial Reporting Standards 2007 (including International Accounting Standards (IAS(tm)) and Interpretations as at 1 January 2007), LexisNexis, ISBN 1-4224-1813-8 y Original texts of IAS/IFRS, SIC and IFRIC adopted by the Commission of the European Communities and published in Official Journal of the European Union http://ec.europa.eu/internal_market/accounting/ias_en.htm#adopted-commission y A Roadmap for Convergence between IFRSs and US GAAP 2006-2008: Memorandum of Understanding between the FASB and IASB, International Accounting Standards Board, February 27, 2006, http://www.iasb.org/NR/rdonlyres/874B63FB-56DB-4B78B7AF-49BBA18C98D9/0/MoU.pdf y Completing the February 2006 Memorandum of Understanding - A progress report and timetable for completion, Financial Accounting Standards Board, September 11, 2008, http://www.fasb.org/intl/MOU_09-11-08.pdf y Financial Accounting Standards Board (July 19, 2006). "FASB Formally Adds Project to Reconsider Lease Accounting". Press release. http://www.fasb.org/jsp/FASB/Page/news/nr071906.shtml. Retrieved January 19, 2011. y Financial Accounting Standards Board. "FASB: Financial Accounting Standards Board". http://www.fasb.org/cs/ContentServer?c=FASBContent_C&pagename=FASB%2FFASB Content_C%2FProjectUpdatePage&cid=900000011123. Retrieved January 19, 2011. y Stickney and Weil 2007 p. 791 (Glossary of Financial Accounting: An Intro. to Concepts, Methods, and Use 12e).