Académique Documents
Professionnel Documents
Culture Documents
The following costs are excluded from the cost of inventories. Abnormal amount of wasted material, labor and production cost Storage cost Admin. cost Selling and distribution cost
In case of disposal of fixed assets, the diff. between the net proceeds and the book value should be charged or credited to the P&L account.
The cash flow statement explains the movement of cash under the following heads Cash flow from operating activities-cash receipts on account of sales, services, royalties, fees, commission etc Cash flow from investing activities-Cash payment on account of fixed asset, R&D and other investments, cash received on disposal of fixed assets ,shares and debentures, Loans and Advances Cash flow from Financing activities-Cash proceeds from issue of shares, debentures , loans , bonds and cash repayment of loans borrowed
INDIAN GAAP Does not require consolidation, however financial statement should be attached to that of parent company Presented in the reverse order
Presented in the order of liquidity starting with most liquid asset Requires disclosure of movement in related parties Current portion of long term debt is classified as current liability
Not Required
Not required
Cash Requires a Flow statement of cash Statement flow It forms part of the financial statement
Came into force in FY 2001. Recent amendments in Stock exchange , requires all listed Co.s to attach cash flow statement with the annual accounts.
Proposed dividends charge to retained are reflected in the earnings at the financial statements of point of time they the year to which they are formally relate even though declared by a board proposed and of directors approved after the year end.
Requires only amount outstanding Parties material related party transaction, at the end of the financial year and Nature of relationship, max balance Description of the transaction, amount of the outstanding during transaction for the financial the year. Auditors comments year and amount due. required on the reasonableness of certain transactions. Requires such expense to These can be 6 Share issue be written off when accounted for as expense incurred against proceeds deferred expenses of capital and amortized
Historical Cost
Depreciation
Straight line basis over the useful economic life of the asset
Rates are prescribed by the Indian Companies act 1956, for minimum depreciation provision. Same principle with exception that exchange rate fluctuations arising from foreign currency borrowings / liabilities are added /deducted from carrying cost from the relevant fixed asset
Gains or losses arising from foreign currency transactions are included in determining the net income for the period in which such gains or losses arise.
10 Intangible assets
All intangible asset must be amortized by the systematic charge to income over the period estimated to be benefited not exceeding 40 years
Requires intangible assets to be written off within their period of use or legal term of validity whichever is earlier while other intangible assets such as deferred revenue expenditure be written off within 3-5 years
Inventory
Inventory should be stated at the lower of cost or market except in certain exceptional cases when it may be stated above cost. Exceptional cases when inventories be stated above cost include precious metals
Inventories are valued at the lower of cost and net realizable value. AS-2 permits only FIFO or weighted average cost formula for determining the cost of inventories
WHY US GAAP????
1. Transparency. 2. Access to global financial market. 3. Enhances company profile and reputation. 4. Facilitates benchmarking and comparability. 5. Key to seamless financial markets.
22
24
Research will be an expense, but development will be capitalized. Property, plant and equipment may be carried out at cost less depreciation and impairment, or at face value. The definition of debt and equity will alter which can flow through to what is treated as interest rather than dividends. Proposed final dividend will not be accrued until they have been approved. Provisions will be calculated by discounting future cashflows, so adjustment will affect interest
26