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(AS-4) : CONTINGENCIES AND EVENTS OCCURING AFTER BALANCE SHEET

Introduction

This statement deals with the treatment in financial statement of contingencies and events occuring after the balance sheet date.

DEFINITION
A contingency is a condition / situation. The ultimate outcome of which gain or loss will be known / determined only on the occurances or non-occurance of one or more uncertain future events.

SCOPE
Liabilities of life assurance and general insurance enterprises arising from policies issued. Obligations under retirement benefit plans.

DISCLOSURE
The nature of the event.
An estimates of the financial effect or a

statement that such an estimate cannot be made. The estimation of the amount of contingent loss to be provided for in the financial statements.

(AS-5) : NET PROFIT OR LOSS FOR THE PERIOD, PRIOR PERIOD ITEMS AND CHANGES IN ACCOUNTING POLIES
Objective

The objective of this statement is to prescribe the classification and disclosure of certain items in the statements of profit and loss so that all enterprises prepare and present such a statement on a uniform basis.

SCOPE
This statement should be applied by an enterprise in presenting profit or loss from ordinary activities, extra-ordinary items and prior period items in the statements of profit and loss, in accounting for changes in accounting estimates and in disclosure of changes in accounting policies.

THE TERMS USED IN THIS STATEMENT


Ordinary Activities
Extra-ordinary Items Prior Period

Accounting Policies

DISCLOSURE
The nature and amount of prior period items should be separately disclosed in the statement of profit and loss in a manner that their impact on the current profit or loss can be purchased.

(AS-11) : Accounting For The Effects Of Changes In Foreign Exchange Rates


Objective An enterprise may have transactions in foreign currencies or it may have foreign branches. Foreign currency transactions should be expressed in the enterprises reporting currency. The financial statements of foreign branches

should be translated into the enterprises reporting currency in order to include them in the financial statements of the enterprise.

SCOPE
In accounting for transactions in foreign currencies.
In translating the financial statements of

foreign branches for inclusions in the financial statement of the enterprise.

TERMS USED IN FINANCIAL STATEMENTS


Reporting Currency
Foreign Currency Average Rate

Exchange Rate
Closing Rate

REPORTING EFFECTS OF CHANGES IN EXCHANGE RATES


At each balance sheet data-monetary items denominated in a foreign currency.

eg: Foreign currency notes. Non-monetary items other than fixed assets, which are carried in terms of historical cost denominated in a foreign currency should be reported using the exchange rate at the date of the transactions.

DISCLOSURES
The amount of exchange differences adjusted in the net profit / loss for the period.
The amount of exchange differences adjusted

in the carrying amount of fixed assets during the accounting period.

(AS-12) : ACCOUNTING FOR GOVERNMENT GRANTS


Introduction

This statement deals with accounting for govt grants. Govt grants are sometimes called by other names such as subsidies, cash incentives, duty drawbacks, etc.

DEFINITIONS
Govt refers to govt, govt agencies and similar bodies whether local, national or international.
Govt grants are assistance by govt in cash or

kind to an enterprise for past or future compliance with certain conditions.

ACCOUNTING TREATMENT OF GOVT GRANTS


The capital approach under which a grant is treated as part of shareholders funds.
The income approach under which a grant is

taken to income over one or more periods.

NON-MONETARY GOVT GRANTS


Govt grants may take the form non-monetary assets, such as land / other resources given at concessional rates. It is usual to account for such assets at their acquisition cost.

DISCLOSURE
The accounting policy adapted for govt grants, including the method of presentation in financial statements.

(AS-13) : ACCOUNTING FOR INVESTMENTS


Introduction

This statement deals with accounting for investments in the financial statements of enterprises and related disclosure requirements.

DEFINITION
Investments are assets held by an enterprise for earning income by way of dividends, interest and rentals, for capital appreciation, or for other benefits to the investing enterprise.

CLASSIFICATION OF INVESTMENTS
Current Investment
Long-Term Investment

(AS-14) : ACCOUNTING FOR AMALGAMATIONS


Introduction

This statement deals with accounting for amalgamations and the treatment of any resultant goodwill / reserves.

DEFINITIONS
Amalgamation means an amalgamation pursuant to the provisions of the companies act 1956 or any other statute which may be applicable to companies.

TYPES OF AMALGAMATIONS
An amalgamation in the nature of merger.
An amalgamation in the nature of purchase.

METHODS OF ACCOUNTING FOR AMALGAMATIONS


The pooling of interest method.
The purchase method.

DISCLOSURE
Name and general nature of business of amalgamation companies.
Effective date of amalgamation for accounting

purpose. The method of accounting used to reflect the amalgamation. Particulars of the scheme sanctioned under a statute.