Presented to : Ranika Chaudhary

Presented by : Delsum Rodrigues Aman Bansal Amit Sehnani Mohnish Rohtagi

ACCOUNTING STANDARD INTRO

An accounting standard is a guideline for financial accounting, such as how a firm prepares and presents its business income and expense, assets and liabilities. The Generally Accepted Accounting Principles is comprised of a large group of individual accounting standards. GAAP standards apply to financial reporting in the United States and may be eventually phased out in favor of the International Accounting Standards. A principle that guides and standardizes accounting practices. The Generally Accepted Accounting Principles (GAAP) are a group of accounting standards that are widely accepted as appropriate to the field of accounting. Accounting standards are necessary so that financial statements are meaningful across a wide variety of businesses; otherwise, the accounting rules of different companies would make comparative analysis almost impossible.

WHY USE ACCOUNTING STANDARDS ?

Accounting standards are necessary to promote high quality financial reporting. The fundamental role of accounting is to communicate economic information about businesses and other organization to various stakeholders including government, investors, shareholders, suppliers, lenders, customers and the general public the accounting standards should have essential characteristics of understandability, comparability, relevance and reliability in order to play its role effectively

ACCOUNTING STANDARD (AS) 10 (ISSUED 1985) ACCOUNTING FOR FIXED ASSETS

Fixed asset is an asset held with the intention of being used for the purpose of producing or providing goods or services and is not held for sale in the normal course of business.

Fair market value is the price that would be agreed to in an open and unrestricted market between knowledgeable and willing parties dealing at arms length who are fully informed and are not under any compulsion to transact.
Gross book value of fixed asset is its historical cost or other amount substituted for historical cost in the books of account or financial statements. When this amount is shown net of accumulated depreciation, it is termed as net book value.

Fixed Assets of Special Types: Goodwill Patent Know-how : In general Know-how is recorded in the books only when some consideration in money or money's worth has been paid for it.

SCOPE
AS -10 was issued in November, 1985. It became mandatory from accounting periods commencing on or after 1, 1991 for: a. Companies governed by the Companies Act,1956. b. Entities other than sole proprietary concerns/individuals, partnership firms, Societies Registration Act, trusts, Hindu undivided family and associations of persons.
AS-10 became mandatory for all entities for accounting periods commercing on or after April1, 1993. However, it is not applicable to: a. Forests, plantations and similar regenerative natural resources. b. Wasting fixed assets including mineral rights,expenditure on the exploration for or the extraction of minerals, oil, natural gas and similar non- regenerative resources. c. Expenditure on real estate development d. Livestock

AS-10 does not deal with intangible fixed assets. Expenditure on individuals items of fixed assets used to develop or maintain activities covered in the given cases but separable from those activities are accounted for in accordance with AS-10.

EFFECTS
Fixed-asset purchases increase the "total assets" portion of a company's balance sheet. Inversely, asset sales and divestitures reduce the firm's financial position. Financial Reporting Besides the balance sheet, tangible resources affect other financial statements. Depreciation expense, for example, is an income statement item. This report is also known as a statement of profit-and-loss or statement of income. Fixedasset transactions also have an impact on corporate liquidity and are usually recorded in the statement of cash flows.

COMPARISION B/W INDIAN GAAP,IAS,US-GAAP

Particulars Indian GAAP
Goodwill Goodwill is capitalized and tested for impairment annually. Except for goodwill from amalgamation, which is amortized over 3-5 years.

US GAAP
Goodwill is not amortized but goodwill is to be tested for impairment annually.

IFRS
Goodwill is amortized to expense on a systematic basis over its useful life with a maximum of twenty years. The straight line method should be adopted unless the use of any other method can be justified.

Particulars
Negative Goodwill (i.e. the excess of the fair value of net assets acquired over the aggregate purchase consideration)

Indian GAAP
Negative goodwill is credited to the capital reserve account, which is a component of stockholders equity.

US GAAP
Negative goodwill is allocated to reduce proportionately the value assigned to non-current assets. Any remaining excess Is considered to be extraordinary gain.

IFRS
Negative goodwill that relates to expectations of future losses and expenses should be recognized as income when the future losses and expenses are recognized. Where it does not relate to identifiable future losses and expenses, an amount not exceeding the fair values of the acquired identifiable non-monetary Assets should be recognized as income on a systematic basis over the remaining weighted average useful life of such assets and the balance, if any immediately charged to income.