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ACCOUNTING STANDARDS

PRESENTED TO:
Dr. Harpreet Kaur
Punjabi
University Patiala

PRESENTED BY:
JASPREET KAUR
Research Scholar
Department of Commerce
Punjabi University Patiala
AGENDA OF DISCUSSION

Accounting Standard 1
Accounting Standard 17
Accounting Standard 1
Disclosure of Accounting Policies

This is the first accounting standard, that


deals with the disclosure of significant
Accounting Policies followed in preparing
and presenting Financial Statements.
Status and Applicability
AS-1 is Mandatory w.e.f. 01.04.1991 for
Companies registered underthe Companies
Act, 1956

With effect from 01.04.1993 for HUF,


Partnerships, Sole proprietorships,
Hindu Undivided Families, Trusts and
Societies.
Objective
To disclose all the Accounting Polices
adopted in preparation of financial accounts.
The financial accounts should disclose true
and fair view of the financial accounts of the
year.
Proper disclosure of accounting Polices
In the absence of disclosure and information it
is assumed that the basic principles(Going
Concern, Accrual System and Consistency)
have been followed.
Fundamentals Accounting Principles
1.Going concern:

2.Consistency:

3.Accrual:
Accounting Polices

Method of Depreciation:
1. Straight line method.
2. Written down value method.
Valuation of investments and fixed costs:
1. Cost2. Market Value 3. replaceable Value
Treatment of contingent liabilities.
Treatment of Goodwill.
Recognition on profit on long term contracts.
Treatmentofexpenditure incurred during
construction.
Conversion offoreign currencies.
Disclosure
To ensure properunderstanding offinancial
statements, it is necessary that all accounting
policies adopted in the preparation and
presentation of financial statements should be
disclosed and at one place.

To disclose any change to the accounting


policies which has a material effect in current
period or later periods.
Contd.

If the fundamental accounting assumptions,


viz., going concern, consistency and accrual
are followed in financial statements, specific
disclosure is not required.
If a fundamental accounting assumption is
not followed, the fact should be disclosed.
Accounting Standard 17

SEGMENT REPORTING
Segment Reporting
A company cannot survive running with single
product. Diversification is necessary in todays
market, to secure itself from the attacks and
counter attacks of competitors on any
product. Specially in a multi product company
or a company operating in different
geographical Ares needs segment reporting
Objectives
To enable the users of financial statements to:
Better understand the performance of the
enterprise;
Better assess the risks and returns of the
enterprise:
Make more informed judgments about the
enterprise as a whole.
Applicability
Level I entities and Non SMCs

Listed Companies
Companies in the process of listing their
equity or debt securities
Banks including Co-operative banks
Financial Institutions
Insurance companies
Cont.
All commercial and business reporting
enterprises having turnover exceeding Rs. 50
Crores.
All commercial and business reporting
enterprises having borrowings including public
deposits in excess of Rs. 10 Crore at any time
during the accounting period.
Holding and subsidiary companies of above.
Definitions
Business Segment is a
distinguishable component of an enterprise
that is engaged in providing an individual
product or service or a group of related
products or services and
that is subject to risks and returns that are
different from those of other business
segments.
Factors For consideration of
Business Segment
Nature of products or services
Nature of product processes
Type or class of customers for the product
or services
Distribution Methods
The nature of regulatory environment, for
example, banking, insurance or public
utilities.
Business Segments of
Reliance
Exploration and Production
Petroleum Refining and Marketing
Petrochemicals
Textiles
Retail
Geographical Segment - Definition
Geographical segment is a distinguishable
component of an enterprise:
that is engaged in providing products or
services within a particular economic
environment; and
that is subject to risks and returns that are
different from those of components operating in
other economic environments.
Factors for determination of
geographical segment

Similarity of economic and political


conditions;
Relationships between operations in
different geographical areas;
Proximity of operations;
Special risks associated with operations in a
particular area
Exchange control regulations
The underlying currency risks.
FORMATS
Primary segment
Secondary segment
Reportable segment
A business or geographical segment is a
reportable segment only if:
Segment revenue >10 % of total
revenue
Its segment result > 10% of total
Results
Segment assets > 10% of Total Assets
Segment Revenue
Segment revenue is the aggregate of
(i) the portion of enterprise revenue
that is directly attributable to a segment.
(ii) the relevant portion of enterprise
revenue that can be allocated on a
reasonable basis to a segment, and
(iii) revenue from transactions with other
segments of the enterprise.
Segment Expenses
Segment expense is the aggregate of
(a) Operating expeneses
(b) the relevant portion of enterprise
expense that can be allocated on a
reasonable basis to the segment including
expense relating to transactions with other
segments of the enterprise.
Segment Assets
Segment assets are those operating assets
that are employed by a segment in its
operating activities and that either are
directly attributable to the segment or can be
allocated to the segment on a reasonable
basis.
If the segment result includes interest or
dividend income, its segment assets should
also include the related receivables, loans,
investments, or other interest or dividend
generating assets.
Segment Liabilities
Segment liabilities are those operating
liabilities that result from the operating
activities of a segment and that either are
directly attributable to the segment or can
be allocated to the segment on a reasonable
basis.
If the segment result of a segment includes
interest expense, its segment liabilities
include the related interest bearing liabilities.
Segment Liabilities-
Exclusion
It does not include income-tax liabilities.
Primary Reporting Format
1. Segment Revenue classified into
From sales to external customers;and
Segment revenue from transactions
with other segments.
2. Segment result i.e. Segment revenue less
segment expense.
3. Total carrying amount of segment assets;
4. Total amount of segment liabilities;
Primary Reporting Format
5. Total cost incurred during the period to
acquire segment assets that are expected
to be used during more than one period.
6. Total amount of expense included in
segment result for depreciation and
amortisation in respect of segment assets
for the period.
Primary Reporting Format
7. Total amount of significant non-cash
expenses, other than depreciation and
amortisation in respect of segment assets,
that were included in segment expense.
Information at 6 and 7 not to be given if
segment cash flow statement is prepared.
Secondary Reporting
Format
If Business Segment is primary segment : then
Geographical segment will be secondary.

Segment Revenue from External Customers


based on Customer location for each
geographical segment
Total carrying amount of segment assets by
geographical location of assets.
Secondary Reporting
Format
The total cost incurred during the year to
acquire segment assets that are expected to
be used during more than one period.
Secondary Reporting
Format
If the primary format is geographical segment,
the following information for each business
segment:
segment revenue from external
customers;
the total carrying amount of segment
assets; and
total cost incurred during the year to
acquire the segment assets.
Other Disclosures
Inter-se Transfers
Changes in accounting policies
Types of products and services included in
each reported business segments
Composition of each geographical segment, if
not otherwise disclosed in the financial
statements.
THANK YOU