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ACCOUNTING STANDARDS

Group 9:

Arijit Nayak (15P189)

Gaurav Gupta (15P199)

Mounica Chilla (15P209)

Puneeth Putcha (15P219)


Sarin Babu (15P229)

Vishal Garga (15P239)

VALUATION OF INVENTORIES
Indian AS 2

Scope exceptions:

1.

Livestock, forest and


agricultural products

2.

work in progress arising


under construction
contracts, including directly
related service contracts

3.

4.

IFRS IAS 2

shares, debentures and other


financial instruments held
as stock-in-trade
work in progress arising in
the ordinary course of
business of service providers

1.

2.

3.
4.

Scope exceptions:

Livestock, forest and


agricultural products
work in progress arising under
construction contracts
Financial instruments
Inventories of commodity
brokers and traders

VALUATION OF INVENTORIES

ShouldIndian
be valued
at lower of
AS2
cost or net realisable value
Cost of inventories
comprises all costs of
purchase, costs of conversion
and other costs incurred in
bringing the inventories to
their present location and
condition

Net realisable value is the


estimated selling price in
the ordinary course of
business less the estimated
costs of completion and the
estimated costs necessary to
make the sale

Should be valued at
lower
of cost
and net
IFRS
IAS2
realisable value

Cost of inventories
comprises all costs of
purchase, costs of
conversion and other
costs incurred in
bringing the inventories
to their present location
and condition

Net realisable value is


the estimated selling
price in the ordinary
course of business less
the estimated costs of
completion and the
estimated costs
necessary to make the
sale

VALUATION OF INVENTORIES
Indian AS2

1.

1.

Excluded costs

abnormal amounts of
wasted materials, labour or
other production costs

2.

storage costs, unless those


costs are necessary in the
production process before a
further production stage

3.

administrative overheads
that do not contribute to
bringing inventories to
their present location and
condition

4.

selling & distribution costs

2.

3.

4.

Excluded costs

IFRS IAS2

abnormal amounts of
wasted materials, labour
or other production
costs
storage costs, unless
those costs are
necessary in the
production process
before a further
production stage

administrative
overheads that do not
contribute to bringing
inventories to their
present location and
condition
selling & distribution
costs

VALUATION OF INVENTORIES
Indian AS2

IFRS IAS2

The cost of inventories will be


assigned by using the first-in, firstout (FIFO) or weighted average
cost formula

The cost of inventories will be assigned by


using the first-in, first-out (FIFO) or
weighted average cost formula

Cost formula - The cost of inventories of


items that are not ordinarily interchangeable
and goods or services produced and
segregated for specific projects should be
assigned by specific identification of their
individual costs

Cost formula - The cost of


inventories of items that are not
ordinarily interchangeable and
goods or services produced and
segregated for specific projects
shall be assigned by using specific
identification of their individual
costs

VALUATION OF INVENTORIES
Disclosures:

Indian AS2

the accounting policies adopted in measuring


inventories, including the cost formula used;

IFRS IAS2

the total carrying amount of inventories and


the carrying amount

classifications appropriate to the entity;

(c) the carrying amount of inventories carried


at fair value less costs

(d) the amount of inventories recognised as an


expense during the

Disclosures:

1.

The accounting policies adopted in


measuring inventories, including the cost
formula used

2.

The total carrying amount of inventories


and its classification appropriate to the
enterprise

to sell;

(f) the amount of any reversal of any writedown that is recognised as

a reduction in the amount of inventories


recognised as expense in

(e) the amount of any write-down of


inventories recognised as an
expense in the period in accordance with
paragraph 34;

period;

the period in accordance with paragraph 34;


(g) the circumstances or events that led to the
reversal of a write-down
of inventories in accordance with paragraph
34; and

(h) the carrying amount of inventories

CASH FLOW STATEMENT


AS03

IFRS IAS 07
Cash comprises cash on hand and
demand deposits

Cash equivalents are short-term,


highly liquid investments that are
readily convertible to known amounts
of cash and which are subject to an
insignificant risk of changes in value

Cash comprises cash on hand and


demand deposits with banks

Cash equivalents are short term,


highly liquid investments that are
readily convertible into known
amounts of cash and which are subject
to an insignificant risk of changes in
value

Bank borrowings are generally


considered to be financing activities.
However, in some countries, bank
overdrafts which are repayable on
demand form an integral part of an
entitys cash management. In these
circumstances, bank overdrafts are
included as a component of cash and
cash equivalents

Cash flows are inflows and outflows of


cash and cash equivalents

Cash flows are inflows and outflows of


cash and cash equivalents

CASH FLOW STATEMENT


AS03

IFRS IAS 07

Operating activities are the principal


revenue-producing activities of the
enterprise and other activities that are
not investing or financing activities

Operating activities are the


principal revenue-producing
activities of the entity and other
activities that are not investing or
financing activities

Investing activities are the acquisition


and disposal of long-term assets and
other investments not included in cash
equivalents

Financing activities are activities that


result in changes in the size and
composition of the owners capital
(including preference share capital in the
case of a company) and borrowings of the
enterprise

The cash flow statement should report


cash flows during the period classified by
operating, investing and financing
activities

Investing activities are the


acquisition and disposal of longterm assets and other investments
not included in cash equivalents

Financing activities are activities


that result in changes in the size
and composition of the contributed
equity and borrowings of the entity
The statement of cash flows shall
report cash flows during the period
classified by operating, investing
and financing activities

CASH FLOW STATEMENT


AS03

IFRS IAS 07

Cash flows from operating activities are


primarily derived from the principal
revenue-producing activities of the
enterprise. Therefore, they generally
result from the transactions and other
events that enter into the determination
of net profit or loss
Some transactions, such as the sale of an
item of plant, may give rise to a gain or
loss which is included in the
determination of net profit or loss.
However, the cash flows relating to such
transactions are cash flows from investing
activities

Cash flows from operating activities


are primarily derived from the
principal revenue-producing activities
of the entity. Therefore, they generally
result from the transactions and other
events that enter into the
determination of profit or loss
Some transactions, such as the sale of
an item of plant, may give rise to a gain
or loss that is included in recognized
profit or loss. The cash flows relating to
such transactions are cash flows from
investing activities. However, cash
payments to manufacture or acquire
assets held for rental to others and
subsequently held for sale as described
in paragraph 68A of IAS 16 Property,
Plant and Equipment are cash flows
from operating activities

CASH FLOW STATEMENT


AS03

IFRS IAS 07
The separate disclosure of cash
flows arising from investing
activities is important because the
cash flows represent the extent to
which expenditures have been
made for resources intended to
generate future income and cash
flows. Only expenditures that result
in a recognized asset in the
statement of financial position are
eligible for classification as
investing activities

The separate disclosure of cash flows


arising from investing activities is
important because the cash flows
represent the extent to which
expenditures have been made for
resources intended to generate future
income and cash flows
cash payments to acquire fixed assets,
acquire shares, warrants or debt
instruments of other enterprises and
interests in joint ventures

cash payments to acquire property,


plant and equipment, intangibles,
other long-term assets, equity or
debt instruments of other entities
and interests in joint ventures

CASH FLOW STATEMENT

]
IFRS IAS 07

AS03

The separate disclosure of cash flows arising


from financing activities is important
because it is useful in predicting claims on
future cash flows by providers of funds

The separate disclosure of cash flows


arising from financing activities is
important because it is useful in
predicting claims on future cash flows
by providers of capital to the entity
(a) cash proceeds from issuing shares or
other equity instruments;

(b) cash payments to owners to acquire


or redeem the entitys shares;

(a) cash proceeds from issuing shares or


other similar instruments;

(c) cash proceeds from issuing


debentures, loans, notes, bonds,
mortgages and other short-term or longterm borrowings;

(b) cash proceeds from issuing debentures,


loans, notes, bonds, and other short or longterm borrowings; and
(c) cash repayments of amounts borrowed

(d) cash repayments of amounts


borrowed; and

(e) cash payments by a lessee for the


reduction of the outstanding liability
relating to a finance lease

]
CASH FLOW STATEMENT
AS03

IFRS IAS 07
Interest paid and interest and
dividends received are usually
classified as operating cash flows
for a financial institution. However,
there is no consensus on the
classification of these cash flows for
other entities. Interest paid and
interest and dividends received
may be classified as operating cash
flows because they enter into the
determination of profit or loss.
Alternatively, interest paid and
interest and dividends received
may be classified as financing cash
flows and investing cash flows
respectively, because they are costs
of obtaining financial resources or
returns on investments.

Some argue that dividends paid may be


classified as a component of cash flows from
operating activities in order to assist users to
determine the ability of an enterprise to pay
dividends out of operating cash flows.
However, it is considered more appropriate
that dividends paid should be classified as
cash flows from financing activities because
they are cost of obtaining financial resources

]
CASH FLOW STATEMENT
AS03

IFRS IAS 07

Disclosures :

Investing and financing transactions


that do not require the use of cash or
cash equivalents should be excluded
from a cash flow statement. Such
transactions should be disclosed
elsewhere in the financial statements
in a way that provides all the relevant
information about these investing and
financing activities
An enterprise should disclose the
components of cash and cash
equivalents and should present a
reconciliation of the amounts in its cash
flow statement with the equivalent
items reported in the balance sheet

Disclosures :

Investing and financing transactions


that do not require the use of cash or
cash equivalents shall be excluded
from a statement of cash flows. Such
transactions shall be disclosed
elsewhere in the financial
statements in a way that provides all
the relevant information about these
investing and financing activities
An entity shall disclose the
components of cash and cash
equivalents and shall present a
reconciliation of the amounts in its
statement of cash flows with the
equivalent items reported in the
statement of financial position

]
CASH FLOW STATEMENT
AS03

IFRS IAS 07

An enterprise should disclose,


together with a commentary by
management, the amount of
significant cash and cash equivalent
balances held by the enterprise that
are not available for use by it

Examples include cash and cash


equivalent balances held by a branch
of the enterprise that operates in a
country where exchange controls or
other legal restrictions apply as a
result of which the balances are
not available for use by the
enterprise

An entity shall disclose, together with a


commentary by management, the amount
of significant cash and cash equivalent
balances held by the entity that are not
available for use by the group
Examples include cash and cash
equivalent balances held by a subsidiary
that operates in a country where
exchange controls or other legal
restrictions apply when the balances are
not available for general use by the
parent or other subsidiaries

The disclosure of segmental cash flows


enables users to obtain a better
understanding of the relationship
between the cash flows of the business as
a whole and those of its component parts
and the availability and variability of
segmental cash flows

AS10 VS IAS16

AS1O

IFRS16
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
Forests, Plantations, and similar regenerative
resources.

Historical Cost

II.

Revalued Price

Live stock

Purchase price

Import duties and other non-refundable taxes

Any internal profit included un the cost should be


eliminated. Self constructed Asset

Exclusions

PPT held for sale IFRS 5

Biological assets related to agricultural


activity IAS 41

Historical Cost:

Any directly attributable cost of bringing the asset


to the working condition for its intended use like; site
preparation , delivery and handling cost , professional
fees

Administrative purposes

Rental to others

Assets held by a lessee under finance


lease is also included in this category

Held for Use in the production or


supply of goods or services

Fixed assets shall be shown in financial statement by


two ways:-

I.

Tangible assets

Expenditure on real estate development.

Wasting assets like minerals , oil, and natural gas.

Property plant and equipment :

Exceptions-

Exploration and evaluation assets


IFRS 6

Mineral rights and mineral reserves like


oil and natural gas etc

AS10

By re-stating the gross book value and


accumulated depreciation.

IFRS16

In IFRS , frequency of revualation


needs to be mentioned.

By re-stating net book value adding there


in the net increase on account of
revaluation.
Revaluation of fixed assets should be
restricted to the net recoverable
amount of fixed assets

Improvements and Repair:

If expected future benefits from fixed


assets do not change. charged to P&L

If expected future benefits from fixed


assets will increase beyond the
previously assessed standard
performance.- added to gross value of
fixed asset

In IFRS ,replacement of parts is


capitalised.

The cost of any major inspection or


overhual occuring in regular
intervals is capitalised.

Disclosures AS10

Gross and net book values of fixed assets at the beginning and at the end of accounting period
showing, disposal, acquisition and other movements.

Disclosure:

Expenditure incurred on account of fixed assets in the course of construction or acquisition.

Revalued amount substituted for historical cost of fixed assets, the method adopted to compute the
revalued amount, and whether an external valuer has valued the fixed assets, in case where fixed
external has valued amount.

If there is loss then it can be adjusted against the balance of revaluation reserve.

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