Every question in AA, searchable by chapter and source.
With respect to loan bonds of ` 2,00,000, the finance cost to be charged to Statement of Profit and Loss for the year ended on 31 st March 2025 is:
How the loss due to fraud by cashier will be recognized in the books of Unicorn Limited?
Which of the following is a primary objective of Accounting Standards as prescribed under the Companies (Accounting Standards) Rules?
Accounting Standards aim to improve which qualitative characteristic of financial statements?
Under the Companies (Accounting Standards) Rules, which category of non‑corporate entities is exempt from the mandatory application of Accounting Standards?
Which body, constituted by the ICAI, is responsible for issuing Accounting Standards in India?
For a company that is listed on a recognized stock exchange, the applicability of Accounting Standards is:
Which four fundamental aspects are explicitly addressed by an Accounting Standard?
Which body is primarily responsible for formulating Accounting Standards in India?
In the standards‑setting process, which step specifically involves inviting public comments on the Exposure Draft?
The benefit of "standardisation of alternative accounting treatments" primarily helps to achieve which objective of Accounting Standards?
When a conflict arises between a Statute and an Accounting Standard, which prevails?
Convergence of Indian standards with IFRS seeks to achieve which of the following?
Which international body issues International Financial Reporting Standards (IFRS)?
Ind AS is best described as:
Which of the following is NOT a recognized benefit of Accounting Standards?
What does the acronym GAAP stand for?
What best describes the definition of Accounting Standards (AS) in India?
Which of the following is the primary objective of Accounting Standards?
Which body recommends Accounting Standards to the Ministry of Corporate Affairs (MCA) for issuance?
In the Accounting Standards setting process, which step directly follows the circulation of the draft to external bodies?
How does "convergence" of IFRS differ from "adoption" of IFRS in the Indian context?
In the framework of Ind AS, what is meant by a "carve‑out"?
When a conflict arises between a statutory provision and an Accounting Standard, which one prevails?
After the exposure draft (E.D.) of an Accounting Standard is published, what is the next mandatory step before the standard can be issued?
What is the authority of an Accounting Standard Interpretation (ASI) after its consensus portion is merged as an "Explanation" to the relevant Accounting Standard?
The primary objective of Accounting Standards issued in India is to:
One of the advantages of having Accounting Standards is the reduction of scope for:
In the Accounting Standards setting process, after the draft is circulated to outside bodies for comments, the next step is:
Which authority recommends Accounting Standards to the Ministry of Corporate Affairs (MCA) for issuance in India?
Which statement correctly differentiates convergence from adoption of IFRS in India?
A listed manufacturing company prepares its financial statements under Ind AS but continues to apply AS 10 for revenue recognition because AS 10 has been specifically exempted for the manufacturing sector. This treatment is an example of:
Which of the following is NOT listed among the fundamental accounting assumptions in the Framework for Preparation and Presentation of Financial Statements?
The primary objective of financial statements, as stated in the Framework, is to provide information about which three elements?
Which component of a complete set of financial statements presents the changes in cash and cash equivalents during the reporting period?
Under the qualitative characteristics of financial information, which characteristic requires that information be capable of influencing the economic decisions of users?
An element is recognized in the financial statements when it satisfies two criteria. Which pair correctly states these criteria?
If a specific Accounting Standard conflicts with the Framework, which provision takes precedence?
Which concept of capital maintenance focuses on preserving the entity's physical productive capacity?
Which group of users is primarily interested in the entity's ability to meet its loan repayments and interest obligations?
Which of the following is NOT an element of financial statements as defined by the Framework?
Which measurement basis is considered the most reliable and is the default under the Framework unless another basis is required by an Accounting Standard?
Which of the following is NOT an objective of financial statements as defined in the Framework?
Which component is NOT listed as part of a complete set of general‑purpose financial statements in the Framework?
The assumption that requires revenue to be recognised when earned rather than when cash is received is called:
Which qualitative characteristic ensures that information can be independently verified?
The concept that focuses on preserving the physical productive capacity of an entity is known as:
Which user group is primarily interested in an enterprise’s ability to repay its loans and interest when due?
If an entity prepares its financial statements on a basis other than going concern, what must be disclosed according to the Framework?
Which of the following is an enhancing qualitative characteristic under the Framework?
The primary purpose of the notes to the financial statements is to:
In the Framework, "financial performance" of an enterprise is best described as:
Which of the following is NOT a component of a complete set of general‑purpose financial statements as defined in the Framework?
The primary objective of financial statements is to provide information about which three aspects of an enterprise?
Under the Framework, which qualitative characteristic is described as the capacity of information to influence the decisions of users?
Which fundamental accounting assumption requires revenue to be recognized when earned rather than when cash is received?
According to the Framework, an entity that adopts the "physical capital maintenance" concept will determine profit based on:
Which user group is primarily concerned with the entity's ability to meet its loan obligations and the timing of interest payments?
The Framework states that if an entity does not intend to continue as a going concern, the basis of preparation must be disclosed. This disclosure is required under which assumption?
Which element of financial statements is defined as "probable future economic benefits obtained or controlled by an entity as a result of past events"?
The Framework provides criteria for recognition of an element. Which of the following is NOT one of the two recognition criteria?
In the Framework, which statement best describes "comparability"?
When determining the applicability of an Accounting Standard, which of the following is the first question that must be answered?
Which type of entity is exempt from the applicability of Accounting Standards under the current framework?
Under Section 143(3)(e) of the Companies Act, 2013, the auditor must report whether the audited financial statements comply with which of the following?
A partnership firm that carries out commercial activities is preparing its financial statements. Which of the following statements correctly reflects the applicability of Accounting Standards to this firm?
A company incorporated under the Companies Act, 2013 is classified as a Small and Medium‑Sized Company (SMC) under the Companies (Accounting Standards) Rules, 2021. Which statement best describes its compliance requirement with Accounting Standards?
A non‑company entity has the following characteristics: its equity securities are not listed, it is not a bank, financial institution or insurance company, its turnover (excluding other income) is ₹200 crore, it has borrowings of ₹30 crore, and it is not a holding or subsidiary of a non‑MSME. According to the revised criteria for applicability of Accounting Standards, how is this entity classified?
A company has not complied with Accounting Standard 19 on depreciation for finance leases. According to Section 143(3)(e) of the Companies Act, 2013, what is the auditor’s responsibility in the auditor’s report?
A partnership firm, XYZ & Co., has a turnover of ₹30 crore, borrowings of ₹10 crore, is not listed on any stock exchange, and is neither a bank, financial institution nor an insurance company. According to the revised criteria for applicability of Accounting Standards issued by ICAI for non‑company entities, which statement correctly describes the applicability of Accounting Standards to XYZ & Co.?
Which of the following is required to be disclosed in the financial statements under Accounting Standard 1, Disclosure of Accounting Policies?
Which of the following is NOT a circumstance that permits a change in accounting policy?
Which of the following best illustrates the application of prudence in selecting an accounting policy?
Which of the following transactions exemplifies the principle of substance over form?
Which of the following enterprises is exempt from the applicability of Accounting Standards?
A charitable trust that only collects donations and distributes them to flood victims is a non‑profit enterprise. Do the Accounting Standards apply to this trust?
Which of the following entities is required to comply with all Accounting Standards in their entirety?
Which of the following statements best describes the applicability of Accounting Standards to a charitable trust that exclusively collects donations and distributes them to flood‑affected people?
Which of the following statements correctly reflects the applicability of Accounting Standards to a non‑company entity that has a small portion of its activities commercial?
According to the Companies (Accounting Standards) Rules, 2021, which entity type is exempt from complying with all Accounting Standards in their entirety?
In the revised classification for non‑company entities, which of the following is NOT a criterion for an entity to be classified as a Micro, Small and Medium Sized Entity (MSME)?
When assessing applicability of an Accounting Standard, which of the following is the correct sequence of questions to be answered?
A partnership firm, "Green Harvest Pvt. Ltd.", runs a small organic farming business and also collects donations for a local food bank. Which of the following best describes the applicability of Accounting Standards to this firm?
"TechNova Ltd." is a company incorporated under the Companies Act, 2013. Its turnover in the preceding accounting year was ₹200 crore and it has borrowings of ₹60 crore. According to the revised criteria for classification of non‑company entities, how is this entity classified for the purpose of applicability of Accounting Standards?
"Sunrise Manufacturing" has prepared its financial statements in accordance with all Accounting Standards except for AS 16, which it has not complied with. What is the auditor’s responsibility under Section 143(3)(e) of the Companies Act, 2013?
"Hope Foundation" is a charitable trust that does not carry out any commercial, industrial or business activities. Does the applicability of Accounting Standards extend to this trust?
Which of the following best describes the primary objective of Accounting Standard 1?
Which of the following is NOT a fundamental accounting assumption that must be followed for financial statements to be prepared?
Under Accounting Standard 1, when must a change in accounting policy be disclosed?
Which of the following best illustrates the application of the prudence principle in selecting an accounting policy?
Which of the following items must be disclosed under Accounting Standard 1, Disclosure of Accounting Policies?
A company changes its inventory valuation method from FIFO to weighted average. Under Accounting Standard 1, what must be disclosed?
A company is in the process of liquidation and has no intention of continuing operations. Which fundamental accounting assumption is no longer applicable?
In selecting an accounting policy, the principle that requires profits not to be overstated and losses not to be understated is known as what?
Which of the following is required by Accounting Standard 1 with respect to the presentation of accounting policies?
Under Accounting Standard 1, a change in accounting policy must be disclosed when it has a material effect in the current period or is expected to have a material effect in a later period.
Which of the following is NOT a requirement under Accounting Standard 1, Disclosure of Accounting Policies?
When a change in an accounting policy has a material effect in the current period but the amount by which any item is affected is not ascertainable, Accounting Standard 1 requires the disclosure of:
A charitable trust that only collects donations and distributes them to flood‑affected people is seeking to prepare its financial statements. According to the applicability criteria of the Accounting Standards, does the trust have to apply the Accounting Standards?
Under Section 143(3)(e) of the Companies Act, 2013, what is the auditor’s responsibility regarding the compliance of a company’s financial statements with the Accounting Standards?
Which of the following conditions is NOT part of the definition of a Micro, Small and Medium‑Sized Entity (MSME) for the purpose of applicability of the Accounting Standards?
According to the Accounting Standards, how is materiality best described?
A charitable trust that also operates a small retail shop is preparing its annual report. According to the applicability framework of accounting standards, which of the following questions should be answered first to determine if an accounting standard applies to this entity?
A non‑company entity has a turnover of ₹200 crore (excluding other income), borrowings of ₹30 crore, its equity securities are not listed, it is not a bank, financial institution or insurance company, and it is not a holding of a non‑MSME. According to the revised criteria for MSMEs, which of the following conditions must be satisfied for it to be classified as a MSME?
Company X has not complied with AS 16. Under Section 143(3)(e) of the Companies Act, 2013, what is the auditor’s responsibility regarding this non‑compliance?
A company pays a penalty of ₹50,000 for a breach of law. According to the definition of materiality in accounting standards, is this penalty considered a material item?
XYZ Trust is a charitable trust that collects donations and distributes them to flood victims. It also operates a small retail shop selling donated goods. Which of the following statements is correct regarding the applicability of Accounting Standards to XYZ Trust?
ABC Pvt Ltd is a private limited company with a turnover of 200 crore rupees, net worth of 300 crore rupees, and borrowings of 30 crore rupees. It is classified as a Small and Medium‑Sized Company (SMC) under the Companies (Accounting Standards) Rules, 2021. Which of the following statements is correct regarding its compliance with Accounting Standards?
Which of the following is NOT a fundamental accounting assumption that must be followed by an enterprise?
Under Accounting Standard 1, which statement correctly describes the requirement for disclosure of changes in accounting policies?
Which principle guides the selection of accounting policies to prevent overstatement of profits and understatement of losses?
Which of the following must be disclosed as part of the financial statements under Accounting Standard 1?
A company changes its depreciation method from straight‑line to reducing balance. The change has a material effect in the current period but the amount by which the profit is affected is not ascertainable. According to Accounting Standard 1, what must be disclosed?
Which of the following fundamental accounting assumptions, if not followed, does not require disclosure in the financial statements?
A manufacturing firm has adopted the FIFO method for valuing its finished goods inventory. According to Accounting Standard 1, what must the firm disclose in its financial statements regarding this choice?
A listed company changes its revenue recognition method from the point of sale to the point of delivery, and this change has a material effect on the current period’s financial statements. Which of the following disclosures is mandatory?
A company is experiencing a significant decline in its market position and may not be able to continue as a going concern. Under Accounting Standard 1, what disclosure is required regarding the going‑concern assumption?
A trader has 500 units of a product in stock, each purchased at ₹10. The net realisable value per unit is ₹8. Which inventory valuation method should the trader apply to comply with the prudence principle?
Which of the following is a requirement of Accounting Standard 1 regarding the disclosure of significant accounting policies?
Under what condition must a company disclose the fact that it has recognized income on a cash basis?
A company changes its inventory valuation method from FIFO to weighted average. The change has no material effect in the current period but will have a material effect in future periods. Which of the following is required?
Which of the following principles ensures that profits are not overstated and losses are not understated?
Which of the following costs is NOT included in the cost of inventories under AS 2 (Revised)?
According to AS 2 (Revised), the net realisable value of an inventory is defined as:
Which valuation method is prescribed by AS 2 (Revised) for work‑in‑process and finished goods inventories?
In allocating fixed production overheads under AS 2 (Revised), the overheads should be absorbed on the basis of:
Which of the following is NOT included in the definition of inventory under AS 2 (Revised)?
Under AS 2, inventory should be valued at the lower of which two amounts?
Which of the following costs is NOT considered a cost of conversion under AS 2 (Revised)?
According to AS 2, fixed production overheads should be allocated over normal capacity. Which of the following best describes normal capacity?
Which of the following items is excluded from the scope of AS 2 (Revised) "Valuation of Inventories"?
Which of the following items is excluded from the scope of AS 2 (Revised)?
According to AS 2 (Revised), which of the following costs should be included in the cost of inventory?
Under which circumstance should fixed production overheads be allocated on the basis of normal capacity rather than actual production?
How is net realisable value of inventory determined under AS 2 (Revised)?
According to AS 2 (Revised), which of the following items is excluded from the scope of inventories?
Which of the following costs should not be included in the cost of inventories under AS 2 (Revised)?
ABC Ltd. has a partly finished unit at year‑end. The cost of the unit is ₹200. The unit can be finished by an additional ₹80. The expected selling price in the ordinary course of business is ₹350, and a brokerage of 5% of the selling price is payable. What is the net realisable value of the unit?
In allocating fixed production overheads under AS 2 (Revised), which approach prevents inventories from being measured above cost when actual production is below normal capacity?
Which of the following costs is explicitly excluded from the cost of inventories under AS 2 (Revised) unless it is necessary for the production process?
When allocating fixed production overheads to units of production, AS 2 (Revised) prescribes that the overheads should be absorbed on the basis of:
Net realisable value of an inventory is calculated as:
Abnormal gains or losses arising from the valuation of inventories are:
A textile manufacturer has the following items in its inventory: (i) raw cotton, (ii) maintenance supplies for its looms, (iii) spare parts for its looms that are classified as property, plant and equipment under AS 10 (Revised), and (iv) consumables used in the production process. Under AS 2 (Revised), which of the following items is excluded from the scope of inventories?
A company’s closing inventory of finished goods has a cost of ₹200 per unit. The estimated selling price is ₹250 per unit, the brokerage is 5% of the selling price, and the estimated cost of completion is ₹30 per unit. What value should be recorded for the inventory under AS 2 (Revised)?
A company purchases goods for ₹1,000. The purchase is subject to a trade discount of 10%, a duty drawback of ₹50, freight of ₹100, and an import duty of 5% on the net price after discount. The import duty is recoverable from the tax authorities. Which of the following cost elements is excluded from the cost of purchase under AS 2 (Revised)?
A manufacturing plant has a normal capacity of 100,000 units per year and an expected fixed overhead of ₹18 lacs. In the current year, actual production is 90,000 units. According to AS 2 (Revised), how much fixed overhead should be transferred to the profit and loss account?
A manufacturing firm keeps a stock of spare bolts that are used to replace broken bolts in its machinery. These bolts are stored on the shop floor and are intended for use in maintaining the machinery. Under AS 2, are these bolts considered inventory?
A retailer has closing inventory costing ₹1,50,000. The estimated selling price in the ordinary course of business is ₹1,20,000 less selling expenses of ₹20,000. What is the carrying amount of the inventory under AS 2?
Which of the following costs is excluded from the cost of conversion under AS 2?
A manufacturing firm has the following costs associated with its inventory: purchase price of raw materials, direct labour for conversion, overheads incurred during production, and storage costs incurred while the goods are awaiting sale. According to AS 2 (Revised), which of the following costs should be included in the cost of inventory?
ABC Ltd. has a partly finished unit at the end of the year with a cost of ₹150. The unit can be finished next year by an additional expenditure of ₹100. The finished unit can be sold for ₹250, subject to a brokerage of 4% on the selling price. What is the carrying amount of this inventory at year‑end under AS 2 (Revised)?
Which of the following is NOT a category of short‑term employee benefits under AS 15?
Under AS 15, the undiscounted amount of a short‑term employee benefit should be recognized as an expense when:
Which of the following distinguishes a contract of service from a contract for services under AS 15?
Which of the following is a disclosure requirement under AS 15 for post‑employment benefits?
Which of the following is NOT classified as a short‑term employee benefit under AS 15?
An enterprise has an informal practice of giving a lump‑sum payment to employees on a festival occasion. According to AS 15, what accounting treatment is required?
Under AS 15, which contractual arrangement indicates the existence of an employer‑employee relationship?
When should the expense for short‑term compensated absences be recognised under AS 15?
Under AS 15, when should an employer recognize the expense for short‑term employee benefits that are payable within twelve months of the year‑end?
Which of the following is NOT classified as a post‑employment benefit under AS 15?
Actuarial gains and losses arising from a defined benefit plan are recognized in which period?
Which statement correctly describes the accounting treatment for a defined contribution plan under AS 15?
A manufacturing company pays a total salary of ₹50 lakh for the year 2024‑25. As of 31 March 2025, ₹48 lakh has been paid and the remaining ₹2 lakh is paid in April 2025. According to AS 15, how much should be recognised as an expense for the year 2024‑25?
An employee has accumulated 20 days of compensated absences. He uses 12 days and then leaves the company. The company’s policy is that accumulating compensated absences are vesting. What liability should be recognised at the date of his departure?
A company has a defined benefit plan with a projected obligation of ₹1 crore. Under AS 15 (IAS 19), which of the following is required for measuring this obligation?
A company provides free medical care to all its employees. According to AS 15, how should this non‑monetary benefit be accounted for?
During the financial year 20X3-20X4, Company ABC paid ₹1.8 crore of its annual salary of ₹2 crore by 31 March 20X4. According to AS 15, what is the correct accounting treatment for the unpaid salary at year‑end?
Which of the following best describes a defined benefit plan under AS 15?
Which of the following is NOT considered an employee benefit under AS 15?
An enterprise has a salary obligation of ₹5 crore for the year. By year‑end, it has paid ₹4.5 crore. According to AS 15, what amount should be recognized as expense in the income statement, and what amount should be shown as a liability on the balance sheet?
Which statement correctly describes accumulating compensated absences under AS 15?
Which of the following is a characteristic of a defined benefit plan as per AS 15?
Which of the following is NOT a category of short‑term employee benefits as defined in AS 15?
Under AS 15, an enterprise must recognise a liability for an informal practice that gives rise to an employee benefit if the practice:
Which statement about short‑term compensated absences is correct?
When a defined benefit plan is curtailed, which of the following is recognised in profit and loss?
XYZ Ltd. pays a salary of ₹5,00,000 for the year 20X5-20X6. As of 31 March 20X6, ₹4,50,000 has been paid. According to AS 15, what amount should be recognized as an expense in the year 20X5-20X6 and what amount should be shown as a liability in the balance sheet?
An employee has accrued 30 days of paid annual leave, of which 20 days have been used. The leave is accumulating and non‑vesting. Which statement is correct regarding the obligation?
ABC Pvt. Ltd. sponsors a pension scheme for its employees. The scheme promises a defined monthly pension to employees after retirement, based on their final salary and years of service. Which classification does this post‑employment benefit fall under?
During the year, the actuarial assumptions used for the company’s defined benefit plan are revised, resulting in an actuarial loss of ₹2,00,000. According to AS 15, how should this actuarial loss be recognized?
A manufacturing firm, XYZ Ltd., had a receivable of ₹10,00,000 on its balance sheet date. On 15th April 20X2, after the balance sheet date but before the approval of the financial statements, the debtor filed a lawsuit against XYZ Ltd. The lawsuit is likely to result in a loss. According to AS 4 (Revised), what type of event does this constitute?
ABC Pvt. Ltd. had a contract to sell goods worth ₹5,00,000 to a customer. On 10th May 20X2, after the balance sheet date, the customer’s bank confirmed that the payment would be made within 30 days. The gain from this transaction is virtually certain. How should ABC recognise this gain under AS 4 (Revised)?
A company declares dividends on 20th June 20X2, after the balance sheet date of 31st March 20X2 but before the approval of the financial statements. What is the required treatment of these dividends under AS 4 (Revised)?
After the balance sheet date, a major production plant of DEF Ltd. is destroyed by a fire, indicating that the enterprise may no longer be a going concern. According to AS 4 (Revised), what action must the company take?
Which of the following events occurring after the balance sheet date would require an adjustment to the financial statements under AS 4 (Revised)?
Under AS 4 (Revised), a contingent gain can be recognized in the financial statements only when it is:
Which of the following disclosures is required for an event occurring after the balance sheet date under AS 4 (Revised)?
An event occurring after the balance sheet date that may indicate that the enterprise is no longer a going concern would lead the preparer to consider:
XYZ Ltd. has filed a lawsuit against a debtor for recovery of a large amount. The legal team estimates that the probability of recovery is negligible. According to AS 4 (Revised), what accounting treatment should be applied to the potential loss?
ABC Pvt. Ltd. is expecting a tax refund, but the refund is contingent on a change in tax law that has not yet been enacted. According to AS 4 (Revised), how should ABC treat this potential gain?
PQR Ltd. had a trade receivable as of 31 March 20X1. On 5 April 20X1, the debtor was declared insolvent. The board approved the financial statements on 15 April 20X1. According to AS 4 (Revised), what adjustment is required?
LMN Ltd. holds an investment in shares. The market value of the shares fell between 31 March 20X1 and 10 April 20X1. The board approved the financial statements on 20 April 20X1. According to AS 4 (Revised), what is required?
A company has filed a lawsuit against a debtor for the recovery of ₹10 lakh. The legal team has informed the management that the chances of recovery are nil. According to AS 4 (Revised), what accounting treatment should be applied to this contingency?
A company has a contract that may generate a gain if a future event occurs, but the probability of that event is low. Under AS 4 (Revised), should the company recognise this gain in the financial statements?
A trade receivable of ₹5 lakh existed on 31 March. On 15 April, the customer becomes insolvent. What is the appropriate accounting action under AS 4 (Revised)?
A company holds an investment in equity shares. The market value falls from ₹50 lakh to ₹30 lakh between 31 March (balance sheet date) and 30 June (date of approval). According to AS 4 (Revised), how should this event be treated?
At the balance sheet date of 31‑March, Company X has a trade receivable of ₹10 lakh from Customer Y. On 15‑April, Customer Y files for bankruptcy. Which type of event does this constitute under AS 4 (Revised)?
Company Z is sued by a supplier for ₹5 lakh. The legal opinion states that a loss is likely and the amount can be estimated at ₹3 lakh. According to AS 4 (Revised), what accounting treatment is required?
Company M has a pending claim against a customer for ₹2 lakh. Legal opinion indicates that recovery is unlikely. Under AS 4 (Revised), how should this situation be treated?
Company P’s main production plant was destroyed by fire on 10‑April, after the balance sheet date of 31‑March. The loss is estimated at ₹20 lakh. Which statement is correct regarding adjustment and disclosure under AS 4 (Revised)?
A manufacturing company, after its year‑end on 31‑March, receives a court judgment that it must pay ₹10 lakh to a supplier due to a breach of contract. The judgment was issued on 15‑April. Which accounting action is required under AS 4 (Revised) for the year ended 31‑March?
A trading company receives a cheque dated 31‑March from a customer on 2‑April. The cheque is deposited and cleared in May. According to AS 4 (Revised), how should this event be treated in the year ended 31‑March?
A company’s warehouse is destroyed by a fire on 20‑May, after its year‑end on 31‑March. No evidence of such loss existed at 31‑March. What is the correct accounting treatment under AS 4 (Revised)?
After the balance‑sheet date, a company learns that its major customer has gone bankrupt, and this event indicates that the company may no longer be a going concern. Under AS 4 (Revised), what should the company do?
Under Ind AS 37, a provision differs from a contingent liability primarily because a provision involves:
Under AS 3, cash flows are classified into which three main categories?
Under AS 3, 'cash equivalents' are defined as short-term, highly liquid investments that are:
AS 3 permits an enterprise to report cash flows from operating activities using which two methods?
Under the indirect method, net profit before tax is adjusted for non-cash items such as:
Under AS 3, interest and dividends received by a non-financial enterprise are generally classified as:
Under AS 3, interest and dividends paid by a non-financial enterprise are generally classified as:
The purchase of a fixed asset for cash is classified under AS 3 as a cash flow from:
The repayment of a long-term borrowing is classified under AS 3 as a cash flow from:
Under AS 3, cash flows arising from taxes on income are, unless specifically identifiable with financing or investing activities, classified as:
Under AS 3, a transaction that does not involve cash or cash equivalents (such as the conversion of debt into equity) is:
Under AS 3, cash flows relating to extraordinary items should be:
Under AS 3, the acquisition and disposal of subsidiaries and other business units should be presented as:
Bank overdrafts that are repayable on demand and form an integral part of an enterprise's cash management are, under AS 3, generally treated as a component of:
Under AS 3, the objective of a cash flow statement is primarily to provide information about the historical changes in an enterprise's:
Under AS 3, when a foreign subsidiary's cash flows are included in a consolidated cash flow statement, they should be translated using:
Under AS 3, unrealised gains and losses arising from changes in foreign currency exchange rates are:
Under AS 3, an enterprise is encouraged to report cash flows from operating activities using the direct method primarily because it:
Under AS 3, cash receipts from the sale of goods and rendering of services are classified as cash flows from:
Under AS 3, cash payments to acquire shares, warrants, or debt instruments of OTHER enterprises (other than instruments held for trading purposes) are classified as cash flows from:
Under AS 3, cash proceeds from issuing shares or other similar instruments are classified as cash flows from:
AS 3 requires an enterprise to disclose, together with a commentary by management, the amount of significant cash and cash equivalent balances held by the enterprise that are:
Under AS 3, cash flows from operating activities can be derived by adjusting revenues and expenses for the effects of transactions of a non-cash nature under which reporting method?
AS 3 requires an enterprise to disclose the components of cash and cash equivalents and to present a reconciliation of the amounts in its cash flow statement with the equivalent items reported in:
Under AS 3, cash payments for the purchase of fixed assets that include capitalised interest are classified as cash flows from:
Under AS 17, a 'business segment' is defined primarily by reference to:
Under AS 17, a 'geographical segment' is defined primarily by reference to:
Under AS 17, a segment is generally identified as a 'reportable segment' if its revenue, results, or assets meet a threshold of:
Under AS 17, an enterprise's 'primary' segment reporting format is generally determined based on the:
Under AS 17, segment revenue excludes:
Under AS 17, 'segment expense' does NOT include:
AS 17 requires an enterprise to disclose segment information primarily to help users of financial statements:
Under AS 17, for the 'secondary' segment reporting format, an enterprise generally discloses a more limited set of information, including at minimum:
Under AS 17, 'segment assets' generally include operating assets employed by a segment, but exclude items such as:
Under AS 17, inter-segment transfers are generally measured on the basis actually used by the enterprise to price those transfers, and the basis of pricing must be:
AS 17 permits an enterprise to combine, rather than report separately, two or more business or geographical segments that are similar with respect to:
Under AS 17, if a segment's total is below the 10% reportable-segment threshold, it may still be separately reported if management believes information about it would be:
AS 17 requires that, once a segment is identified as reportable in the current period based on the 10% threshold, comparative segment information for prior periods should be:
Under AS 17, 'segment result' is generally computed as segment revenue less segment expense, and is presented:
AS 17's requirement to report information along both business and geographical lines (primary and secondary formats) reflects its underlying premise that a diversified enterprise's:
Under AS 17, the cost of fixed assets acquired during the period, when disclosed by segment, refers to:
Under AS 17, common costs incurred for the benefit of more than one segment (such as head-office administrative costs) are:
AS 17 requires disclosure of segment information based primarily on the financial information used by:
Under AS 17, when a single financial statement contains both consolidated financial statements of a parent and the parent's own separate financial statements, segment information is required to be presented on the basis of:
AS 17 generally requires an enterprise to disclose factors used to identify its reportable segments, including whether segments are organised around differences in:
Under AS 17, if two or more segments are predominantly, or almost exclusively, providing goods/services to other segments within the enterprise, they may indicate the need for combination or reconsideration of segment identification because:
AS 17's segment reporting requirements generally apply to enterprises whose:
Under AS 17, unallocated corporate assets and liabilities (those not attributable to any specific segment) are:
Under AS 17, when preparing segment information, transactions with parties outside the enterprise are generally the basis for computing:
Under AS 18, 'related party disclosures' are required primarily because related party relationships can:
Under AS 18, two enterprises are considered related parties if one has the ability to:
Under AS 18, 'key management personnel' are those persons who have authority and responsibility for:
Under AS 18, which of the following is generally NOT considered a related party merely by virtue of that relationship alone?
Under AS 18, disclosure of related party transactions is required for transactions that occur:
Under AS 18, if there were no transactions between related parties during the reporting period, but a related party relationship existed, the enterprise is:
Under AS 18, examples of related party transactions requiring disclosure (where material) include:
Under AS 18, disclosures required for related party transactions include the volume of transactions, either as an amount or as an appropriate proportion, along with:
Under AS 18, disclosure of related party transactions made on terms equivalent to those prevailing in arm's length transactions is:
Under AS 18, a 'significant influence' (as distinguished from 'control') generally involves participation in the financial and/or operating policy decisions of an enterprise, but:
Under AS 18, relatives of key management personnel are considered related parties if they might be expected to:
Under AS 18, state-controlled enterprises are generally NOT required to disclose related party transactions with:
Under AS 18, an enterprise is required to disclose the name of the transacting related party, and:
Under AS 18, 'control' is generally defined to include ownership, directly or indirectly, of an interest that gives the holder the power to govern the financial and operating policies of an enterprise, commonly evidenced by ownership of more than:
Under AS 18, disclosures of related party transactions made in the financial statements of a reporting enterprise are required to be made regardless of whether:
Under AS 18, examples of entities generally treated as related parties to a reporting enterprise include its holding company, subsidiaries, fellow subsidiaries, associates, and:
AS 18 clarifies that in assessing whether a related party can exercise significant influence over an enterprise, factors to consider include the extent of ownership by the related party and:
Under AS 18, related party disclosures are required in the financial statements of the reporting enterprise, and where consolidated financial statements are prepared, disclosure requirements are applied with respect to related party transactions:
AS 18's underlying rationale for requiring disclosure of related party relationships, even absent any transaction, is that the mere existence of the relationship may be sufficient to affect the:
Under AS 18, an enterprise's post-employment benefit plans for the benefit of its own employees are generally treated, in relation to that enterprise, as:
Under AS 18, if an enterprise reports related party transactions, but comparative figures for a prior period were not previously required to be disclosed under an earlier accounting framework, the enterprise's disclosure obligation for the current period under AS 18 is:
Under AS 18, when related party transactions are disclosed, items of a similar nature may be disclosed in aggregate, unless:
AS 18 is fundamentally a disclosure standard, meaning it primarily deals with:
Under AS 20, Basic EPS is computed by dividing net profit/loss attributable to equity shareholders by:
Under AS 20, for the purpose of computing Basic EPS, net profit attributable to equity shareholders is arrived at after deducting:
Under AS 20, Diluted EPS reflects the potential dilution that could occur if:
Under AS 20, a potential equity share is treated as 'dilutive' only if its conversion would:
Under AS 20, when an enterprise issues bonus shares during the period, the weighted average number of shares used for EPS (including for restated comparative periods) should be adjusted as if the bonus issue had occurred:
Under AS 20, in a rights issue, since the issue price is often below the fair value of shares, the weighted average number of shares is adjusted using a computed:
Under AS 20, EPS figures (both basic and diluted) are required to be presented on the face of the:
Under AS 20, if an enterprise reports a discontinuing operation, EPS is required to be presented separately for:
Under AS 20, when the numerator or denominator used to compute EPS changes as a result of a subsequent bonus issue or share split occurring AFTER the balance sheet date but before the financial statements are approved, the EPS computation for all periods presented should be:
Under AS 20, potential equity shares are treated as anti-dilutive, and therefore excluded from Diluted EPS, when their conversion would:
Under AS 20, for the purpose of calculating Diluted EPS, the net profit attributable to equity shareholders is adjusted for the after-tax effect of:
Under AS 20, EPS information is required to be presented even when the amounts disclosed are:
Under AS 20, if the number of equity or potential equity shares outstanding changes as a result of a share split or reverse share split after the reporting period but before approval of the financial statements, per-share calculations for ALL periods presented should:
Under AS 20, when an enterprise has more than one class of equity shares with different dividend rights, net profit attributable to each class for EPS purposes is apportioned in accordance with:
Under AS 20, contingently issuable equity shares (e.g. shares issuable upon satisfaction of certain future conditions) are included in the Diluted EPS computation:
Under AS 20, when computing the weighted average number of shares, shares issued as part of the purchase consideration in an acquisition are included from:
Under AS 20, if an enterprise's Diluted EPS is not more favourable (i.e. is anti-dilutive in aggregate) than Basic EPS, the enterprise is:
Under AS 20, the primary objective of prescribing principles for the determination and presentation of EPS is to improve:
Under AS 20, when computing the weighted average number of equity shares for the period, shares that are partly paid up are generally treated as a fraction of an equity share to the extent that they were entitled to participate in dividends relative to a:
Under AS 20, EPS is required to be calculated and presented even if the resulting figures are the same for both Basic and Diluted EPS, in which case:
Under AS 24, a 'discontinuing operation' is a component of an enterprise that the enterprise, pursuant to a single plan, is:
Under AS 24, for a component to qualify as a discontinuing operation, it must be distinguishable operationally and for financial reporting purposes, representing:
Under AS 24, the 'initial disclosure event' for a discontinuing operation occurs when an enterprise has entered into a binding sale agreement, or its board of directors/similar governing body has approved a detailed formal plan and:
Under AS 24, an enterprise is required to include, in its financial statements, disclosure of the initial disclosure event beginning with the financial statements for the period in which the initial disclosure event occurs, and continuing:
Under AS 24, disclosures for a discontinuing operation include a description of the discontinuing operation, the business/geographical segment it is reported in, and:
Under AS 24, the carrying amounts of the total assets and total liabilities to be disposed of relating to a discontinuing operation must be disclosed:
Under AS 24, the revenue, expenses, and pre-tax profit or loss attributable to a discontinuing operation, together with the related income tax expense, must be disclosed for:
Under AS 24, if an enterprise abandons or withdraws from a plan that was previously reported as a discontinuing operation, that fact, reasons, and its effect should be:
Under AS 24, net cash flows attributable to the operating, investing, and financing activities of a discontinuing operation must be disclosed:
Under AS 24, the amount of any impairment loss (or reversal of an impairment loss) recognised on the discontinuing operation's assets, as required under other applicable accounting standards, must be:
Under AS 24, comparative information for prior periods presented in financial statements should be restated to segregate assets, liabilities, revenue, expenses, and cash flows of the operation that is discontinuing in:
AS 24's underlying rationale for requiring separate disclosure of discontinuing operations is that this information helps users of financial statements to:
Under AS 24, if an enterprise discloses the initial disclosure event for a discontinuing operation but the actual disposal is not completed by the time the financial statements are approved, the enterprise is:
Under AS 24, a discontinuing operation excludes a mere gradual or evolutionary phasing out of a product line or market, or the shifting of a production/marketing activity, without a fundamental change in a distinguishable major line of business, because such changes:
Under AS 24, a discontinuing operation is distinct from a mere restructuring of an enterprise's operations that does NOT involve discontinuing a separate major line of business, since AS 24's disclosure requirements apply specifically to a component representing:
Under AS 24, the disclosures for a discontinuing operation are presented in the notes to the financial statements, except for which specific item that AS 24 requires to be shown on the FACE of the statement of profit and loss?
Under AS 24, if the initial disclosure event for a discontinuing operation occurs after the balance sheet date but before the financial statements are approved, the enterprise is:
Under AS 24, when comparing a discontinuing operation to the general provisions of AS 5 (Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies) regarding extraordinary/exceptional items, AS 24's specific disclosure requirements:
Under AS 24, an enterprise's plan to discontinue an operation that has been approved by the board but not yet publicly announced does NOT yet trigger:
Under AS 24, a discontinuing operation's separately disclosed financial information is intended to help users evaluate the effects of the discontinuance on the enterprise's ongoing:
Under AS 25, an 'interim period' is defined as a financial reporting period that is:
Under AS 25, the 'discrete' approach to recognising and measuring interim period results treats each interim period as:
Under AS 25, an enterprise applying the same accounting policies in its interim financial statements as in its annual financial statements should measure income and expenses on a basis that is:
Under AS 25, revenues that are received seasonally, cyclically, or occasionally within a financial year should NOT be anticipated or deferred as of an interim date if:
Under AS 25, costs that are incurred unevenly during an enterprise's financial year should be anticipated or deferred for interim reporting purposes only if it is also appropriate to:
Under AS 25, the minimum components of an interim financial report include a condensed balance sheet, a condensed statement of profit and loss, and:
Under AS 25, an enterprise's condensed interim balance sheet should be presented as of the end of the current interim period, and comparative information should be presented as of:
Under AS 25, an enterprise's condensed interim statement of profit and loss should be presented for the current interim period and cumulatively for the current financial year to date, with comparative statements for:
Under AS 25, if an estimate of an amount reported in an interim period is changed significantly during the final interim period of the financial year, but a separate financial report is not published for that final interim period, the nature and amount of that change in estimate should be disclosed in:
Under AS 25, if an enterprise's business is highly seasonal, AS 25 encourages disclosure of financial information for the twelve months ending on the interim reporting date, along with comparative information for the:
Under AS 25, income tax expense for an interim period is generally accrued using an estimated average annual effective income tax rate applied to the:
Under AS 25, an enterprise should apply the same materiality considerations in making recognition and disclosure decisions for interim reporting as would be applied for:
Under AS 25, changes in accounting policy (other than one for which a transition is specified by a new accounting standard) should be reflected by restating the financial statements of:
Under AS 25, the recognition of an impairment loss in an earlier interim period relating to a decline that later reverses should be:
Under AS 25, an enterprise that does NOT publish interim financial reports, or that publishes interim reports that do not comply fully with AS 25, is:
Under AS 25, if a reliable estimate of an amount cannot be made for an interim period, the related item that would ordinarily be recognised or disclosed should be:
AS 25's underlying rationale for requiring interim financial reporting is that timely, reliable interim information enables investors and others to better understand an enterprise's:
Under AS 25, when an enterprise's interim financial report is described as complying with AS 25, that description requires compliance with:
Under AS 25, the recognition and measurement principles applied for an interim period are generally the same as those applied in the enterprise's annual financial statements, with the key practical distinction between the two chiefly relating to:
Under AS 25, when an enterprise's condensed interim financial statements are presented, the notes are generally expected to provide an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the enterprise:
Under AS 10, the cost of an item of property, plant and equipment (PPE) comprises its purchase price and:
Under AS 10, the cost of a self-constructed asset is determined using the same principles as for an acquired asset, and includes:
Under AS 10, an enterprise may choose either the cost model or the revaluation model as its accounting policy for a class of PPE, and must apply that chosen policy to:
Under AS 10, when an item of PPE is measured using the revaluation model, revaluations are required to be carried out with sufficient regularity to ensure that the carrying amount does not differ materially from its:
Under AS 10, depreciation of an asset begins when the asset is:
Under AS 10, the depreciable amount of an item of PPE is allocated on a systematic basis over its useful life, where the depreciable amount is defined as the asset's cost (or revalued amount) less its:
Under AS 10, when a major component of an item of PPE (such as an aircraft engine) has a useful life different from the remainder of the asset, AS 10 requires:
Under AS 10, the residual value and useful life of an asset are required to be reviewed:
Under AS 10, an item of PPE is derecognised (removed from the balance sheet) upon disposal, or when no future economic benefits are expected from its:
Under AS 10, the gain or loss arising from the derecognition of an item of PPE is determined as the difference between the net disposal proceeds and the:
Under AS 10, subsequent expenditure on an item of PPE (such as a major overhaul) is capitalised (added to the asset's carrying amount) only if it:
Under AS 10, when an item of PPE is exchanged for a dissimilar asset, the cost of the newly acquired asset is generally measured at:
Under AS 10, land and buildings are generally treated as:
Under AS 10, the depreciation charge for a period is generally recognised in the statement of profit and loss unless it is included in the:
Under AS 10, when an item of PPE is revalued upward, the increase is generally recognised in other comprehensive income/revaluation reserve, except to the extent it reverses a revaluation decrease of the same asset previously recognised in:
Under AS 13, investments are classified for the purpose of financial statement presentation into:
Under AS 13, a current investment is carried in the financial statements at:
Under AS 13, a long-term investment is generally carried in the financial statements at:
Under AS 13, the cost of an investment includes its purchase price and:
Under AS 13, when an investment is reclassified from long-term to current, the transfer is made at the lower of cost and carrying amount at the date of transfer; conversely, when reclassified from current to long-term, the transfer is made at the:
Under AS 13, if long-term investments are reclassified as current investments, the transfer is made at the lower of cost and carrying amount at the date of transfer, meaning that if the carrying amount is higher than cost, the:
Under AS 13, investment properties (investments in land or buildings not intended to be occupied substantially for use by, or in the operations of, the investing enterprise) are accounted for:
Under AS 13, profit or loss on disposal of an investment is generally recognised as the difference between the carrying amount of the investment and the:
Under AS 13, interest, dividends, and rentals receivable in connection with an investment are generally recognised as revenue when the:
Under AS 13, when a long-term investment previously written down is later found to have recovered in value, the reduction may be reversed to the extent:
Under AS 13, investments in shares of a subsidiary that are acquired and held exclusively with a view to their subsequent disposal in the near future are, notwithstanding their nature as an equity holding in a subsidiary, classified as:
Under AS 13, if an investment is acquired by issuing shares or other securities, the acquisition cost of the investment is generally recorded at:
Under AS 13, the disclosure requirements include the accounting policies used for the determination of carrying amounts for investments, and the amount included in the statement of profit and loss for:
Under AS 13, if the fair value of a current investment has declined, and this decline is subsequently reversed in a later period, the reversal is recognised as an:
Under AS 16, borrowing costs that are directly attributable to the acquisition, construction, or production of a qualifying asset are:
Under AS 16, a 'qualifying asset' is an asset that necessarily takes a:
Under AS 16, borrowing costs other than those directly attributable to a qualifying asset are:
Under AS 16, when funds are borrowed specifically for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation is the actual borrowing costs incurred during the period, less any:
Under AS 16, when funds are borrowed generally (not specifically for a qualifying asset) and used in part for obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation is determined by applying a:
Under AS 16, the amount of borrowing costs capitalised during a period should not exceed the amount of:
Under AS 16, capitalisation of borrowing costs should commence when all of the following conditions are first satisfied: expenditure on the asset is being incurred, borrowing costs are being incurred, and:
Under AS 16, capitalisation of borrowing costs should be suspended during extended periods in which:
Under AS 16, capitalisation of borrowing costs should cease when:
Under AS 16, when the construction of a qualifying asset is completed in parts, and each part is capable of being used while construction continues on other parts, capitalisation of borrowing costs relating to a completed part should cease when:
Under AS 16, disclosure requirements for an enterprise's financial statements include the accounting policy adopted for borrowing costs, and the amount of borrowing costs:
Under AS 10, spare parts and servicing equipment are usually carried as inventory, but are recognised as PPE when:
Under AS 10, the cost of an item of PPE does NOT include:
Under AS 10, where a fixed asset is acquired at a consolidated price for several assets, the cost is apportioned among the various assets on a:
Under AS 10, PPE may be acquired for a non-monetary consideration, in which case the asset is usually recorded at:
Under AS 10, when an enterprise has a legal obligation to dismantle and remove an asset and restore the site on which it is located, the estimated costs of that obligation are:
Under AS 13, investments made in gold and silver-type instruments (unless held for regular trading) are treated as:
Under AS 13, the standard specifically excludes from its scope certain forms of investment already covered by other accounting standards, such as:
Under AS 13, if an investment is acquired by exchanging it for another asset, the acquisition cost is generally determined by reference to the fair value of:
Under AS 13, when the carrying amount of a long-term investment is written down to recognise a decline (other than temporary) in its value, this reduction is recognised as a:
Under AS 13, indicators that a decline in the value of a long-term investment might NOT be merely temporary include a significant fall in the investee's:
Under AS 13, the disclosure requirements also include the aggregate amount of quoted and unquoted investments, along with the aggregate:
Under AS 16, 'borrowing costs' are interest and other costs incurred by an enterprise in connection with the:
Under AS 16, examples of assets that would normally qualify as 'qualifying assets' include manufacturing plants, power generation facilities, and:
Under AS 16, when an enterprise borrows funds generally and uses part of them for a qualifying asset, the amount of borrowing costs capitalised for a period should not exceed the amount of borrowing costs incurred during that period, ensuring the capitalisation formula never produces a result:
Under AS 16, if the carrying amount (or expected ultimate cost) of a qualifying asset exceeds its recoverable amount or net realisable value, the carrying amount is:
Under AS 16, when the acquisition, construction, or production of a qualifying asset is achieved in parts, and the enterprise completes the construction of a specific part while continuing construction on remaining parts, the enterprise should recognise capitalisation cessation:
Under AS 16, borrowing costs eligible for capitalisation do NOT include costs incurred once construction activities on a qualifying asset have been:
Under AS 16, a brief period during which substantial technical and administrative work is being carried out (even though physical construction of a qualifying asset has been temporarily halted) is generally treated as a period during which capitalisation should:
Under AS 16, when an enterprise capitalises borrowing costs on a qualifying asset, the amounts capitalised are subsequently recovered over the asset's useful life through the mechanism of:
Under AS 16, disclosure of the accounting policy adopted for borrowing costs is required in the financial statements primarily so that users can understand:
Under AS 19, a lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an asset to the:
Under AS 19, a lease that is NOT a finance lease is classified as an:
Under AS 19, a lessee recognises a finance lease as an asset and a liability in its balance sheet at amounts equal to the fair value of the leased property, or if lower, the:
Under AS 19, lease payments under a finance lease are apportioned between the finance charge and the reduction of the outstanding liability so as to produce a:
Under AS 19, a finance lease gives rise to a depreciation expense for the leased asset, as well as a finance expense, for each accounting period, and the depreciation policy for a leased asset should be consistent with that for:
Under AS 19, if there is no reasonable certainty that a lessee will obtain ownership of a leased asset by the end of the lease term, the asset should be fully depreciated over the shorter of:
Under AS 19, for an operating lease, lease payments (excluding costs for services such as insurance/maintenance) are recognised as an expense in the statement of profit and loss on a:
Under AS 19, in a finance lease, a lessor recognises assets held under the lease in its balance sheet not as property but as a:
Under AS 19, a lessor recognises finance income under a finance lease based on a pattern reflecting a:
Under AS 19, in an operating lease, the lessor continues to present the leased asset in its own balance sheet under:
Under AS 19, a 'sale and leaseback' transaction involves the sale of an asset by the vendor and the leasing of the same asset back to the vendor, and the accounting treatment depends primarily on the:
Under AS 19, if a sale and leaseback transaction results in a finance lease, any excess of sale proceeds over the carrying amount of the asset sold should NOT be immediately recognised as income by the seller-lessee, but should instead be:
Under AS 19, if a sale and leaseback transaction results in an operating lease, and it is clear that the transaction is established at fair value, any profit or loss on sale should be:
Under AS 19, the classification of a lease as a finance lease or an operating lease is made at the:
Under AS 19, an example of a situation that would normally lead to a lease being classified as a finance lease is one where the lease term is for the:
Under AS 19, disclosure requirements for a lessee under a finance lease include, for each class of asset, the net carrying amount at the balance sheet date, and a reconciliation between the total of minimum lease payments and their:
Under AS 19, contingent rent (that portion of lease payments not fixed in amount, but based on a factor other than the passage of time, such as a percentage of sales) is:
AS 19's underlying rationale for distinguishing finance leases from operating leases is rooted in the accounting principle of:
Under AS 19, initial direct costs incurred by a lessor in negotiating and arranging a finance lease (such as commissions and legal fees) are generally:
Under AS 26, an intangible asset is defined as an identifiable non-monetary asset, without physical substance, held for use in the production/supply of goods or services, for rental to others, or for:
Under AS 26, an asset is 'identifiable' if it is separable (capable of being separated and sold, transferred, licensed, rented, or exchanged) or if it:
Under AS 26, an intangible asset should be recognised if, and only if, it is probable that future economic benefits attributable to the asset will flow to the enterprise, and:
Under AS 26, internally generated goodwill is:
Under AS 26, expenditure on an internally generated brand, mastheads, publishing title, or customer list is:
Under AS 26, expenditure on research (as distinguished from development) is:
Under AS 26, an intangible asset arising from the development phase of an internal project is recognised only if the enterprise can demonstrate, among other conditions, the technical feasibility of completing the asset and its intention to:
Under AS 26, after initial recognition, an intangible asset is generally carried at its cost less any accumulated amortisation and any accumulated:
Under AS 26, the useful life of an intangible asset arising from contractual or other legal rights should not exceed the period of those rights, but may be shorter, depending on the period over which the enterprise expects to:
Under AS 26, there is a rebuttable presumption that the useful life of an intangible asset will not exceed a specific number of years from the date the asset is available for use, unless there is persuasive evidence that the useful life will be a longer, but still finite, period; that presumed cap is:
Under AS 26, the amortisation method used for an intangible asset should reflect the pattern in which the asset's future economic benefits are expected to be consumed; if that pattern cannot be determined reliably, the enterprise should use the:
Under AS 26, the amortisation period and the amortisation method for an intangible asset with a finite useful life should be reviewed:
Under AS 26, expenditure on an intangible item that was initially recognised as an expense in a previous period is NOT permitted to be:
Under AS 26, examples of costs that are directly attributable and included in the cost of an internally generated intangible asset during its development phase include costs of materials/services consumed, and:
Under AS 26, subsequent expenditure on an already recognised intangible asset is recognised as an expense when incurred, UNLESS it is probable that the expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standard of performance, AND:
Under AS 28, an asset is 'impaired' when its carrying amount exceeds its:
Under AS 28, the 'recoverable amount' of an asset is defined as the higher of its net selling price and its:
Under AS 28, 'value in use' is defined as the present value of estimated future cash flows expected to arise from:
Under AS 28, an enterprise is required to assess, at each balance sheet date, whether there is any indication that an asset may be impaired, and if such an indication exists, the enterprise must:
Under AS 28, external indicators of possible impairment include a significant decline in an asset's market value, and significant adverse changes in the:
Under AS 28, internal indicators of possible impairment include evidence of obsolescence or physical damage to an asset, and evidence from internal reporting that indicates an asset's economic performance is, or will be, worse than:
Under AS 28, if an asset's recoverable amount cannot be estimated for an individual asset, the enterprise should determine the recoverable amount of the:
Under AS 28, a 'cash-generating unit' is defined as the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from:
Under AS 28, if the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset should be reduced to its recoverable amount, and that reduction is recognised as an:
Under AS 28, after recognition of an impairment loss, the depreciation (amortisation) charge for the asset should be adjusted in future periods to allocate the asset's revised carrying amount, less its residual value (if any), on a systematic basis over its:
Under AS 28, at each balance sheet date, an enterprise is required to assess whether there is any indication that an impairment loss recognised for an asset in a prior period may no longer exist or may have:
Under AS 28, a reversal of an impairment loss for an asset (other than goodwill) is recognised immediately in the statement of profit and loss, but the increased carrying amount due to reversal should not exceed the carrying amount that would have been determined (net of depreciation) had:
Under AS 28, goodwill acquired in a business combination is tested for impairment as part of the cash-generating unit to which it relates, and an impairment loss recognised for goodwill is:
AS 28's underlying rationale for requiring enterprises to test assets for impairment is to ensure that assets are NOT carried in the financial statements at an amount greater than their:
Under AS 19, an example of a situation that would normally lead to a lease being classified as a finance lease is one where, at the inception of the lease, the present value of the minimum lease payments amounts to:
Under AS 26, computer software purchased for use in an item of hardware-dependent computer-controlled machinery is generally treated as:
Under AS 26, the cost of a separately acquired intangible asset comprises its purchase price and:
Under AS 26, expenditure on start-up activities (such as legal/secretarial costs incurred in establishing a legal entity) is:
Under AS 26, expenditure on training activities intended to improve staff skills within the enterprise is:
Under AS 26, if an intangible asset is acquired as part of a business combination and the acquirer cannot measure its fair value with sufficient reliability, that intangible item is:
Under AS 28, the discount rate used to calculate an asset's value in use should be a pre-tax rate that reflects current market assessments of the:
Under AS 28, estimates of future cash flows used to calculate an asset's value in use should be based on reasonable and supportable assumptions, giving greater weight to:
Under AS 28, cash flow projections used in estimating value in use should be based on the most recent financial budgets/forecasts approved by management, generally covering a maximum period of:
Under AS 28, future cash flows are estimated for an asset in its current condition, meaning that estimates should NOT include future cash inflows or outflows expected to arise from:
Under AS 28, if there is an indication that an asset may be impaired, this may also indicate that the:
AS 28 requires disclosure, for each class of assets, of the amount of impairment losses recognised in the statement of profit and loss during the period, and the amount of impairment losses:
Under AS 29, a 'provision' is a liability that can be measured only by using a substantial degree of:
Under AS 29, a provision should be recognised when an enterprise has a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation, and:
Under AS 29, a 'contingent liability' is a possible obligation that arises from past events, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events:
Under AS 29, a contingent liability also includes a present obligation that arises from past events but is not recognised because either it is not probable that an outflow of resources will be required, or:
Under AS 29, contingent liabilities are NOT recognised in the financial statements, but are instead:
Under AS 29, a 'contingent asset' is a possible asset that arises from past events, whose existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within the:
Under AS 29, contingent assets are NOT recognised in the financial statements, since recognising them might result in the recognition of income that may:
Under AS 29, a contingent asset is disclosed, where an inflow of economic benefits is probable, in the:
Under AS 29, the amount recognised as a provision should be the best estimate of the expenditure required to settle the present obligation at the:
Under AS 29, where a provision involves a large population of items, the obligation is estimated by weighting all possible outcomes by their associated probabilities, a statistical method AS 29 refers to as:
Under AS 29, where a single obligation is being measured, the individual most likely outcome may be the best estimate of the liability, but the enterprise should also consider:
Under AS 29, where the effect of the time value of money is material, the amount of a provision should be the:
Under AS 29, provisions should be reviewed at each balance sheet date and adjusted to reflect the current best estimate; if it is no longer probable that an outflow of resources will be required, the provision should be:
Under AS 29, a provision should be used only for expenditures for which the provision was:
Under AS 29, a 'restructuring' provision (such as for the sale/termination of a line of business or closure of business locations) should include only the direct expenditures arising from the restructuring, which are those that are both:
Under AS 29, an enterprise should NOT recognise a provision for future operating losses, because such losses:
Under AS 29, a provision for an 'onerous contract' (a contract in which the unavoidable costs of meeting the obligations exceed the economic benefits expected to be received under it) should be recognised and measured as the:
Under AS 29's disclosure requirements, for each class of provision, an enterprise should disclose the carrying amount at the beginning and end of the period, additional provisions made in the period, and amounts:
Under AS 29, a key distinction between a 'provision' and other liabilities such as trade payables and accruals is that a provision involves a significant degree of estimation uncertainty regarding its:
Under AS 5, all items of income and expense recognised in a period should be included in the determination of net profit or loss for that period, unless:
Under AS 5, 'extraordinary items' are income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the enterprise, and are therefore:
Under AS 5, the nature and amount of extraordinary items should be disclosed:
Under AS 5, when items of income and expense within profit or loss from ordinary activities are of such size, nature, or incidence that their disclosure is relevant to explain the enterprise's performance, the nature and amount of such items should be disclosed:
Under AS 5, 'prior period items' are income or expenses that arise in the current period as a result of errors or omissions in the preparation of the financial statements of:
Under AS 5, 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:
Under AS 5, a change in an accounting estimate (such as a revised estimate of the useful life of a depreciable asset) is NOT the same as a change in accounting policy, and its effect should be included in the determination of net profit or loss in:
Under AS 5, a 'change in accounting policy' should be made only if required by statute, required for compliance with an Accounting Standard, or if it is considered that the change will result in a more appropriate presentation of the:
Under AS 5, when a change in accounting policy has a material effect in the current period (or is expected to have a material effect in a later period), the amount of that effect should be disclosed, and if such amount is not ascertainable, that fact should be:
Under AS 5, examples of a change in accounting policy would include a change in the method of valuation of inventories from FIFO to weighted average, whereas a revised estimate of the amount of bad debts likely to arise from outstanding trade receivables is, by contrast, an example of a change in:
Under AS 5, 'ordinary activities' are any activities that are undertaken by an enterprise as part of its business, and include related activities in which the enterprise engages in furtherance of, incidental to, or:
Under AS 5, when items of income and expense are offset, AS 5 generally requires that the resulting net amount continue to reflect the substance of the transaction, meaning offsetting is generally:
Under AS 11, a foreign currency transaction should be recorded, on initial recognition, by applying to the foreign currency amount the:
Under AS 11, at each balance sheet date, foreign currency monetary items (such as cash, receivables, and payables denominated in a foreign currency) should be reported using the:
Under AS 11, non-monetary items that are carried in terms of historical cost denominated in a foreign currency should be reported using the exchange rate at the date of the:
Under AS 11, exchange differences arising on the settlement of monetary items, or on reporting an enterprise's monetary items at rates different from those at which they were initially recorded, should be recognised as income or expense in the period in which they:
Under AS 11, the financial statements of a foreign operation that is 'integral' to the operations of the reporting enterprise should be translated using the same principles and procedures as if the transactions of the foreign operation had been:
Under AS 11, for translating the financial statements of a 'non-integral foreign operation' (one that operates largely independently), the assets and liabilities (both monetary and non-monetary) are translated at the:
Under AS 11, income and expense items of a non-integral foreign operation are translated at the exchange rates at the dates of the transactions, though for practical reasons, AS 11 permits use of a rate that approximates the actual rate, such as:
Under AS 11, exchange differences arising on the translation of the financial statements of a non-integral foreign operation should be accumulated in a foreign currency translation reserve until the:
Under AS 11, gain or loss on a forward exchange contract entered into to hedge the foreign currency risk of an existing recognised monetary asset or liability is generally recognised in the statement of profit and loss, with the premium/discount on the contract amortised:
Under AS 11, exchange differences arising on a monetary item that, in substance, forms part of an enterprise's net investment in a non-integral foreign operation should be accumulated in a foreign currency translation reserve, rather than immediately recognised as income or expense, until:
AS 11's underlying rationale for distinguishing an 'integral' foreign operation from a 'non-integral' foreign operation is that the appropriate translation method should reflect the:
Under AS 22, the objective of accounting for taxes on income is to prescribe accounting treatment for taxes on income, given that taxable income may differ significantly from:
Under AS 22, 'timing differences' are differences between taxable income and accounting income for a period that originate in one period and are capable of:
Under AS 22, 'permanent differences' are differences between taxable income and accounting income for a period that originate in one period and do NOT:
Under AS 22, tax expense for a period comprises current tax and:
Under AS 22, deferred tax should be recognised for all timing differences, subject to the consideration of prudence in respect of deferred tax:
Under AS 22, deferred tax assets and liabilities should be measured using the tax rates and tax laws that have been enacted or substantively enacted by the:
Under AS 22, deferred tax assets and liabilities should NOT be discounted to their present value, meaning they are measured using:
Under AS 22, an enterprise having unabsorbed depreciation or carry forward of losses under tax laws should recognise deferred tax assets only to the extent that there is:
Under AS 22, deferred tax assets and liabilities should be reviewed at each balance sheet date, and a deferred tax asset not previously recognised (because the recognition criteria were not met) should subsequently be recognised to the extent it has:
Under AS 22, current tax should be measured at the amount expected to be paid to (or recovered from) the taxation authorities, using the applicable tax rates and tax laws, computed in accordance with the:
Under AS 22, deferred tax assets and liabilities are generally required to be disclosed in the balance sheet separately from:
Under AS 5, a change in an accounting estimate that leads to a change in the amount of a related asset or liability recognised (e.g. a change in the estimated cost of dismantling a plant) should be accounted for by adjusting the carrying amount of the:
Under AS 5, the effect of a change in accounting policy, if material, should be disclosed even in periods subsequent to the period in which the change first occurs, so long as the effect is:
Under AS 5, examples of items ordinarily distinct enough to potentially qualify as extraordinary items include losses from an earthquake, a plant seizure by a foreign government, or a legislative:
Under AS 5, profit or loss from ordinary activities, in combination with the disclosure of the nature and amount of extraordinary items, is intended to enable users of financial statements to better perceive the:
Under AS 5, correction of an error in the financial statements of a prior period, discovered in the current period, is treated as a:
Under AS 5, the term 'extraordinary items' is distinguished from items that are merely 'exceptional' (large but arising from ordinary activities), and this distinction is drawn primarily by reference to the:
Under AS 5, when the current period's figures are not comparable with those of the preceding period due to a prior period item, change in accounting policy, or extraordinary item, that fact should be:
Under AS 5, the disclosure of a change in accounting policy that has no material effect on the financial statements for the current period, but is reasonably expected to have a material effect in later periods, requires that the fact of the change be disclosed in the period in which the change is:
Under AS 11, a 'monetary item' is money held, and assets/liabilities to be received or paid in fixed or determinable amounts of money, as distinguished from a 'non-monetary item' such as:
Under AS 11, an exchange difference arising on a monetary item that, in substance, forms part of an enterprise's net investment in a non-integral foreign operation is an exception to the general rule that exchange differences on monetary items are recognised immediately in profit and loss, because such a difference is instead:
Under AS 11, when there is a change in the classification of a foreign operation from 'non-integral' to 'integral', the translation procedures applicable to the newly reclassified operation should be applied from the date of the:
Under AS 11, when a foreign currency transaction is settled within the same accounting period in which it occurred, the entire exchange difference (between the transaction-date rate and the settlement-date rate) is recognised in:
Under AS 11, when a foreign currency transaction is settled in a subsequent accounting period (different from the period in which it was originally entered into), the exchange difference recognised in each period up to the period of settlement is determined by the change in exchange rates during:
Under AS 11, exchange differences arising on a foreign currency loan that has been taken specifically to finance the acquisition of a fixed asset are, under one option AS 11 previously permitted for certain enterprises, allowed to be:
Under AS 11, the reporting currency for an Indian enterprise's financial statements prepared under this standard is generally the:
Under AS 11, disclosure requirements include the amount of exchange differences included in the net profit or loss for the period, and the amount of exchange differences accumulated in a foreign currency translation reserve as a:
Under AS 11, an enterprise should disclose the method selected to translate the financial statements of a foreign operation, and any change in that classification (integral versus non-integral) along with the:
Under AS 22, the tax effects of timing differences are included in the tax expense in the statement of profit and loss, and in the deferred tax asset/liability in the balance sheet, following the underlying concept known as:
Under AS 22, a deferred tax liability arises when accounting income is more than taxable income due to timing differences, since this indicates that the enterprise has, relative to book profits, paid tax:
Under AS 22, a deferred tax asset arises when accounting income is less than taxable income due to timing differences, since this indicates that the enterprise has, relative to book profits, paid tax:
Under AS 22, unrecognised deferred tax assets are reassessed at each balance sheet date, and are recognised to the extent it has become reasonably certain or virtually certain (as applicable) that they will be:
Under AS 22, the carrying amount of a deferred tax asset should be reviewed at each balance sheet date, and written down to the extent that it is no longer:
Under AS 22, when an enterprise has carry-forward losses under tax laws, and there is virtual certainty supported by convincing evidence of future taxable income, deferred tax assets should be recognised only to the extent there is virtual certainty that there will be sufficient future taxable income against which such deferred tax assets can be:
Under AS 22, virtual certainty supported by convincing evidence, required for recognising a deferred tax asset in respect of carry-forward losses, should be evidenced by concrete factors such as:
Under AS 22, current tax assets and current tax liabilities should be offset in the balance sheet if the enterprise has a legally enforceable right to set them off, and intends to settle the asset and the liability on a:
Under AS 22, in the situation of unabsorbed depreciation or carry forward of losses under tax laws, if virtual certainty supported by convincing evidence ceases to exist, the enterprise should:
Under AS 7, a 'construction contract' is a contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated in terms of their:
Under AS 7, when the outcome of a construction contract can be estimated reliably, contract revenue and contract costs associated with the contract should be recognised as revenue and expenses respectively by reference to the:
Under AS 7, an expected loss on a construction contract should be recognised as an expense:
Under AS 7, contract revenue comprises the initial amount of revenue agreed in the contract, plus variations in contract work, claims, and incentive payments, to the extent that they are:
Under AS 7, when the outcome of a construction contract cannot be estimated reliably, revenue should be recognised only to the extent of contract costs incurred that it is probable will be recoverable, and contract costs should be recognised as an expense in the period in which they are:
Under AS 7, the stage of completion of a contract may be determined using various methods, including the proportion that contract costs incurred for work performed to date bear to the:
Under AS 7, 'contract costs' comprise costs that relate directly to the specific contract, costs that are attributable to contract activity in general and can be allocated to the contract, and such other costs as are specifically:
Under AS 7, costs that relate directly to a specific contract may be reduced by any incidental income that is not included in contract revenue, such as income from the sale of:
Under AS 7, an enterprise is required to disclose the amount of contract revenue recognised as revenue in the period, and the methods used to determine the:
Under AS 9, revenue is the gross inflow of cash, receivables, or other consideration arising in the course of the ordinary activities of an enterprise from the sale of goods, from the rendering of services, and from the use by others of enterprise resources yielding:
Under AS 9, revenue from the sale of goods is generally recognised when the seller has transferred to the buyer the property in the goods for a price, or when significant risks and rewards of ownership have transferred, and:
Under AS 9, revenue from service transactions is generally recognised as the service is performed, using either the proportionate completion method or the:
Under AS 9, revenue arising from the use by others of enterprise resources yielding interest should be recognised on a:
Under AS 9, revenue arising from the use by others of enterprise resources yielding royalties should be recognised on an:
Under AS 9, revenue arising from the use by others of enterprise resources yielding dividends from investments should be recognised when the owner's right to receive payment is:
Under AS 9, revenue recognition is postponed when the ability to assess the ultimate collection with reasonable certainty is lacking, and revenue recognition in such a case is instead postponed to the extent of the:
Under AS 9, when unreasonable delay is not involved and no significant uncertainty exists regarding the amount of consideration or its collectability, revenue recognition should not await the actual receipt of:
Under AS 7, a 'fixed price contract' is a construction contract in which the contractor agrees to a fixed contract price, or a fixed rate per unit of output, which is in some cases subject to:
Under AS 7, a 'cost plus contract' is a construction contract in which the contractor is reimbursed for allowable or otherwise defined costs, plus a percentage of these costs or a:
Under AS 7, when a contract covers a number of assets, the construction of each asset should be treated as a separate construction contract when separate proposals were submitted for each asset, and the assets were subject to:
Under AS 7, a group of contracts, whether with a single customer or several customers, should be treated as a single construction contract when the group of contracts is negotiated as a single package, and the contracts are so closely interrelated that they are, in effect, part of a single project with an overall:
Under AS 7, construction of an additional asset at the customer's option (or as a contract amendment) should be treated as a separate construction contract when the asset differs significantly in design, technology, or function from the assets covered by the original contract, or when the price of the asset is negotiated without regard to the:
Under AS 7, the review of estimates of contract revenue and contract costs during the course of a contract does NOT, by itself, mean that the outcome of the contract cannot be estimated reliably, since a change in estimate reflects:
Under AS 7, when it is probable that total contract costs will exceed total contract revenue, the resulting expected loss should be recognised as an expense immediately, regardless of:
Under AS 7, contract costs that are attributable to contract activity in general, and can be allocated to specific contracts, include items such as insurance, and costs of design and technical assistance that are:
Under AS 7, costs that CANNOT be attributed to contract activity, or cannot be allocated to a specific contract, are excluded from construction contract costs; examples include general administration costs (for which reimbursement is not specified in the contract) and:
Under AS 7, research and development costs for which reimbursement is not specified in the contract are, alongside general administration costs and selling costs, treated as costs that should be:
Under AS 7, an enterprise should present, as an asset, the gross amount due from customers for contract work, representing costs incurred plus recognised profits (less recognised losses and progress billings), where this net amount is a debit balance; and where the net amount is a credit balance, it should be presented as a:
Under AS 9, revenue does NOT include amounts collected on behalf of third parties, such as certain taxes, since these amounts do not result in an:
Under AS 9, when goods are sold subject to conditions such as delivery is delayed at the buyer's request and the buyer takes title and accepts billing, revenue from such a 'bill and hold' sale may still be recognised even though delivery has not occurred, provided it is probable that delivery will actually be:
Under AS 9, revenue is generally NOT recognised on a sale where goods are sold on approval, since the buyer has a specific right of return, and revenue is instead recognised only when the:
Under AS 12, 'government grants' are assistance by government in cash or kind to an enterprise for past or future compliance with certain conditions, and generally exclude forms of government assistance that cannot reasonably have a value placed upon them, and transactions with government that:
Under AS 12, government grants should not be recognised until there is reasonable assurance that the enterprise will comply with the conditions attached to them, and that the:
Under AS 12, government grants related to specific fixed assets should be presented in the balance sheet by showing the grant as a deduction from the gross value of the asset concerned, or alternatively by treating it as a:
Under AS 12, when a government grant relating to a specific fixed asset is treated as a deduction from the gross value of the asset, the grant is effectively recognised in the statement of profit and loss over the useful life of the depreciable asset, by way of a reduced:
Under AS 12, government grants related to revenue are generally recognised in the statement of profit and loss on a systematic basis over the periods necessary to match them with the:
Under AS 12, a government grant that becomes refundable should be accounted for as an extraordinary item (or otherwise appropriately treated) and should be applied first against any unamortised deferred credit remaining in respect of the grant; to the extent the amount refundable exceeds any such deferred credit, the excess should be:
Under AS 12, government grants in the form of non-monetary assets, given at a concessional rate, should be accounted for on the basis of their:
Under AS 12, disclosure requirements include the accounting policy adopted for government grants, including the methods of presentation adopted in the financial statements, and the nature and extent of government grants:
Under AS 14, an amalgamation in the nature of a 'merger' is one that satisfies specific conditions, including that all (or substantially all) the assets and liabilities of the transferor company become, after amalgamation, the assets and liabilities of the:
Under AS 14, for an amalgamation to be classified as 'in the nature of a merger', shareholders holding not less than a specified minimum percentage of the face value of the equity shares of the transferor company (other than shares already held by the transferee or its subsidiaries/nominees) should become equity shareholders of the transferee company; that specified minimum is:
Under AS 14, an amalgamation in the nature of a merger is accounted for using the 'pooling of interests' method, under which the assets, liabilities, and reserves of the transferor company are recorded by the transferee company at their:
Under AS 14, an amalgamation in the nature of a 'purchase' is one in which the conditions for a merger are not satisfied, and is accounted for using the 'purchase method', under which the transferee company records the transferor company's identifiable assets and liabilities at their:
Under AS 14, in an amalgamation accounted for under the purchase method, any excess of the purchase consideration over the net value of the assets acquired (less liabilities assumed) is recognised as:
Under AS 14, in an amalgamation accounted for under the purchase method, when the net value of the assets acquired (less liabilities assumed) exceeds the purchase consideration, the excess is treated as:
Under AS 14, 'purchase consideration' is the aggregate of the shares and other securities issued, and the payment made in the form of cash or other assets, by the transferee company to the:
Under AS 14, in a merger-type amalgamation accounted for under the pooling of interests method, the difference between the amount recorded as share capital issued (plus any additional consideration in cash/other assets) and the amount of share capital of the transferor company is adjusted in:
Under AS 14, disclosure requirements for an amalgamation include the names and general nature of business of the amalgamating companies, the effective date of amalgamation for accounting purposes, the method used to account for the amalgamation, and:
Under AS 12, grants related to non-depreciable assets that require the fulfilment of certain obligations are generally credited to income over the same period over which the:
Under AS 12, a grant that becomes receivable as compensation for expenses or losses already incurred, with no further related future costs, should be recognised as income in the period in which it becomes:
Under AS 12, government grants in the form of promoters' contribution (i.e. amounts given by promoters as their contribution towards total capital outlay, credited directly to capital reserve and not treated as revenue) are:
Under AS 12, government grants sometimes take the form of promoters' contribution when they are given as a percentage of the total investment in an undertaking, and are given with reference to the total investment in fixed assets rather than as a:
Under AS 12, disclosure of a government grant not recognised in the statement of profit and loss (e.g. one treated as promoters' contribution) is also required, since it represents a form of:
Under AS 14, 'amalgamation' means an amalgamation pursuant to the provisions of applicable statute(s), and includes the absorption of one company by another, or the:
Under AS 14, a 'transferor company' is defined as the company which is amalgamated into another company, while a 'transferee company' is defined as the company into which a transferor company is:
Under AS 14, for an amalgamation to be classified as being in the nature of a merger, the business of the transferor company is intended to be carried on, after the amalgamation, by the:
Under AS 14, for an amalgamation to be classified as being in the nature of a merger, no adjustment is intended to be made to the book values of the assets and liabilities of the transferor company when they are incorporated in the financial statements of the transferee company, other than to ensure:
Under AS 14, an amalgamation that does not satisfy all the specific conditions required for classification as being in the nature of a merger is classified, and accounted for, as an amalgamation in the nature of a:
Under AS 14, under the pooling of interests method, the financial statements of the combined entity are presented as if the two companies had been amalgamated from the:
Under AS 14, in a purchase-method amalgamation, any reserves (other than the statutory reserves) of the transferor company are, unlike under the pooling of interests method, generally NOT:
Under AS 14, when a statutory reserve of the transferor company (required to be maintained under a specific statute, e.g. a development rebate reserve) needs to be recorded in the transferee company's books under a purchase-method amalgamation for continued statutory compliance, a corresponding debit is made to an account described as:
Under AS 14, in a purchase-method amalgamation, goodwill arising on amalgamation represents a payment made in anticipation of future income, and it is appropriate to treat it as an asset to be amortised to income over a period not exceeding a specific maximum number of years, unless a longer period can be justified; that maximum is:
Under AS 14, in accounting for an amalgamation, the treatment of any reserves specified in the scheme of amalgamation sanctioned under a relevant statute should be followed, giving:
Under AS 14, for the purpose of computing the 90% shareholding threshold used to test whether an amalgamation qualifies as being in the nature of a merger, shares of the transferor company already held by the transferee company (or its subsidiaries or their nominees) immediately before the amalgamation are:
Under AS 9, in a transaction involving the rendering of services performed by an indeterminate number of acts over a specified period of time, revenue is generally recognised on a:
Under AS 9, revenue from a transaction of the sale of goods should NOT be recognised when the seller retains significant risks of ownership, even though legal title may have already:
Under AS 9, examples of situations in which the seller may retain significant risks of ownership, and therefore not recognise revenue despite delivery, include when the goods are shipped subject to installation and the installation is a significant part of the contract that has not yet been:
Under AS 9, when the buyer has the right to rescind the purchase for a reason specified in the contract, and the seller is uncertain about the probability of return, revenue is:
Under AS 9, in the case of installation fees, when installation is incidental to the sale of a product (i.e. not a significant separate service), revenue from the installation is recognised when the:
Under AS 9, revenue from advertising commissions is generally recognised when the related:
Under AS 9, revenue from insurance agency commissions is generally recognised on the effective commencement or renewal dates of the related policies, unless the agency is also likely to be required to render further services during the policy period, in which case the commission (or part of it) is deferred and recognised over the period the policy remains in:
Under AS 9, revenue from admission fees for artistic performances, banquets, and other special events is recognised when the:
Under AS 9, revenue from tuition fees is generally recognised over the period of instruction, since this is the period over which the enterprise providing the education is actually:
Under AS 12, there are broadly two approaches to the accounting treatment of a government grant: the 'capital approach', under which a grant is treated as part of shareholders' funds, and the 'income approach', under which a grant is taken to income over one or more periods to match it with the:
Under AS 12, arguments in favour of the 'capital approach' include the view that government grants are a financing device and should be credited directly to shareholders' interests rather than routed through the:
Under AS 12, arguments in favour of the 'income approach' include the view that government grants are rarely gratuitous, and the enterprise earns them through compliance with their conditions and meeting the envisaged obligations, so they should be recognised in the statement of profit and loss over the periods in which the related:
Under AS 12, since taxation is only one of many factors to be considered in arriving at an accounting treatment for a government grant, accounting for a government grant should NOT be predominantly influenced by:
Under AS 12, where a grant is received for a specific purpose, and non-compliance with the attached conditions of the grant would require refund of the whole or a specified part of the grant, an appropriate provision for the liability arising should be made to the extent of the:
Under AS 12, government grants may also take the form of loans that are wholly or partly forgivable by the government on fulfilment of certain conditions; a forgivable loan should be treated as a government grant when there is reasonable assurance that the enterprise will meet the conditions for the loan's:
Under AS 12, disclosure requirements for government grants also include disclosure of the periods over which unamortised deferred credit is:
Under AS 21, 'consolidated financial statements' are the financial statements of a group presented as those of a:
Under AS 21, a parent should present consolidated financial statements in addition to its own separate financial statements, and should consolidate all subsidiaries, both:
Under AS 21, a subsidiary should be excluded from consolidation when control is intended to be temporary, because the subsidiary is acquired and held exclusively with a view to its:
Under AS 21, consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances; if a member of the group uses accounting policies different from those adopted for the consolidated financial statements, appropriate:
Under AS 21, the financial statements used in the consolidation should be drawn up to the same reporting date; when the reporting dates of the parent and a subsidiary are different, the subsidiary generally prepares, for consolidation purposes, additional statements as of the same date as the parent's financial statements, unless it is:
Under AS 21, minority interest (non-controlling interest) in the net income of the group for the reporting period is identified and adjusted against the income of the group in order to arrive at the net income attributable to the:
Under AS 21, minority interest in the net assets of consolidated subsidiaries should be identified and presented in the consolidated balance sheet separately from:
Under AS 21, intragroup balances and intragroup transactions, along with any resulting unrealised profits, should be eliminated in full when preparing consolidated financial statements, since they represent transactions:
Under AS 21, unrealised losses resulting from intragroup transactions should also generally be eliminated, unless the underlying transaction provides evidence of a reduction in the:
Under AS 21, when consolidated financial statements are presented for the first time, comparative figures for the previous period need NOT be presented, unless the enterprise had earlier presented such comparative figures in compliance with:
Under AS 23, an 'associate' is an enterprise in which the investor has:
Under AS 23, 'significant influence' is the power to participate in the financial and/or operating policy decisions of the investee, but is NOT:
Under AS 23, if an investor holds, directly or indirectly through subsidiaries, 20% or more of the voting power of the investee, it is presumed that the investor has significant influence, unless it can be:
Under AS 23, an investment in an associate should be accounted for in consolidated financial statements under the:
Under AS 23, under the equity method, the investment in the associate is initially recorded at cost, and the carrying amount is subsequently increased or decreased to recognise the investor's share of:
Under AS 23, the investor's share of the profits or losses of an associate is shown in the consolidated statement of profit and loss as a separate line item, distinct from:
Under AS 23, when an associate's losses equal or exceed the carrying amount of the investment, the investor ordinarily discontinues recognising its further share of losses, and the investment is reported at:
Under AS 23, if the associate subsequently reports profits after a period during which loss recognition was discontinued (because losses had reduced the investment's carrying value to nil), the investor resumes recognising its share of those profits only after its share of the profits equals the:
Under AS 23, unrealised profits and losses resulting from transactions between the investor (or its consolidated subsidiaries) and an associate should be eliminated to the extent of the investor's:
Under AS 27, a 'joint venture' is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to:
Under AS 27, 'joint control' is the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating decisions relating to the activity require the:
Under AS 27, a 'jointly controlled operation' involves the use of the assets and other resources of the venturers rather than the establishment of a corporation, partnership, or other separate entity, with each venturer generally using its own:
Under AS 27, in respect of its interest in a jointly controlled operation, a venturer should recognise, in its own separate financial statements, the assets that it controls and the liabilities that it incurs, along with the expenses it incurs and its share of the:
Under AS 27, a 'jointly controlled asset' involves joint control, and often joint ownership, by the venturers of one or more assets contributed to, or acquired for the purpose of, the joint venture, with each venturer taking a share of the:
Under AS 27, a venturer should recognise, in respect of its interest in a jointly controlled asset, its share of the jointly controlled assets, classified according to the nature of the assets, along with any liabilities it has incurred and its share of any liabilities incurred jointly with the other:
Under AS 27, a 'jointly controlled entity' is a joint venture that involves the establishment of a corporation, partnership, or other entity in which each venturer has an:
Under AS 27, a venturer should report its interest in a jointly controlled entity in its consolidated financial statements using the:
Under AS 27, when a venturer contributes or sells assets to a joint venture, recognition of any portion of a gain or loss from the transaction should reflect the substance of the transaction, and generally, while the assets are retained by the joint venture (and assuming the venturer has transferred the significant risks and rewards of ownership), the venturer should recognise only that portion of the gain or loss attributable to the interests of the:
Under AS 21, control is defined as either the ownership, directly or indirectly through subsidiaries, of more than one-half of the voting power of an enterprise, or:
Under AS 21, a subsidiary should also be excluded from consolidation when it operates under severe long-term restrictions that significantly impair its ability to transfer funds to the:
Under AS 21, in preparing consolidated financial statements, the financial statements of the parent and its subsidiaries are combined on a line-by-line basis by adding together like items of assets, liabilities, income, and expenses, after eliminating the carrying amount of the parent's investment in each subsidiary against the parent's portion of:
Under AS 21, any excess of the cost to the parent of its investment in a subsidiary, over the parent's portion of equity of the subsidiary at the date on which the investment is made, is described in the consolidated financial statements as:
Under AS 21, where the parent's portion of equity in a subsidiary, at the date the investment is made, exceeds the cost to the parent of the investment, the excess is treated in the consolidated financial statements as:
Under AS 21, the difficulties involved in eliminating intragroup balances, when the financial statements used in a consolidation are drawn up to different reporting dates, should be:
Under AS 21, minority interests should be presented in the consolidated balance sheet within equity, separately from the parent's own shareholders' equity, since the minority shareholders' interest represents an ownership claim on the subsidiary's:
Under AS 21, the disclosure requirements for consolidated financial statements include a list of all subsidiaries, giving the name, country of incorporation/residence, and the proportion of ownership interest and, if different, the proportion of:
Under AS 21, in a consolidated statement of profit and loss, the results of operations of a subsidiary are included from the date it becomes a subsidiary, and the results of operations of a subsidiary disposed of during the year are included up to the date of:
Under AS 21, on the acquisition of a subsidiary, any difference between the proceeds from disposal of an investment in that subsidiary and its carrying amount as of the date of disposal is recognised in the consolidated statement of profit and loss as the:
Under AS 23, evidence of an investor's significant influence over an investee may be demonstrated by representation on the board of directors, participation in policy-making processes, material transactions between the investor and investee, and interchange of:
Under AS 23, potential equity shares of the investee held by the investor should NOT be taken into account for determining significant influence, since AS 23 assesses significant influence on the basis of:
Under AS 23, the existence and effect of potential equity shares that are currently exercisable or convertible, including those held by other investors, are considered only when assessing whether an investor has the ability to exercise significant influence, but are NOT used to determine the:
Under AS 23, when an associate has outstanding cumulative preference shares held by parties other than the investor, the investor computes its share of profits or losses after adjusting for:
Under AS 23, the most recent available financial statements of the associate are used by the investor in applying the equity method, and when the reporting dates of the investor and the associate are different, the associate generally prepares, for the use of the investor, financial statements as of the same date as the investor's own financial statements unless it is:
Under AS 23, the investor's financial statements should be prepared using uniform accounting policies for like transactions and events in similar circumstances; if the associate uses different accounting policies from those of the investor, appropriate:
Under AS 23, disclosure requirements include an appropriate listing and description of significant associates, including the proportion of ownership interest and, if different, the proportion of:
Under AS 23, an investor should discontinue the use of the equity method from the date that it ceases to have significant influence in an associate but retains, either in whole or in part, its investment, and from that date should account for the investment in accordance with:
Under AS 23, the carrying amount of an investment in an associate should be reduced to recognise a decline, other than temporary, in the value of the investment, with each impairment loss determined and made for:
Under AS 23, unrealised profits and losses resulting from 'downstream' transactions (from the investor to the associate) are eliminated to the extent of the investor's interest in the associate, in the same manner as unrealised profits and losses resulting from:
Under AS 27, in its separate (unconsolidated) financial statements, a venturer should account for its interest in a jointly controlled entity as an investment in accordance with:
Under AS 27, an investor in a joint venture that does NOT have joint control should report its interest in a jointly controlled entity in its consolidated financial statements in accordance with:
Under AS 27, when applying proportionate consolidation, a venturer combines its share of each of the assets, liabilities, income, and expenses of the jointly controlled entity with the similar items, line by line, in its own financial statements, or alternatively includes:
Under AS 27, when a venturer ceases to have joint control over an entity, it should account for its remaining investment from that date in accordance with:
Under AS 27, a venturer should discontinue the use of proportionate consolidation from the date on which it ceases to have joint control over a jointly controlled entity, since the venturer's continued line-by-line inclusion of the entity's assets, liabilities, income, and expenses would no longer be justified once genuine:
Under AS 27, when a venturer contributes or sells an asset to a joint venture, if the transaction provides evidence of a reduction in the net realisable value of current assets, or of an impairment loss, the venturer should recognise the:
Under AS 27, disclosure requirements for a venturer include the aggregate amount of certain specified contingent liabilities, unless the probability of loss is remote, separately from the amount of other contingent liabilities, and also the aggregate amount of certain:
Under AS 27, a venturer should also disclose a list of all joint ventures and a description of the interests in significant joint ventures, including the proportion of ownership interest and, if different, the proportion of:
Under AS 27, an investor in a joint venture that does not itself have joint control should still disclose the extent to which the investor participates, or has an interest, in the underlying joint venture, since even an ordinary (non-joint-control) investor's disclosure obligations under AS 27 are intended to give users a picture of the investor's own overall:
Under AS 23, on the acquisition of an investment in an associate, any difference between the cost of acquisition and the investor's share of the fair value of the identifiable assets and liabilities of the associate is accounted for in a manner consistent with:
Under AS 27, when a venturer sells an asset it purchased from a joint venture, the venturer should recognise its share of the profits or losses on the transaction in the same way as when an unrelated third party sells that asset, once the underlying transaction provides:
Under AS 27's underlying rationale, the distinction it draws among jointly controlled operations, jointly controlled assets, and jointly controlled entities is intended to ensure that a venturer's financial reporting reflects the actual:
Under the Companies Act framework governing financial statement preparation, the Statement of Profit and Loss and Balance Sheet of a company are required to be prepared in the form(s) prescribed by:
Under Schedule III's general instructions, the Balance Sheet of a company is presented classifying assets and liabilities into current and:
Under Schedule III, an asset is classified as 'current' when it is expected to be realised in, or is intended for sale or consumption in, the company's normal operating cycle, or is held primarily for the purpose of being traded, or is expected to be realised within twelve months after the reporting date, or is:
Under Schedule III, a liability is classified as 'current' when it is expected to be settled in the company's normal operating cycle, or it is held primarily for the purpose of being traded, or it is due to be settled within twelve months after the reporting date, or the company does NOT have an unconditional right to defer settlement of the liability for at least:
Under Schedule III, share capital is required to be disclosed for each class of shares, giving, among other particulars, the number and amount of shares authorised, and the number of shares:
Under Schedule III, 'Reserves and Surplus' is required to be classified in the notes to accounts, showing separately the nature and amount of each type of reserve, such as capital reserve, securities premium, and the:
Under Schedule III, the Statement of Profit and Loss is required to present, among other line items, 'Revenue from operations', 'Other income', and expenses classified by:
Under Schedule III, 'Exceptional items' and 'Extraordinary items' are required to be disclosed separately in the Statement of Profit and Loss, consistent with the disclosure principles set out in:
Under Schedule III, 'Notes' forming part of the financial statements are required to, among other purposes, present information not presented elsewhere in the financial statements, but that is relevant to an understanding of any of them, and provide additional information not shown on the face of the financial statements, but that is:
Under Schedule III, a company is required to disclose figures for the current reporting period alongside the corresponding amounts for the:
Under Schedule III's general instructions, a company (other than one exempted under the applicable rules) is required to include, as part of its financial statements, a Cash Flow Statement prepared in accordance with:
In the context of a company's financial statements, the Cash Flow Statement is generally regarded as a particularly useful supplement to the Balance Sheet and Statement of Profit and Loss because it helps users assess the company's ability to generate cash and cash equivalents, thereby enabling users to develop models to assess and compare the present value of the future cash flows of:
When preparing a company's Cash Flow Statement, historical cash flow information is often used as an indicator of the amount, timing, and certainty of:
When a company's Cash Flow Statement is prepared using the indirect method, the starting point is generally net profit before tax, which is then adjusted for non-cash items such as depreciation, and for changes during the period in:
In a company's Cash Flow Statement, dividends paid to the company's own equity and preference shareholders are generally classified as a cash outflow under:
In a company's Cash Flow Statement, the purchase of shares or debentures of another company is generally classified as a cash outflow under:
In a company's Cash Flow Statement, proceeds from a fresh issue of equity shares for cash are generally classified as a cash inflow under:
When reconciling net profit to cash generated from operations in the indirect method, an increase in trade receivables (debtors) during the period is generally treated as a:
When reconciling net profit to cash generated from operations in the indirect method, an increase in trade payables (creditors) during the period is generally treated as an:
In a company's Cash Flow Statement, interest paid on a term loan taken by a non-financial company is generally classified as a cash outflow under:
Under Schedule III, 'Trade Payables' are required to be sub-classified into micro/small enterprise dues and other trade payables, primarily to enable users to assess compliance with the disclosure requirements of a specific:
Under Schedule III, a company is required to disclose 'Contingent Liabilities and Commitments' separately for each class, distinguishing between contingent liabilities and:
Under Schedule III, 'Property, Plant and Equipment' is required to be disclosed showing, for each class of asset, the gross carrying amount, accumulated depreciation, and:
Under Schedule III, amounts due for a period exceeding six months from the date they became due for payment, in respect of trade receivables, are required to be:
Under Schedule III, 'Earnings per Share' is required to be disclosed in the notes to accounts, showing basic and diluted EPS, computed in accordance with:
Under Schedule III, 'Long-term Borrowings' are required to be classified, for each type of borrowing, showing separately amounts that are secured and:
Under Schedule III, an item of income or expense which exceeds a specified threshold percentage of the total revenue from operations, or a specified fixed absolute rupee amount, whichever is higher, is required to be disclosed separately in the notes, this being a materiality-based threshold specifically defined for this purpose within:
Under Schedule III, a company is required to round off the figures appearing in the financial statements, depending on its total income, to the nearest hundreds, thousands, lakhs, or:
Under Schedule III, disclosure of 'Related Party Transactions' in a company's financial statements is required to be made in accordance with the requirements of:
Under Schedule III, 'Inventories' are required to be classified into categories such as raw materials, work-in-progress, finished goods, stock-in-trade, and stores and spares, with the mode of valuation for each category disclosed, consistent with:
In a company's Cash Flow Statement, income taxes paid are generally disclosed separately and classified as cash flows from operating activities unless they can be specifically identified with:
In a company's Cash Flow Statement, cash receipts from customers for the sale of goods or services are classified under:
In a company's Cash Flow Statement, cash payments to and on behalf of employees (e.g. salaries and wages) are classified under:
In a company's Cash Flow Statement, proceeds from the sale/disposal of a company's own fixed assets (property, plant, and equipment) are classified as a cash inflow under:
In a company's Cash Flow Statement, cash repayment of the principal amount of a long-term loan is classified as a cash outflow under:
When preparing a company's Cash Flow Statement using the indirect method, a decrease in inventory during the period is generally treated as an:
In a company's Cash Flow Statement, the profit or loss on the sale of a fixed asset, already included in the Statement of Profit and Loss, is, under the indirect method, added back or deducted from net profit before tax as an adjustment for a:
In a company's Cash Flow Statement, a bonus issue of shares (a capitalisation of reserves into share capital, with no actual cash consideration) is:
In a company's Cash Flow Statement, a decrease in outstanding prepaid expenses during the period is generally treated, under the indirect method, as an:
In a company's Cash Flow Statement, cash flows arising from the purchase and sale of dealing or trading securities (held by an enterprise primarily for the purpose of trading) are generally classified as cash flows from:
Under the Companies Act framework governing buyback of securities, a company is generally required to fund a buyback out of its free reserves, securities premium account, or the:
After a buyback of equity shares is completed, a company is generally required to transfer, to the Capital Redemption Reserve account, a sum equal to the nominal value of the shares bought back, out of its:
The primary purpose of transferring an amount equal to the nominal value of the bought-back shares to the Capital Redemption Reserve is to ensure that a company's buyback does NOT result in a reduction of its:
Under the Companies Act framework, a company's overall buyback of equity shares (or other specified securities) in a financial year is generally subject to an overall value limit expressed as a percentage of its total paid-up capital and free reserves, which is:
Under the Companies Act framework, the buyback of equity shares in any financial year is generally subject to a specific sub-limit, expressed as a percentage of the company's total paid-up equity capital in that financial year, which is:
Under the Companies Act framework, after completing a buyback of its own securities, a company is generally prohibited from making a further issue of the same kind of shares or other specified securities within a specified minimum period, primarily to prevent:
When a company completes a buyback of its own equity shares, the shares actually bought back are required to be:
Under the Companies Act framework, before undertaking a buyback, a company is generally required to obtain a specific board and/or shareholder authorisation, and to file a declaration of solvency confirming that the company will be able to pay its:
Equity shares with 'differential rights' refer to a class of equity shares that carry rights as to dividend, voting, or otherwise different from those attaching to a company's:
A company issuing equity shares with differential rights (e.g. shares carrying lower or no voting rights) is generally subject to conditions intended to protect the interests of shareholders by, among other requirements, ensuring the company has a consistent track record of:
When accounting for an amalgamation in the nature of a merger, under the pooling of interests method, the assets and liabilities of the transferor company are recorded by the transferee company at their:
When accounting for an amalgamation in the nature of a purchase, the excess of the purchase consideration paid by the transferee company over the net value of the assets acquired (less liabilities assumed) is recognised as:
'Purchase consideration' for an amalgamation is generally defined as the aggregate of the shares and other securities issued, and the payment made in the form of cash or other assets, by the transferee company to the:
In accounting for an amalgamation using the purchase method, when the net value of the identifiable assets acquired (less liabilities assumed) exceeds the purchase consideration paid, the resulting excess is treated as:
In the books of a transferor company undergoing an amalgamation, upon the transfer of its business to the transferee company, accounts such as the Realisation Account are used to record the transfer of assets and liabilities and to determine the resulting:
Goodwill arising on amalgamation, in the books of a transferee company, is generally considered appropriate to amortise to income over a period not exceeding:
When a scheme of amalgamation sanctioned under a relevant statute prescribes a specific treatment to be accorded to a particular reserve of the transferor company, that prescribed treatment is generally given:
In the books of a transferee company, when the pooling of interests method is used, the difference between the amount recorded as share capital issued (plus any additional consideration in cash/other assets) and the amount of share capital of the transferor company is adjusted in:
When a company (transferor) is amalgamated into another company (transferee), and the transferor company had a statutory reserve required to be maintained for continued compliance, but the purchase method is being used, the transferee records that statutory reserve with a corresponding debit to an account described as:
When computing the 'purchase consideration' for an amalgamation, the value of any shares issued by the transferee company as part of the consideration is generally taken at their:
Under the Companies Act framework, a company is generally prohibited from undertaking a buyback of its own securities through any subsidiary company, including its own:
Under the Companies Act framework, a company is generally prohibited from buying back its own shares or other specified securities if it has defaulted in the repayment of deposits, interest payment, or redemption of debentures/preference shares, unless the:
Under the Companies Act framework, the offer for buyback of shares or other specified securities is generally required to be completed within a specified maximum period from the date of passing the special resolution (or board resolution, as applicable) authorising the buyback, this being intended to:
Under the Companies Act framework, a company is generally required to maintain a register of the securities it has bought back, recording particulars such as the consideration paid for the securities bought back, and the:
Under the Companies Act framework, a company undertaking a buyback of its own securities through the open market (via a recognised stock exchange) is generally subject to a specific regulatory framework governed by the applicable securities market regulator, in addition to the general conditions set out under the:
Under the Companies Act framework, when a company completes a buyback of preference shares (rather than equity shares), the accounting treatment for the resulting reduction in the company's own share capital is broadly analogous to the accounting treatment applicable to a:
Under the Companies Act framework, one of the general conditions a company must satisfy before undertaking a buyback is that the buyback must be authorised by the company's own articles of association, ensuring that the:
Under the Companies Act framework, after completing a buyback, a company is generally required to file a return with the relevant regulatory authority (e.g. the Registrar of Companies), containing particulars of the buyback, within a specified period of time from the date of:
Under the Companies Act framework, equity shares with differential voting rights are generally required to be disclosed separately in a company's shareholding pattern and financial statements, distinguishing them from the company's own:
When a company issues equity shares with differential rights as to dividend (e.g. a higher fixed dividend rate combined with restricted or no voting rights), this structure is generally intended to allow the company to raise equity capital from investors who prioritise:
When a scheme of amalgamation involves the transferor company's shareholders receiving shares of the transferee company, along with a small cash balancing figure, that cash component is generally referred to as the:
In the books of a transferor company undergoing an amalgamation, the Equity Shareholders' Account (or Shareholders' Account) is generally used to record the transfer of the transferor company's own reserves and the resulting profit or loss on realisation, in order to determine the:
When a transferee company issues shares to the transferor company's shareholders as part of the purchase consideration for an amalgamation, the transferee company's own Share Capital account is credited with the:
Under an amalgamation in the nature of a purchase, when the transferee company assumes the liabilities of the transferor company at amounts different from their book values in the transferor's own books, those liabilities are generally recorded in the transferee company's books at their:
In an amalgamation scheme where the transferee company also agrees to discharge the transferor company's debenture holders by issuing its own debentures in exchange, that specific exchange of debentures is generally treated as part of the overall:
Under an amalgamation in the nature of a merger, since no adjustment is generally made to the transferor company's own book values (other than for achieving uniformity of accounting policies), the resulting financial statements of the combined transferee company are generally regarded as reflecting a continuation of the:
When preparing the opening Balance Sheet of a transferee company immediately after an amalgamation, the combined Balance Sheet is generally required to reflect the elimination of any inter-company balances (such as mutual owings between the transferor and transferee companies) that existed:
Under an amalgamation, when the transferor company's own contingent liabilities (such as a pending legal claim) are assumed by the transferee company, those contingent liabilities are generally disclosed by the transferee company in accordance with the general principles applicable to:
In an amalgamation, the transferor company's own preliminary expenses (such as its original formation/incorporation costs, if still carried as an unamortised balance) are generally NOT taken over by the transferee company, since such expenses represent a cost specific to the:
Under an amalgamation, the specific date from which the amalgamation is given effect for accounting purposes (i.e. the 'appointed date' or 'effective date') is generally determined by reference to the scheme of amalgamation itself, as sanctioned under the:
'Internal reconstruction' of a company refers to a process by which a company's own capital structure and financial position are reorganised WITHOUT:
A primary purpose of internal reconstruction is generally to eliminate a company's accumulated losses and write down overvalued assets, so that the company's Balance Sheet presents a:
A 'reduction of share capital' undertaken as part of an internal reconstruction scheme generally requires the approval of the company's shareholders and confirmation by the:
In accounting for an internal reconstruction, a 'Capital Reduction Account' (or 'Reconstruction Account') is generally used to record the various sacrifices made by shareholders and creditors, and to absorb the company's:
In a scheme of internal reconstruction, when equity shareholders agree to a reduction in the nominal value of their shares (e.g. from ₹10 to ₹5 per share), the resulting credit arising in the company's books is generally transferred to the:
In a scheme of internal reconstruction, preference shareholders may be asked to forgo (give up) a portion of their arrears of preference dividend, which, if agreed, is generally treated as a:
In a scheme of internal reconstruction, a company's creditors may agree to reduce the amount owed to them (a 'haircut'), in exchange for which they might receive shares in the company or some other form of settlement; the resulting gain to the company from this reduction is generally credited to the:
After a scheme of internal reconstruction is fully implemented, and the Capital Reduction Account has fully absorbed the company's accumulated losses and asset write-downs, any remaining (residual) balance in that account is generally transferred to:
Under an internal reconstruction, the phrase 'reconstruction scheme' is generally distinguished from an 'amalgamation' primarily because internal reconstruction involves only a:
In a scheme of internal reconstruction, when a company's overvalued fixed assets are written down to their genuine, more realistic current value, the resulting debit (loss) is generally absorbed against the:
Under the branch accounting system generally known as the 'debtors system' (typically used for a small-sized branch), the Head Office maintains a single Branch Account in its own books, which is prepared to determine the branch's own:
Under the 'stock and debtors system' of branch accounting (typically used for a larger branch requiring more detailed control), the Head Office maintains several separate accounts, including a Branch Stock Account, a Branch Debtors Account, and a Branch Adjustment Account, primarily to enable:
Under the branch accounting system generally used for an 'independent branch' (one that maintains its own complete, self-contained set of books), the branch's own trial balance is periodically incorporated into the Head Office's own books through a process of:
When incorporating an independent branch's trial balance into the Head Office's own books, any reciprocal (mutual) balances between the Head Office and the branch, such as the 'Branch Account' in the Head Office's books and the 'Head Office Account' in the branch's own books, are generally required to be:
For a foreign branch that is classified as a 'non-integral foreign operation' (largely independent of the Head Office's own operations), the branch's assets and liabilities are generally translated into the reporting currency of the Head Office using the:
For a foreign branch that is classified as an 'integral foreign operation' (essentially an extension of the Head Office's own business), the branch's non-monetary items carried at historical cost are generally translated using the exchange rate prevailing at the:
When incorporating a foreign branch's trial balance into the Head Office's own books, exchange differences arising on translation of a non-integral foreign branch's financial statements are generally accumulated in a separate component of equity known as the:
Under branch accounting, goods sent by the Head Office to a dependent branch (one not maintaining its own complete, independent set of books) at 'invoice price' (a price above cost, to conceal the actual profit margin from branch staff) require the Head Office to make an adjustment for the resulting unrealised profit element included in the branch's own:
Under branch accounting, the 'Stock Reserve' created to eliminate unrealised profit included in a dependent branch's closing stock (valued at invoice price) is generally computed as a proportion of the closing stock's invoice-price value, based on the:
Under branch accounting for a dependent branch that also sells goods obtained locally (in addition to goods received from the Head Office), the branch's own overall trading results (and hence overall profit) are generally determined by combining the results of the goods received from the Head Office with the results of the:
Internal reconstruction is generally distinguished from a simple 'reduction of share capital' alone, since internal reconstruction typically involves a broader, more comprehensive reorganisation that may also include a change in the:
In a scheme of internal reconstruction, when the company's authorised share capital itself needs to be altered (e.g. subdividing shares into a larger number of smaller-denomination shares), this generally requires an alteration of the company's own:
Under a scheme of internal reconstruction, debenture holders may sometimes agree to convert part of their debentures into equity shares of the company, which has the effect of reducing the company's own:
In a scheme of internal reconstruction, a company's contingent liabilities (such as a pending legal claim not yet recognised as an actual liability) are generally:
Under a scheme of internal reconstruction, when the company's own share premium account (if it exists and has an unutilised balance) is applied to help write off accumulated losses, this application is generally subject to the same statutory restrictions that govern the:
In a scheme of internal reconstruction, when a company issues new shares for cash specifically to raise additional working capital as part of the overall reconstruction, the proceeds of that fresh issue are generally recorded separately from the:
Under a scheme of internal reconstruction, once the Capital Reduction Account has fully absorbed the company's accumulated losses and asset write-downs, the company's Balance Sheet is generally expected to show a Profit and Loss Account balance of:
Under a scheme of internal reconstruction, when a company's overvalued current assets (such as slow-moving or obsolete inventory) are written down to their genuine, more realistic net realisable value, the resulting write-down is generally treated in the same manner as the write-down of a company's:
A key practical difference between internal reconstruction and external reconstruction (achieved via an amalgamation-style transfer to a newly formed company) is that internal reconstruction generally avoids the need for a fresh:
Under a scheme of internal reconstruction, the overall scheme is generally required to be fair and equitable to all classes of stakeholders affected, including equity shareholders, preference shareholders, debenture holders, and:
Under branch accounting for a dependent branch, cash remitted by the branch to the Head Office (representing cash sales and cash collected from branch debtors) is generally recorded in the Head Office's own Branch Account as a:
Under branch accounting, expenses incurred directly by the Head Office on behalf of a dependent branch (such as branch rent paid centrally by the Head Office) are generally recorded in the Head Office's own Branch Account as a:
Under branch accounting, goods returned by branch customers directly to the Head Office (rather than to the branch itself) require an adjustment in the Head Office's own Branch Account to reflect that the branch's own debtors (customer) balance should be correspondingly:
Under branch accounting, when the Head Office grants a discount or allowance to a branch customer directly (bypassing the branch itself), this is generally treated in the Head Office's own Branch Account as an item that reduces the:
Under branch accounting for a dependent branch maintaining the stock and debtors system, the Branch Adjustment Account is primarily used to record the loading (unrealised profit margin) included in goods sent to the branch, and to ultimately determine the branch's own genuine:
Under branch accounting, normal losses of goods in transit or at the branch (such as ordinary evaporation or wastage inherent to the nature of the goods) are generally treated by:
Under branch accounting, abnormal losses of goods (such as goods destroyed by fire or theft at the branch, well beyond ordinary expected wastage) are generally treated by:
Under branch accounting, when the Head Office decides to send fixed assets (such as furniture or equipment) to a branch for the branch's own use, these fixed assets are generally recorded, for depreciation and accounting purposes, in the books of the:
Under branch accounting, a 'wholesale branch' (one that sells goods to independent retailers rather than directly to final consumers) is generally distinguished from an ordinary retail branch primarily by reference to the:
Under branch accounting, when preparing the combined financial statements of the Head Office and its various branches, any unrealised profit remaining in the closing stock of goods still held by a branch (that had originally been sent from the Head Office at a price above cost) is generally eliminated, consistent with the broader accounting principle that profit should only be recognised once the underlying goods have actually been: