ISSN - 2250 - 1991Volume : 1 Issue : 5 May 2012` 200

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INDEXSr. No. Title Author Subject Page No.

1 Convergence of India Gaap with International GAAP / IFRS

Prof. Kalola Rimaben A. Accountancy 1-3

2 Global Scenario of Business Ethics With Corporate Governance

Prof. Dr.Kishor V. Bhesaniya

Accountancy 4-6

3 VAT & ACCOUNTING Miss. Mira J. Bhanderi Accountancy 7-8

4 Carbon Trading: An Emerging Business Dr. Basanta Khamrui, Dilip Kumar Karak

Commerce 9-11

5 Developments in Indian Non Life Insurance Industry Ms.Kiran Sood, Ms.Supriya Tandon

Commerce 12-14

6 Parameters And Costs Influencing Transportation Decisions In Small Manufacturing Firms

Vipul Chalotra,Prof Neetu Andotra

Commerce 15-17

7 Foreign Trade Policy of India (2009-14) Dr. M. K. MARU Commerce 18-20

8 “A Comparative Analysis on Profitability of Selected Petroleum Industries”

Dr. Ramesh A. Dangar Commerce 21-23

9 An Empirical study on Consumer Awareness on Internet Banking in Gujarat

Dr. Vinod K. Ramani Commerce 24-26

10 Study of Factors Affecting HNIs’ Preferences for their Banks in South Mumbai Area

Shri. Arvind A. Dhond Commerce 27-31

11 Promotion mix straregy of jammu and kashmir co-operatives supply and marketing federation limited in jammu district of J&K state

Tarsem Lal Commerce 32-35

12 Intelligent Brain Tumor Tissue Segmentation from Magnetic Resonance Image using forward and backward anisotropic diffusion

S.Nithya Roopa,P. Vasanthi Kumari

Computer Science

36-38

13 Share of Women in Total Family Income – A Two Group Discriminant Analysis

Dr.A.Shyamala Economics 39-41

14 Socio-Economic Evaluation of Shg’s in Bidar District of Karnataka

Dr.Sangappa V. Mamanshetty

Economics 42-44

15 The Development of Chemical and Petrochemicals Industry in Gujarat

Dr.D.G.Ganvit Economics 45-46

16 How Can Primary Teachers Help To Assist The Development Of Positive Self-Esteem In Students Through Their Ordinary Teaching Practice?

Jigar L. Dave Education 47-48

17 Primary Mission Of Colleges Jigar L. Dave Education 49

18 Effectiveness of Readers Theatre on English Reading Comprehension

Ramesh B. Sakhiya Education 50-51

19 The Role of a Computerized Package on EFL Students' Writing Skills

Abdallah Ahmad, Baniabdelrahman, Abdulaziz A. Abanomey

Education 52-57

20 The Use of Team Teaching and its Effect on Saudi EFL Students' English Proficiency

Abdallah Ahmad, Baniabdelrahman, Abdulaziz A. Abanomey

Education 58-63

21 Study and Development of Road Traffic Noise Model Bhavna K. SutharV. R. Gor, A. K. Patel

Engineering 64-66

22 Weather Forecast Using Artificial Neural Network Laxmikant Raskar, Rohit Waghchaure, Md. Danish Raza,Mayuresh Lande

Engineering 67-68

23 Pavement Subgrade Stabilisation with Rice Husk Ash Patil N. L.,Dr. Sanjay Sharma,Dr. Hemant Sood

Engineering 69-71

24 Study of Precipitation and Stream Flow Data- A Case Study of Kim Basin

Prashant A. Ramani Engineering 72-76

25 “Estimation of Revised Capacity for Deo Reservoir of Gujarat, India”

Hiral Shah,N. N. Borad, R. K. Jain

Engineering 77-79

26 Nanotechnology in Cellular Lightweight Concrete Mr. Nakul Shah, Prof. Jayeshkumar Pitroda

Engineering 80-82

27 Plate Load (Model) Test for Bearing Capacity of Layered Deposite

Patel Ankit D., B.R. Dalwadi

Engineering 83-85

28 Effect of Service Bridge on natural frequency of structurally coupled multistory building

Upadhyay Nishith H., Prof. A.N. Desai

Engineering 86-88

29 “Controling the Soil & Land Pollution in Sabarkantha District by Using an App Lication of Remote Sensing and Geographical Information System”

Gaurang J Patel,R.B Khasiya

Engineering 89-91

30 Control The Soil Erosion & Land Pollution By Flood Reduction in The Tapi River,Surat District, Gujarat, India.

Harshad M.Rajgor,K B Khasiya

Engineering 92-95

31 Methodology for managing irrigation canal system with optimum irrigation scheduling for Meshwo irrigation Scheme

Jitendrasinh D. Raol, Roshani A.Patel,Prof S.A.Trivedi

Engineering 96-98

32 Analyis of regional water supply scheme in rural areas (Case Study: Kutch)

Niketa Patel Engineering 99-103

33 Security For Near Field Communication in Cell Phone Biren M Patel, Vijay B Ghadhvi,Mr Ashish Kumar

Engineering 104-106

34 Heterogeneous Traffic Flow Simulation at Urban Roundabout using ‘VISSIM’

Dipti S. Thanki, Asst. Prof. Ashutosh K. Patel

Engineering 107-109

35 Planning of Facilities for Pedestrian Movement in Urban Area: A Case Study of Vadaj Circle, Ahmedabad

Hitesh A. Patel,Pinak. S. Ramanuj

Engineering 110-113

36 Planning for Non-Motorized Transportation Jignesh C.Prajapati, Prof. N.G.Raval

Engineering 114-116

37 Intersection Design for Pedestrians and Cyclist Jignesh C.Prajapati, Prof. N.G.Raval

Engineering 117-120

38 Theoretical Consideration for optimum irrigation scheduling for irrigation Scheme

Jitendrasinh D. Raol, Prof S.A.Trivedi

Engineering 121-124

39 Overall Equipment Effectiveness Measurement and Review of Total Productive Maintenance

Kadiya Pinjal, Navinchandra

Engineering 125-128

40 To Study the Effect Of Stiffness on the Expansion Joint of a Building Subjected to Earthquake Forces

M.D.SHAH, P. G. Patel Engineering 129-132

41 Side Friction and Side Friction Factor (FARIC) In Ahmedabad Road Link

Parmar Dushyant J, Asst. Prof. Ashutosh K. Patel

Engineering 133-134

42 Fiber Reinforced Selfcompacting Concrete Patel Nikunj R,Elizabeth George

Engineering 135-137

43 Modal Analysis of Helical Gear Purusharth J. Patel,D.A. Patel

Engineering 138-140

44 Impact Strength of Ternary Blended Steel fiber Reinforced concrete

Samir M. Gami., D.A.Sinha

Engineering 141-143

45 Identify issues of traffic movement at landside area & remedial measures

Samir P. Mulani,Prof- Naurdin Hajiani

Engineering 144-147

46 Identification of Truck Transportation Issues at a Junction: a case study of Sarkhej Area

Himanshu. B. Shrimali, Prof- Naurdin Hajiani

Engineering 148-152

47 Assessment of Vehicular Carbon Footprint and its Reduction Measures

Chintan Patel,Prof. H.K.Dave

Engineering 153-155

48 Study of Solar Air Heaters with Different Operating Configurations

Ajaypalsinh Gangasinh Barad

Engineering 156-158

49 Traffic Flow Characteristics on Roads of Small Urban Centre

Axay S. Shah,Dr. L.B.Zala

Engineering 159-162

50 Failure in tensile testing on single lap multi-fastener joint with bolted connection

Jagdish N.Prajapati, Dr.Rajula.k.Gujjar, Prof.M.M.Pomal

Engineering 163-167

51 Study Of Infiltration Capacity At Anjar, Kutch Ravi C Ahir, Sagar D Patel

Engineering 168-169

52 Comparison of Temperature-Base Methods For Calculating Reference Evapotranspiration With Standard Penman-Monteith Method

M.R.Popat, S.N.Chavda, B.H.Pandit

Engineering 170-172

53 Electronic customer relationship management: benefits and trend

Tanuja Nair Engineering 173-174

54 VIRTUAL CLASS ROOM USING MOBILE AD-HOC NETWORK

Gaurav Katariya, Yogesh Parkhe, Devendra Patil,Pawan Pawar

Engineering 175-176

55 PARKING EVALUATION: A CASE STUDY OF AMUL DAIRY ROAD ANAND

Jaydipsinh P. Chudasama, Dr. L.B.Zala

Engineering 177-180

56 ENERGY ANALYSIS OF SOLAR AIR HEATER BY USING DIFFERENT TYPES OF ABSORBER PLATES

Vivek B. Patel,Dr. L.B.Zala

Engineering 181-183

57 Effect of Aspect Ratio W/L ,Body Bias ,and supply Voltage (vDD) for NMOS & PMOS transistor.

Rubina Siddiqui, Angeeta Hirwe, Rahul Parulkar

Engineering 184-186

58 Spider diversity of Wan Wild life Sanctuary, Vidharbha , India.

Taktode N.M. Environment 187-188

59 The Initial Human Behavioural Response to Rapid On set Natural Disaster: Earthquake

S.S. Patil, K.L. Karkare, I.B. Ghorade

Environmental Science

189-190

60 Spatio-temporal Distribution of Surface Water for Irrigation in Satara District of Maharashtra: An Analytical Study

Pawar D. H., Jadhav K.R.

Geography 191-193

61 Nagarcha wadh v kushi bhumi upyog badal nanded-vaghan ek abhyas pahani

Prof. Mane Deshmukh R. S., Dr. S. B Rathod

Geography 194-196

62 Socio-Economic and Nutritional Status of Children with Mental Retardation

Dr. S. S. Vijayanchali Home Science 197-199

63 Motivating Employees under Adverse Conditions Dr Alpesh B Joshi Human Resource

200-202

64 “Strategic Human Resource Management” Dr. M. Venkatasubba Reddy, B. Swetha,S. Jaya Krishna

Human Resource Management

203-204

65 Identifying Crosscutting Concerns for Software Requirement Engineering

Velayutham Pavanasam, Chandrasekaran Subramaniam

Information Technology

205-207

66 Gate pass Automation with Image,Barcode reading and Biometrics

Sumant C. Murke,Tejas N. Athavale, Sangram A. Nalawade

Information Technology

208-210

67 Plight of Rape Victims With Special Reference to India Dr. Monica Narang, Richa Sabharwal

Law 211-212

68 Libraries: An Essential Tool for the Advancement of Knowledge Resources & Research in Recent Era

Dr. Umesh Patel Library Science 213-215

69 An Analytic Study of BA/BSc/BCA/BCom Part I General English Syllabus Prescribed by the University of Jammu

Dr. Wajahat Hussain Literature 216-217

70 A Study on Quality of Work Life Dr.N.Thenpandian Management 218-219

71 Best HR Practices Kavita Trivedi Management 220-221

72 A Study on Employee Retention Practices of Automobile Industry in INDIA

Dr.K.Balanaga Gurunathan, Ms. V.Vijayalakshmi

Management 222-224

73 A Study on Innovation for Organizational Excellence in Health Care Industry in a Private Multi-Speciality Organization

Dr. C. Swarnalatha,T.S. Prasanna

Management 225-227

74 “Performance measurement of Top 10 Mutual Funds with the help of Sharpe, Treynor & Jenson Model”

Monal Patel, Dr. Deepak H. Tekwani

Management 228-230

75 Strategic Expansion for Growth A Case Study on Codescape Consultants Pvt Ltd. (Infinite Possibilities)

Akshay Arora,Abhilansh Bhargava, Preeti Sharma

Management 231-232

76 Role Of Education In Innovation For Economic Development - A Case Study

Dr. Ananthapadhmanabha Achar

Management 233-238

77 ROLE OF HR PROFESSIONAL IN DEALING DISCIPLINARY PROCEEDINGS CONSTRUCTIVELY - AN OVERVIEW

C Santhanamani, Dr. N. Panchanatham

Management 239-241

78 Power of Advertising Supriya Tandon Management 242-244

79 Enhancing Employee Engagement: A Need of The Hour Urmila Vikas Patil Management 245-247

80 Role of E-Learning to Enhance Qualities of Physical Education Teachers and Coaches

Gohil Rajendrasinh K. Physical Education

248-250

81 “Eco – Environmental Study on Nutrient Removal Potential of Eichhornia Crassipes from Domestic Wastewater”

D. K. Patel, V. K. Kanungo

Science 251-253

82 Aphasia – a loss of linguistic faculty Dr Alpesh B Joshi Social Sciences 254-256

83 Workaholism – A Modern Day Nuisance Dr Alpesh B Joshi Social Sciences 257-258

84 Vartman me Dalit Varg ki Samasya Dr. H. L. Chavda Sociology 259-260

Volume : 1 | Issue : 5 | May 2012 ISSN - 2250-1991

PARIPEX - INDIAN JOURNAL OF RESEARCH X 1

Research Paper

* Assistant Professors, Gujarat Arts & Commerce College (Evening), Ahmedabad

Accountancy

Convergence of India Gaap with International GAAP / IFRS

* Prof. Kalola Rimaben A.

Keywords : Accounting principles, Accounting concepts, Key divergences between India GAAP and IFRS

Accounting, being a man made system, should evolve and adjust itself to the changes needed by the mankind. As a result, accounting principles are not as exact and rigid as the laws of natural sciences. Therefore, the emphasis is on general instead of universal acceptability of accounting principles. The GAAP are not the building blocks of the accounting language. Rather, they are the pillars on which the structure of accounting is resting. If we remove these principles, the entire structure of accounting will come down. The GAAP should be understood by the makers and the users of accounting information before analyzing and interpreting financial statements. Accounting communicates the financial results of business to various parties by means of financial statements which have to exhibit a “true and fair” view of the state of affairs. Convergence with IFRS has gained momentum in recent years all over the world. 110+ countries including European Union, Australia, China, New Zealand, and Russia currently require or permit the use of IFRS. Apart from India, countries like Japan, Sri Lanka, Canada and Korea have also committed to adopt IFRS from 2011. United States of America has announced its intention to adopt IFRS from 2014 and it also permits foreign private filers in the U.S. Stock Exchanges to file IFRS complied Financial Statement, without requiring the presentation of Reconciliation statement.

ABSTRACT

IntroductionAccounting aims to provide financial information about an en-terprise to various interested groups for decision-making. As accounting communicates financial information for decision-making to many parties outside the reporting business entity, it is necessary that there is uniformity in the preparation of financial statements of different enterprises at a given point of time. It also requires consistency in the preparation of finan-cial statements of an enterprise over a period of time. If every business could follow its own notion about the accounting terms like revenue, expenses, assets, liabilities, income etc., there will be complete chaos. To have uniformity and consist-ency in the preparation of financial statements, accounting operates within a framework of “Generally Accepted Account-ing Principles” (GAAP), follows a conceptual framework and adheres to the “Accounting Standards” (AS) issued by the recognized regulatory body. This is referred to as the theory base of accounting.

Accounting principles are constantly evolving and are influ-enced by the following :

Ø Changes in the social, legal and economic environmentØ Professional bodies like the Institute of Chartered Ac-

countants of India, the American Institute of Certified Public Accountants, International Accounting Standards Board etc.

Ø Needs of the users of financial information

The GAAP includes the following concepts: Ø Accounting EntityAccountants treat a business as distinct from the persons who own it. Then, it becomes possible to record the trans-actions of the business without the proprietor also. The con-cept of separate business entity is applicable for all types of organizations like sole proprietorship, partnership etc. where the business affairs are free from the private affairs of the proprietor or partner.

Ø Money MeasurementAccounting records normally those transactions which are be-

ing expressed in monetary terms. Measurement of business events in monetary terms helps in understanding the state of affairs of the business in a much better way.

Ø Going Concern ConceptIt is assumed that the business will exist for a ling time and transactions are recorded from this point of view. Based on this concept, the accountants, while valuing assets, will not consider the forced sale value of assets (market value), but the assets, normally, will be reflected at the cost of acquisition minus depreciation. Similarly, depreciation is provided based on the expected life of the assets.

Ø Accounting Period Concept According to this concept, the life of a business is divided into appropriate segments of time, say 12 months, for studying the results. While the life of a business is considered to be indefinite, according to the going concern concept, the meas-urement of income and studying the financial position of the business after a very long time would not be helpful in taking corrective steps at the appropriate time.

Ø Cost ConceptTransactions are entered in the books of account at the amounts actually involved. An asset is ordinarily recorded at a price at which it has been acquired. For example, a plot of land purchased by a firm for Rs. 5,00,000 would be recorded at this value irrespective of its current market price. Cost con-cept has the advantage of bringing objectivity in the presenta-tion of the financial statements.

Ø Realization ConceptAccounting is a historical record of transactions. It only records what has happened. It does not anticipate events, though anticipated adverse effects of events that have al-ready occurred are usually recorded.

Ø Expenses Recognition Cost is the total outlay or expenditure on acquiring resources required for the production of goods or rendering of services. Cost of resources utilized and lost during a particular period

Volume : 1 | Issue : 5 | May 2012 ISSN - 2250-1991

2 X PARIPEX - INDIAN JOURNAL OF RESEARCH

is termed as the expired cost or expense and is charged to the revenue of the period to obtain information about income. Costs of the resources remaining unutilized or unexpired at the end of the period are carried forward to the next account-ing period and are termed as assets.

Ø Accrual ConceptThe accrual system is a method whereby revenue and ex-penses are identified with specific period of time like a month, half year or a year. It implies recording of revenue and ex-penses of a particular accounting period whether they are received/paid in cash or not.

Ø DisclosureWhether something should be disclosed or not will depend on whether it is material or not. Materiality depends on the amounts involved in relation to the assets group involved or profits. In the case of financial statements of a limited com-pany, the practice followed is to append the notes to the ac-counts and disclose significant accounting policies. This is in pursuance of the convention of full disclosure.

Ø Dual Aspect ConceptEach transaction has two aspects. With every increase in the money owned to others, there should be an increase in as-sets or loss. Thus, at any time the accounting equations is as follows : Assets = Liabilities + Capital, or alternatively, Capital = Assets – Liabilities

Ø Verifiable ObjectivityAccording to this concept, all accounting transactions should be evidenced and supported by objective documents. These documents include invoices, contracts, correspondence, vouchers, bill, pass books, etc.

Ø MaterialityAccording to this convention, the accountant should attach importance to material details and ignore insignificant details. This is because otherwise accounting will be unnecessarily overburdened with minute details. The question “what consti-tutes material details” is left to the discretion of the account-ant.

Ø ConsistencyThe accounting practices should remain the same from one year to another. For example, consistency in valuation of stock in trade or in method of charging depreciation. If the stock has been valued by adopting the principle of cost or market value, whichever is less, the same principle has to be consistently followed year after year.

Ø ConservatismFinancial statements are usually drawn up on a conserva-tive basis, especially in the initial stages when the anticipated profits, which were accounted, did not materialize. This re-sults in less acceptability of accounting figures by the end-users. Therefore, accountants follow the rule “anticipate no profits but provide for all possible losses.” Similarly, based on this convention, the inventory is valued at cost or market price whichever less is. Necessary provision for bad and doubtful debts is made in the books of account.

Ø TimelinessFinancial reports should be timely to have any usefulness for decision makers. Timeliness in financial reporting requires es-timation of depreciation, provision for bad and doubtful debts, provision for discount etc. to prepare the financial statements of different accounting periods.

§ Industry Practice Sometimes, practice prevailing in a par-ticular industry is given precedence over generally accepted accounting principles. For example, valuation of gold on the basis of market price, agriculture products on the basis of minimum support price determined by the government etc.

§ Substance over FormThe accounting treatment and pres-

entation in the financial statements of transactions and events should be governed by their substance and not merely by their legal form. Hence, when goods are purchased on hire-purchase basis, the property in goods is transferred to the buyer on their payment of the last installment only.

v Accounting StandardAccounting communicates the financial results of business to various parties by means of financial statements which have to exhibit a “true and fair” view of the state of affairs. However, these rules have to be used with a reasonable degree of flex-ibility in response to specific circumstances of the business.

The changes in the economic environment, social needs, le-gal requirement and technological developments. Accounting standards are defined as the policy documents issued by a recognized expert accounting body relating to various as-pects of measurement, treatment and disclosure of account-ing transactions and events. In India, accounting standards are prepared by the Accounting Standard Board constituted by the Institute of Chartered Accountants of India.

v Convergence of Indian GAAP with International GAAP /IFRSConvergence with IFRS has gained momentum in recent years all over the world. 110+ countries including European Union, Australia, China, New Zealand, and Russia currently require or permit the use of IFRS. Apart from India, countries like Japan, Sri Lanka, Canada and Korea have also commit-ted to adopt IFRS from 2011. United States of America has announced its intention to adopt IFRS from 2014 and it also permits foreign private filers in the U.S. Stock Exchanges to file IFRS complied Financial Statement, without requiring the presentation of Reconciliation statement. In this scenario of globalization, India cannot insulate itself from the develop-ments taking place worldwide. In India, so far as the ICAI is concerned, its aim has always been to comply with the IFRS to the extent possible with the objective to formulate sound financial reporting standards. The ICAI, being a member of the International Federation of Accountants (IFAC), considers the IFRS and tries to integrate them, to the extent possible, in the light of the laws, customs, practices and business en-vironment prevailing in India. The Preface to the Statements of Accounting Standards, issued by the ICAI, categorically recognizes the same.

v The key divergences between India GAAP and IFRS have arisen due to : 1. Conceptual differences2. Legal and regulatory requirements3. Present economic conditions4. Level of preparedness

v Some of the divergences between Indian GAAP and IFRS are summarized as under:1. Special Purpose Entities (SPE) falling under the definition

of ‘control’ as per IAS 27 on “Consolidated and Separate Financial Statements” shall be consolidated.

2. ‘Potential Voting Rights’ that are currently exercisable or convertible shall be considered to assess the existence of ‘control’.

3. All business combinations shall be accounted as per pur-chase method at fair values.

4. Negative goodwill arising on business combinations / consolidation shall be accounted as income instead of capital reserve

5. Goodwill shall not be amortized. It shall only be tested for impairment

6. PP&E and Intangible assets shall be measured either at cost or at revalued amount. Periodical valuation of entire classes of assets is required when revaluation option is chosen

Volume : 1 | Issue : 5 | May 2012 ISSN - 2250-1991

PARIPEX - INDIAN JOURNAL OF RESEARCH X 3

7. Intangible assets can be revalued only when there is an active market for the same

8. Depreciation on revalued portion cannot be recouped out of revaluation reserve

9. Depreciation to be calculated based on useful life, which along with residual value and depreciation method shall be reviewed annually

10. Intangible assets may have an indefinite life e.g. Trade-marks, Goodwill, Franchise

11. Investment property, i.e. land or building hale to earn rent-als or for capital appreciation, shall be measured either at cost or fair value

12. If fair value model is adopted, changes in fair value, measured annually, shall be recognized in the income statement

13. No distinction shall be made between integral and non-integral foreign operations. All foreign operations to be consolidated using non-integral approach

14. Exchange differences shall not be capitalized except to the extent of that allowed by IAS 23 Borrowing Costs

15. Share Based Payments shall be measured at fair value

16. Deferred tax shall be created on temporary difference in-stead of timing differences

17. Liability portion of compound financial instruments, such as convertible debentures, shall be separately

18. Financial assets and liabilities shall be classified and measured accordingly as per the requirements of IAS 39

19. Financial Instruments : Recognition and Measurement

20. All derivative financial assets and liabilities including em-bedded derivatives shall be accounted for as on the bal-ance sheet items

21. Derivatives classified as ‘hedge’ shall have to comply with various requirements of IAS 39 viz. documentation, hedge effectiveness testing and ineffectiveness measure-ment

22. Deracination of financial assets, as in the case of securi-tization, shall be based on risks and rewards, transfer of ‘control’ being a secondary test

23. Prior period errors shall be adjusted in the opening bal-ances of assets, liabilities and equity of the earliest period presented i.e. the figures relating to prior years are re-stated

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