Comparison of accounting standards (2)
-
Upload
sachin-singh -
Category
Business
-
view
641 -
download
0
description
Transcript of Comparison of accounting standards (2)
International financial reporting standards (IFRS)
• The NYSE and AICPA jointly published – First Accounting Standard of the World in 1934.
• During 1960 to 2008 Financial accounting and reporting "principles, standards, and practices.“ emerged as International Accounting Standards
• New series of guidelines called International Financial Reporting Standards (IFRS) from 1997
ICAI constituted the Accounting Standards Board (ASB) on 21st April, 1977, with a view to harmonize the diverse accounting policies and practices in use in India.(32 standards)
Accounting standards
29 International Accounting Standard (IAS), 8International Financial Reporting Standards (IFRS),11 Standing Interpretations Committee (SIC) and 17 International Financial Reporting Interpretations (IFRIC)
Adoption by over 110 countries, Acceptance by Stock Markets Globally.
Full adoption of IFRS from accounting periodcommencing on or after 1 April 2011, Applicable to listed entities and public interest entities such as banks, insurance companies and large sized entities (turnover 100 crores, public deposit 25 crores last year)
"Adoption of IFRS, the new global reportingstandards, would improve Comparability (Benchmarking with global
peers) transparency (Base is known to the investor) and credibility of financial statements and in a
globalized world, would lead to greater economic efficiencies,
(Avoids multiple reporting)
CII said in a release.
Why IFRS
India needs 500 Billion dollars of investment in infrastructure sector alone by 2012.
As per Bloomberg, Indian companies raised Rs12,672 crore (USD 2.64 billion converted at Rs 48 a dollar) by issuing depository receipts in the September 2009 quarter itself.
IFRS (IAS 1) INDIAN GAAP (AS1)
No specific Format
Two Years ‘ Consolidated
• Balance Sheet
• Income Statement
• Cash Flow Statement
• Changes in equity
• Accounting Policies and notes• Statement of recognized
income and expenses(SORIE)
No specific format but guided by Companies Act and Industry Guidelines
Two Years ‘ Consolidated
• Balance Sheet • Income Statement
• Cash Flow Statement
• Accounting Policies and notes
Presentation of Financial Statements
IFRS (IAS 29) INDIAN GAAP
If cumulative inflation in the country is approaching or exceeding 100% in three years
Entities that have functional currency of the hyperinflation economy , restate their financial statement using a measurement unit current at the Balance Sheet.
No guidance
Hyperinflationary Economic
Measurement
IFRS ( IAS 3) Indian GAAP (AS 14)
All business combinations shall be accounted as per purchase method at fair values
Consolidation- Purchase Method
Amalgamation- Pooling of Interest
Acquisition- Held as a subsidiary and long term investment
Business Combination
Factors IFRS (IAS 16, 38) INDIAN GAAP (AS 6, 10, 26)
Depreciation Useful Life Higher of useful life or schedule XIV
Annual Review Useful life, Depreciation Method , Residual Value
Not Required
Major Repair and Maintenance
Capitalized Treated as Expenses
Revaluation Every Year which opts for revaluation model
Not Required
Intangible Assets • May have indefinite life
• No amortization• May be revalued if
active market exists
• No indefinite life• Amortized in 10 years• No Revaluation
Fixed Assets Accounting