Accounting Standards in India Best

8/4/2019 Accounting Standards in India Best

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US GAAP

Established by Financial Accounting Standard Board(FASB)

It provides principles for

1)Financial accounting

2)Management accounting

3)Internal revenue

US GAAP , INDIAN GAAP AND

ACCOUNTING STANDARDS


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IASINTERNATIONAL ACCOUNTING STANDARDS


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A set of international accounting and reporting

standards that will help to harmonize company

financial information, improve the transparency of

accounting, and ensure that investors receive more

accurate and consistent reports.

DEFINITION


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Statements ofInternational Accounting Standards are issued bythe Board of the International Accounting Standards Committee(IASC) between 1973 and 2001

Objective of the IASC:

further harmonization of accounting practices through theformulation of accounting standards and to promote theirworldwide acceptance.

IASB founded on April 1, 2001 is the successor of the IASC


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It is responsible for developing the IFRS, and promoting

the use and application of these standards.

40 International Accounting Standards (IASs) to date

covering a range of topics.

It has also issued a Framework for the Preparation and

Presentation ofFinancial Statements.


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Benefits

Investors and analysts - enhanced comparability of

financial statements.

Multinational corporations

Stock exchanges.

developing or other countries


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Accounting Standards in India

AS1: Disclosure of Accounting Policies

Going Concern

Consistency

Accrual

Accounting standards vis--vis accounting estimates

AS2: Valuation of Inventories

AS3: Cash Flow Statements


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AS4: Contingencies and Events occurring after

Balance Sheet Date

AS5: Net Profit or Loss for the Period, Prior

Period Items and Changes in Accounting Policies

AS6: Depreciation Accounting

AS7: Accounting for Construction Contracts


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AS8: Accounting for Research and Development

AS9: Revenue Recognition

AS10: Accounting for fixed asset Revalued amount substituted for historical cost of fixed

assets

The method adopted to compute revalued amount

The nature of indices used The year of any appraisal made, and whether external

value was involved


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AS11: The effects of changes in Foreign

Exchange Rates

AS12: Accounting for Government Grants

AS13: Accounting for Investment

AS14: Accounting for Amalgamations


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AS15: Accounting for Retirement Benefits

AS16: Borrowing Cost

AS17: Segment Reporting

AS18: Related Party Disclosure


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AS19: Leases

AS20: Earnings Per Share

AS21: Consolidated Financial Statements


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AS22: Accounting for Taxes on Income

AS23: Accounting for Investments inAssociates in ConsolidatedFinancial Statements

AS24: Discontinuing Operations AS25: Interim Financial Reporting

AS26: Intangible Assets

AS27: Financial Reporting of Interest inJoint Ventures

AS28: Impairment of Assets

AS29: Provisions, Contingent Liabilitiesand Contingent Assets


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Comparison between Indian GAAP And US

GAAP

Particulars Indian GAAP US GAAP

Balance Sheet Conforms to statute and captionsare in the following order :

--Equity and reserves

--Debt--Fixed assets

--Investments

--Net current assets

--Deferred expenditure and

--Accumulated losses

Required only for the current year

with the prior year comparatives.

Balance sheet captions are

presented in order of liquidity

starting with the most liquid

assets, cash..Also requires disclosure of

movements in stockholders' equity,

including the number of shares

outstanding for all years presented.

Balance Sheet Does not need segregation ofcurrent and non-current

portions of assets and

liabilities.

Segregation necessary


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Cash Flow

Statement

Mandatory only for listed

companies and companies meeting

certain turnover conditions

Mandatory for all entities.

Depreciation Depreciation is charged at statutoryrates, which may be higher

than that computed

considering the useful of

assets.

Depreciation is charged based on

the, useful lives of assets.

Deferred

revenue

expenditure

Deferral is not generally permitted. Expenses, such as preoperative

expenditure, restructuring

costs and the costs of

voluntary retirement schemes

are generally amortized over a

period of 3-5 years.


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Dividends Dividends are reflected in the financialstatements of the year to which they

Relate even if proposed or approved

after

the year end.

Dividends are accounted for when

approved by the Board/shareholders.

If

the approval is after the year end, the

dividend is not considered as a

subsequent event to adjust the

financials.

R & D Costs R&D costs may be capitalized if thecriteria of technical feasibility of

the product, resource availability

and existence of market, are met

Expensed when incurred (with the

exception of development

costs in, specialized

industries). Purchased R&Dmay be capitalized if it has

alternative future use.

Inventory

valuation

(year end)

Carried at the lower of costs and- net

realizable value.

Carried at the lower of costs or

replacement costs.


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HARMONIZATION

Harmonization of accounting standards implies

the process of ensuring that the GAAP are

formulated , aligned and updated tointernational best practices with suitable

modifications and fine tuning considering the

domestic conditions.


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Obstacles

Difficulties in the

development of

the standards

Difficulties in

enforcement of

the standards

Other

difficulties

1.Provincialism.

2.Different economic

social environment.

3.Diverse accounting

practices.

4.Gap between

developed and

developing countries.

1.Tax laws.

2.Disclosure laws.

3.Existence of local

laws.

4.Competition among

the internal standard.

5.Negative corporate

attitude.

1.Lack of

representation in intl.

bodies.

2.Bias by developedcountries.

3.Lack of political

and local recognition

of IASB.

4.Political pressure.


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BENEFITS

Ensures reliable and high quality financial reporting and disclosure.

Proves to be crucial in the economic and financial development of a

country.

Systematic review and evaluation of performance of M.N.Cs

.

Comparison of the performance of a company against its domestic

and international peers.

Creditworthiness of a corporate house on the intl. level increases

when its accounting data are presented in a more reliable , realistic

and demanding structure.

An organization can access any capital market in the world.

Accounting Standards in India Best

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