CERTIFICATE

This is to certify that project work report titled “A Project Report on

Comparative Study of Accounting Standard Issued by ICAI with
International Accounting Standard” submitted by Mr. XXX is a
benefited student of this college .
The work of project is a partial fulfillment of the requirement for the
Master Degree in Commerce affiliated to University of Pune, during the
Academic Year 2010-2011.

To the best of my knowledge this is original work.

Place: -

Date: -

Project Guide
Principle
(Name)
(Name)
Internal Examiner
Date:-

1
 Acknowledgement

Through this acknowledgment, I take the opportunity to

express my sincere thanks to various teachers, friends and
colleagues for their guidance and assistance through which this
project work is completed.
At first I express my gratitude towards XXX – principle of
XXX and vice-principle – Shri. XXX for their teaching and
guidance of this subject research Methodology and Project Work
and inspiring all students in our class for this project work.
I also express my sincere thanks to Shri. XXX for providing
guidance for this particular project work.
I also thanks to my friends for making me aware from time to
time and guiding me for completing this project in time.
I am also thankful to administrative staff members in college
office for their co-operation.

Name: - XXX
(M.Com II)
Research Candidate

2
 TABLE OF CONTENT
A Project Report on Comparative Study of Accounting Standard Issued
by ICAI with International Accounting Standard
SR. No. TOPIC PAGE NO.
INTRODUCTION OF INDIAN ACCOUNTING
STANDARDS
• Introduction
• What are Accounting Standards
1 • Who Issues Accounting Standards in 1 to 3
India
• About ICAI
• Process of formulating Accounting
Standards in India
INDIAN ACCOUNTING STANDARDS
• Introduction
2 4 to 12
• List of Indian Accounting Standards

INTERNATIONAL ACCOUNTING
STANDARDS
3 • Introduction
13 to 14
• About International Accounting
Standard Board
INTERNATIONAL ACCOUNTING
4 STANDARDS 15 to 19
Comparative Study In Indian Accounting
5 Standards and International Accounting 20 to 24
Standards & Conclusion
Balance Sheet of Infosys Technology Systems
6 24 to 26
and Comments.
Bibliography
7 27

3
 A
Project Report on

“A Project Report on Comparative Study of Accounting

Standard Issued by ICAI with International Accounting
Standard”
Indian Accounting Standard: AS-9, 10, 12, 18.
International Accounting Standard: IAS- 18, 16, 20, 24.

Submitted To
UNIVERSITY OF PUNE
A Report Submitted in Partial Fulfillment of the Requirement of
M.Com part – II

UNDER THE GUIDANCE OF

Prof. XXX

SUBMITTED BY

Mr. XXX

Roll No. XXX Mo No. XXX

THROUGH

XXX COLLEGE OF COMMERCE, PUNE

(2010-2011)

4
Introduction:-

Accounting Standards establish rules relating to recognition,

measurement and disclosures thereby ensuring that all enterprises that follow
them are comparable and that their financial statements are true, fair and
transparent. High-quality accounting standards are a necessary and important
element of a sound capital market system. In public capital markets such as
those in the United States. High-quality accounting standards reduce
uncertainty and increase overall efficiency and investor’s confidence by
requiring that financial report provide decision useful information that is
relevant, reliable, comparable and transparent once confined by national
borders transactions in today’s capital market often are driven by a demand
for and supply of capital that transcends national boundaries. With the
increase in cross-border capital rising and investment transactions comes an
increasing demand for a set of high-quality international accounting
standards that could be used as a basis for financial reporting worldwide.

“Accounting Standards are written policy documents issues by the

expert accounting body or by government or other regulatory body covering
the aspects of recognition, measurement, presentation and disclosure of
accounting transactions in financial statement.”

What are Accounting Standards:-

Accounting Standards are the statements of code of practice of the

regulatory accounting bodies that are to be observed in the preparation of
financial statements. In layman terms accounting standards are the written
documents issued by the expert’s institutes or other regulatory bodies
covering various aspects of measurement treatment, presentation and
disclosure of accounting transactions.

Who issues Accounting Standards in India:-

The institute of chartered Accountants of India (ICAI) reorganizing

the need to harmonies the diverse accounting policies and practices at
present in use in India constituted accounting standard board (ASB) on April
21, 1977. The main role of ASB is to formulate accounting standards from
time to time.

5
About ICAI:-

The Institute of Chartered Accountants of India (ICAI) is a statutory

body established under the Chartered Accountants act 1949.(Act
No.XXXXVIII of 1949) for the regulation of the profession of Chartered
Accountants in India. During its 61 years of existence, ICAI has achieved
recognition as a premier accounting body not only in the country but also
globally, for its contribution in the fields of education, professional
development maintenance of high accounting, auditing and ethical
standards. ICAI now is the second largest accounting body in the whole
world.

Procedure of formulating Accounting Standards in India:-

The institute of Chartered Accountant of India (ICAI) recognizing the

need to harmonize the diverse accounting policies and practices, constituted
an accounting standards boards (ASB) on April 21, 1977. The main faction
of ASB so that such standards may be mandated by the council of ICAI.
While formulating the standards in India, ASB will take into consideration
the applicable laws custom usages and business environment. ICAI is one of
the members of International Accounting Standards Committee (IASC) and
has agreed to support the objectives of IASC. ASB will give due
consideration to IAS and try to integrate them to the extent possible in light
of the considerations and practices pre-vailing in India.
The accounting standards issued will apply to ‘General Purpose
Financial Statement’ this would include balance-sheet, Profit & Loss A/c
and other statement and explanatory notes which form part thereof issued for
the use of shareholders or members, Creditors, Employees and public at
large. The Accounting Standards are intended to apply only to items which
are material. The standards are generally expected to apply prospectively
unless otherwise stated.

6
 Broadly the following procedure will be adopted for
formulating Accounting Standards:-

• ASB shall determine the board areas in which accounting standards

need to be formulated and the priority in regards to the selection
thereof.

• In the preparation of the accounting standards ASB will be assisted by

study groups constituted to consider specific subjects. In the formation
of the study groups provision will be made for wide participation by
the members of ICAI and others.

• ASB will also hold a dialogue with the representative of the

Government, Public sector, Industry and other organizations for
ascertaining their views.

• Based on the above an exposure draft of the proposed standard will be

prepared and issued for comments by members of ICAI and the public
at large.

• After taking into consideration the comments received the exposure

draft will be finalized by the ASB and submitted to the council of
ICAI.

• The council of ICAI will consider the final draft and if found
necessary modify the same in consultation with ASB. The accounting
standard on the relevant subject will then be issued under the authority
of the council.

7
 Indian Accounting Standards:-

Introduction:-

The council of the institute of chartered accountant of India as so far

issue 32 (thirty two) accounting standard. Whoever accounting standards
8th on “Accounting for research and development” has been withdraw on
consequent to the issuance of accounting standard 26th “Intangible
Assets” thus effectively there are 31st accounting standard at present the
accounting standard issued by the ABC establish which have to be
complied so that the financial statement are prepared in accordance with
generally accepted accounting principles.

List of Indian Accounting Standards:-

AS 1 Disclosure of Accounting Principles

AS 2 Valuation of Inventories
AS 3 Cash Flow Statements
AS 4 Contingencies and Events Occurring After the Balance
Sheet Date
AS 5 Net Profit or Loss for the Period, Prior Period Items
and Changes in Accounting Policies
AS 6 Depreciation Accounting
AS 7 Construction Contracts
(Revised)
AS 8 Accounting for Research and Development
AS 9 Revenue Recognition
AS 10 Accounting for Fixed Assets
AS 11 The Effects Of Changes In Foreign Exchange Rates
(Revised
2003)

AS 12 Accounting for Government Grants

AS 13 Accounting for Investments
AS 14 Accounting for Amalgamations
AS 15 Employee Benefits [click here for related

8
(Revised announcement]
2005)
AS 16 Borrowing Costs
AS 17 Segment Reporting
AS 18 Related Party Disclosures
AS 19 Leases
AS 20 Earnings Per Share
AS 21 Consolidated Financial Statements
AS 22 Accounting for taxes on income
AS 23 Accounting for Investments in Associates in
Consolidated Financial Statements
AS 24 Discontinuing Operations
AS 25 Interim Financial Reporting
AS 26 Intangible Assets
AS 27 Financial Reporting of Interests in Joint Ventures
AS 28 Impairment of Assets
AS 29 Provisions, Contingent Liabilities and Contingent
Assets
AS 30 Financial Instruments: Recognition and Measurement
AS 31 Financial Instruments: Presentation
AS 32 Financial Instruments: Disclosures

9
Indian Accounting Standards:-

AS 9: Revenue Recognition:-

Introduction

This statement was issued by ICAI in the year 1985 & the Initial years
it was recommendatory for only level I enterprises & but was made
mandatory for enterprise in India from april 01, 1993.

Revenue

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 the goods, from the rendering of the services, & from the use by others of
enterprises resources yielding interest, royalties & dividend. Revenue is
measured by the charges made to customers or clients for goods supplied &
services rendered to them & by the charges & rewards arising from the use
of resources by them. In an agency relationship, the revenue is the amount of
commission & not the gross inflow of cash, receivable or other
consideration.

This statement dose not deals with the following aspects of revenue
recognition to which special consideration apply:

I. Revenue arising from construction contracts;

II. Revenue arising from hire-purchase, lease agreements;

III. Revenue arising from government grants & other similar subsidies;

IV. Revenue of insurance companies arising from insurance contracts.

10
Examples of items not included within definition of “revenue” for the
purpose of this statement are:

I. Realized gains resulting from the disposal of, & unrealized gains
resulting from the holding of, non-current assets. E.g. appreciation in
the value of fixed assets.

II. Unrealized holding gain resulting from the change in value of current
assets, & the natural increases in herds & agricultural & forest
products;

III. Realized or unrealized gains resulting from changes in foreign

exchange rates & adjustments arising on the translation of foreign
currency financial statements;

IV. Realized gain resulting from the discharged of an obligation at less

than its carrying amount;

V. Unrealized gains resulting from the restatement of the carrying

amount of an obligation;

11
AS 10: Accounting for Fixed Assets:-

Introduction

The standard deals with the disclosure of the status of the fixed assets in
terms of value. The standard dose not takes consideration the specialized
aspects of accounting for fixed assets reflected with the effects of price
escalations but applies to financial statements on historical cost basis. It is
important to note that after introduction of AS 16; 19 & 26, provision
relating to respective AS are held withdrawn & the rest in mandatory from
the accounting year 01/04/2000. an entity should disclose (i) the gross & net
book values of fixed assets at beginning and end of an accounting period
showing additions, disposals, acquisitions & other movement, (ii)
expenditure incurred on account of fixed assets in the course of construction
or acquisition, (iii) revalued amounts substituted for historical cost of fixed
assets with the method applied in computing revalued amount.

This statement dose not deal with the accounting for the following item to
which special considerations apply:

I. Forests, plantations & similar regenerative natural resources.

II. Wasting assets including mineral rights, expenditure of the
exploration for an extraction of minerals, oil, natural gas & similar
non-regenerative resources.
III. Expenditure on real estate development and
IV. Live stock.

Identification of fixed assets:

Fixed assets are assets held with the intention of being used for the purpose
for the producing or providing goods or services & is not held for sale in the
normal course of business. Stand-by equipment & servicing equipment are
normally capitalized. Machinery spares are change to the profit & loss
statement as and when consumed. However, if such spare can be used only
in connection with an item of fixed assets, it may be appropriate to allocate
the total cost on a systematic basic over a period not exceeding the useful
life of principal item.

12
AS 12: Accounting For Government Grants

Introduction

The standard comes in to effect in respect of accounting periods

commencing on or after 01/04/1992 & will be recommendatory in nature for
an initial period of 2 years. Accounting standard 12 deals with accounting
for government’s grants for specifies that the government grants should not
be recognized until there reasonable assurance that the enterprise will
company comply with the conditions attached to them, and the grant will be
received. The standard also describes the treatment of non-monetary
government grants; presentation of grants related to specific fixed assets,
related to revenue, related to promoters, contributions; treatment for refund
of governments grants etc. the enterprises are required to disclose (i) the
accounting policy adopted for government grants including the methods of
presentation in the financial statements; (ii) the nature & extent of
government grants recognized in the financial statement including non-
monetary grants of assets given either at a concessional rate or free of cost.

This statement does not deal with:

I. The special problem arising in accounting for government grants in

financial statements reflection the effects of changing prices or in
supplementary information of a similar nature.
II. Government assistance other than in the form of government grants
III. Government participation in the ownership of the enterprises.

The receipt of the government grant by an enterprise is significant for

preparation of the financial statement for 2 reasons. Firstly, if a
government grant has been received an appropriate method of
accounting therefore is necessary. Secondly, it is desirable to give an
indication of the extent to which the enterprises has benefited from such
grants during the reporting period. This facilitates comparison on an
enterprises financial statement with those prior periods & with those of
other enterprise.

13
 Accounting treatment of government grants

To broad approaches may be followed for the accounting treatment

Of government grants: the capital approach under which grand is
treated as part of share holder funds, and income approach under which
a grand is taken to incomes over one or more period.

Those in support of capital approach argue as follows:

I. Many governments’ grants are in the nature of promoter’s

contribution that is they are given by way of contribution towards
its total capital outlay ordinarily expected in the case of such a
grants.
II. They are not earned but represent an incentive provided by
government without related costs.

Arguments in support of the income approaches are as follows:

I. As a income tax & other taxes are charges against income, it is logical
to deal also with government grants, which are an extension of fiscal
polices, in the profit & loss statement.
II. In case grants are credited to share holder’s fund, no correlation is
done between the accounting treatment of the grants & the accounting
treatment of the expenditure to which grant relates.

14
AS 18: Related Party Disclosures

Introduction

This standard comes into effect in respect of accounting period commencing

on a after 01/04/2001 & is mandatory in nature. The standard prescribes the
requirement for disclosure of related party relationship & transaction
between the reporting enterprise & its related party. The requirements of the
standard apply to the statement of each reporting enterprises as also to
consolidate financial statement presented by a holding company. Since the
standers is more subjective, particularly with respect to identification of
related parties [through provision related to related party concept are given
under section 297/299/301 of the companies act 1956 and section 40A (2)(b)
of the income tax act 1961], obtaining corroborative evidence becomes very
difficult for the auditors. Thus successful implementation of AS 18 is
depend upon how transparent the management is an how vigilant the
auditors are.

Objective
The objective of this statement is to established requirement for disclosure
of:
I. Related party relationship &
II. Transaction between reporting enterprise & it related parties.

Scope

This statement should be applied in reporting related party relationship &

transaction between reporting enterprises & its related parties. The
requirement of this statement applied to the financial statement of each
reporting enterprises as also to consolidate financial statement presented by
a holding company.

This statement deals only with related party relationship describe (a)
to (e) below:

a. Enterprises that directly, or indirectly through one or more

intermediaries, control, or are controlled by, or are under
common control with the reporting enterprise (this include
holding company, subsidiaries & fellow subsidiaries).

15
b. Associated & joint venture reporting enterprise & the investing
party or venture in respect of which the reporting enterprise is
an associate or a joint venture.
c. Individual owning, directly or indirectly, an interest in the
voting power of the reporting enterprises that give them control
or significant influence over the enterprises, and relatives of
any such individual.
d. Key management personnel & relative of such personnel &
e. Enterprise over which any person describes in c or d is able to
exercise significant influence. This includes enterprises owned
by director or major shareholders of the reporting shareholder
of the reporting enterprises & enterprises that have a member of
key management, with reporting enterprise.

16
International Accounting Standards:-

Introduction:-

Accounting is a language of business communicates the financial

result of an enterprise to the various interested parties by means of financial
statements exhibiting true and fair view of its state of affairs as also of
working result. Like any of other language, accounting has its own set of
rules, which have been developed by accounting bodies. These rules cannot
be absolutely rigid. These rules, accordingly, do provide a reasonable
flexibility in line with the economic environment, social needs, legal
requirements and technological development. These how ever, do not emply
that accounting principles and parties can be applied arbitrarily.
Accounting principles have to operate with in the bonds of rationality. This
could, perhaps, be considered as a genesis for setting the accounting
standards.

Accounting Standards are written policy document issued expert

accounting body or by government or other regulatory body covering the
aspects recognition, measurement, presentation and disclosure of accounting
transaction in financial statement. The ostensible purpose of the standard
setting bodies is to promote the dissemination of timely and useful financial
information to investors and certain other parties having an interest in the
company’s economic performance. The accounting standard reduces the
accounting alternative in the preparation of financial statement within the
bond of rationality, thereby ensuring comparability of financial statement of
different enterprises.

The accounting standards deals with the issue of

i. Recognition of events and transactions in the financial statements,
ii. Measurement these transaction and events,
iii. Presentation of these transactions and events in the financial
statement in a manner that is meaningful and understandable to the
reader, and
iv. The disclosure requirements which should be there enable the public
at large and the potentational investors in particular, to get an insight
in to what these financial statement are trying to reflect and there by
the facilitating them to take prudent and informed business decisions.

17
International Accounting Standard Board:-

With a view of achieving this objective, the London based group

mainly the international committee (IASC), responsible for developing
international accounting standard was established in June 1973. it is
presently known as international accounting standard board, the IASC
comprises the professional accounting bodies of over 75 countries(including
the ICAI). Primarily, the IASC was established, in the public interest to
formulate and publish, international standard to be followed in the
presentation of audited financial statement. The member of IASC have
undertaken responsibility to support the standards promulgated by IASC and
to promulgate those standard in there respective countries.
Between 1973 & 2001, the IASC released international accounting
standard. Between 1997 & 1999, the IASC restructured there organization,
which resulted in formation of IASB. These changes came in to effect on 1st
April 2001 subsequently, IASB issued statement about current and future
standards: IASB publishes standards in a series of pronouncements, called
international financial, reporting standards (IFRS). However, IASB has not
rejected the standards issued by the ISAC those pronouncements continue to
be designated as an “international Accounting standard” (IAS). The IASB
approved IASB resolution on IASC standards and there in April 2001, in
which it’s conform the status of all IASC standards and SIC interpretations
in effect as on 1st April 2001.

18
 IAS-18: Revenue

IAS 18 on Revenue is applicable for periods beginning on or after 1st

Jan 1995

IAS 18 prescribes accounting treatment for revenue arising from:

• The sale of goods:
• The rendering of services; &
• The use by others of entity assets yielding interest royalties &
dividend

It excludes the treatment of revenue arising from transaction covered by

other standards or amount collected on behalf of third parties (e.g. Vat).

Summary

Revenue is measured at the fare value of the consideration received or

receivable. The consideration usually in cash. If the inflow of cash is
significant deferred, & there is below-market rate of interest or no interest,
the fare value of consideration is determined by discounting expected future
receipts. If dissimilar goods or services are exchanged (as in barter
transaction) revenue is fare value of the goods or services or received or, if
this is not reliably measurable, the fare value of goods or services given up.

Revenue should measure at the fair value of the consideration received:

• Trade discount & value rebates are deducted to determine fair value.
How ever, payment discounts non-deductible.
• The amount of revenue can be measured reliably;
• The costs of transaction can be measured reliably;
• Significant risks & rewards of ownership are transferred to the buyer;
• The seller has no continuing managerial involvement or control over
the goods;
• It is probable that economic benefits will flow to the seller; and

Interest revenue should be recognized on time proportion basis using the

effective interest. Royalties should be recognized on an accruals basis in
accordance with the substance of the relevant agreement. Dividend revenue
should be recognized when the share holder right to received the dividend is
established.

19
IAS-16: Property, Plant and Equipment:-

IAS 16 on property, plant & equipment was issued in December 2003 & is
applicable to annual accounting period beginning on or after 1st Jan 2005.

IAS 16 prescribed the accounting treatment for property, plant & equipment
unless another standard requires or permit a different account treatment. For
e.g. IFRS, 5 on non current assets held for sale & discontinued operations
applies to property, plant & equipment classified as held for sale.

Summary
Property plant & equipment is initially recognized at historical cost.
Subsequent to initial recognition, property, plant & equipment are carried
either at:

• Cost less accumulated deprecation & any accumulated impairment

loss, or
• Revalued amount less subsequent accumulated deprecation and any
accumulated impairment loss. The revalued amount is the fare value is
at the date of revaluation.

The choice of measurement is applied consistently to an entire class of

property, plant & equipment. Any revaluation increase in such assets
credited directly to the revaluation surplus in equity, unless it reverses a
revaluation decrease previously recognized in profit in loss. Any revaluation
decrease is recognized in profit or loss. However the subsequent revaluation
decrease is debited directly to the revaluation surplus in equity to the extent
of the credit balance in revaluation surplus is respect of that asset.

The gain or loss on derecognizing of an item of property, plant & equipment

is the difference between the net disposal proceeds, if any, and the carrying
amount of the item. It is included in profit or loss.

20
IAS: 20- Accounting for government grants and disclosure of
government assistance:-

IAS 20 on “accounting for government grants & disclosure of government

assistance” was issued in April 1983 & was reformatted in the year 1994. it
came in to effect for annual periods beginning or after 1 January 1984.
The objective of IAS 20 is to be prescribing the accounting for, and
disclosure of, grants & other form of government assistance. How ever, IAS
20 dose not covered government assistance that is provided in the form of
benefit helpful in determine taxable income.

Summary:
A government grant is recognized only when enterprise will comply
with any condition attached to the grants received. The grant is recognized
as a income, over the period, to match them with the related cost for, which
they are intended compensate, on a systematic basis, & should not be
credited directly to equity.

Non monitory grants are usually accounted for at fair value. Although
recording both the assets & grants at a nominal amount is also permitted.
A grant receivable as a compensation for cost already incurred or for
immediate financial support, with no future related cost, should be
recognized as a income in the period in which it is receivable.

A grant relating to assets may be presented as deferred income or by

deducting the grant from the assets carrying amount. A grant relating to
income may be reported separately as other income or deducted from the
related expenses.

If a grant become repayable it should be deferred income or by

deducting the grant from assets carrying amount. Where the original grants
related to income, the repayment should be applied dealt with as an expenses
where the original grants related to an assets, the repayment should be
treated as increasing the carrying amount of the assets or reducing the
deferred income balance. The cumulative deprecation which would have
been charged had the grant not been received should be charged as an
expense. The government grants do not include government assistance
whose value can not be reasonably measured, such as technical or marketing
advice.

21
IAS 24 Related Party Disclosure:

IAS 24 on “Related Party Disclosure” was issued in dec 2003 & is

applicable for annual periods beginning on or after 1st jan 2005.

IAS 24 specifies the disclosure necessary to draw attention to the

possibilities that the financial position & financial performance of an entity
may have been affected by the existence of the related party and by
transaction and outstanding balance with such related parties.

Summery:

A party is related to an entity if it:

• Has joint control over the entity:

• Has significant influence over the entity;
• Directly or indirectly, controls, is control by or is under common
control with, the entity;
• Is a close member of the family of any individual who controls, has
significant influence or joint control over, the entity;
• Is a member of key management personnel of the entity of its parent;
• Is a joint venture in which the entity is venture;
• Is an associates of entity;
• Is an entity that is controlled, jointly controlled or significantly
influenced by, or for which significant voting power in such entity
resides with, any of the key management personnel;
• Is a post-employment benefits plan for the benefit of employees of the
entity, or of any of its related parties.

Examples of the kinds of transactions that are disclosed if they are with a
related party:

• Purchase or sale of goods.

• Rendering or receiving of services.
• Purchase or sale of properties or other assets.
• Lease.
• Transfer under license agreements.

22
 • Transfer of research and development.
• Transfer under finance agreements(including loans & equity
contribution in cash or in kind)
• Settlement of liabilities on behalf of the entity or by the entity on
behalf of another party.
• Provision of guarantee of collateral.

A related party transaction is a transfer of resources, services or obligations

between related parties, regardless whether price is charged.

23
Comparative Study:-

Indian Accounting International Accounting

Standards Standards
Presentation There is no separate standard IAS-1 prescribes minimum
And for disclosure. For structure of financial
Disclosures companies, format and statements and contains
disclosure requirements are guidance on disclosures.
set out under schedule VI of
the companies act.
No such requirement under IAS-1 requires disclosure
Indian GAAP. of critical judgments made
by management in applying
accounting policies.

AS 5 specifically requires IAS-1 prohibits any items

disclosure of certain items as to be disclosed as extra-
extra-ordinary items. ordinary items.

Under Indian GAPP, this is IAS-1 requires a “statement

typically spread over several of changes in equity”
captions such as share which comprises all
capital, reserve & surplus, P transactions with equity
& L debit balance, etc. holders.

Revenue AS-9 allows completed In case of revenue from

Recognition service contract method or rendering of services, IAS-
proportionate completion 18 allows only percentage
method. of completion method.

AS-9 requires interest IAS-18 requires effective

income to be recognized on a interest method to be
time proportion basis. followed for interest
income recognition.

24
 No guidance on barter Deals with accounting of
transactions. barter transactions.

AS-9 permits recognition Under IAS-18, payments

when the goods are received in advance for
manufactured, identified and goods yet to be
ready for delivery in such manufactured or third party
cases. sales cannot be recognized
as revenue until such goods
are delivered to the buyer.

For multiple element

No specific guidance in the contracts, the standard
standards. broadly requires that each
element is fair valued and
recognized when the
underlying service is
performed.

Fixed Assets AS-10 recommends but does IAS-16 mandates

and not force component component accounting.
Depreciation accounting.
Depreciation is based on Depreciation is based on
higher of useful life or useful life.
schedule XIV rates. In
practice most companies use
schedule XIV rates.

Major repair and overhaul Major repairs and overhaul

expenditure are expensed. expenditure are capitalized
as if it is a separate
component.

AS-10 provides that only that Under IAS-16, if

expenditure which increases subsequent costs are
the future benefits from the incurred for replacement of
existing assets beyond its a part of an item of fixed

25
 previously assessed standard
of performance is included in
the gross book value.
e.g. an increase in capacity.
AS-6 requires retrospectively
recomputation of
depreciation and any excess
or deficit on such
recomputation is required to
be adjusted in the period in
which such change is
effected. AS-6 considers this
as change in accounting
policy.
Estimates of residual value needs to be updated.
are not updated.
No need to update alternative
revaluation regulatory.
asset, such costs are
required to be capitalized
and simultaneously the
replaced part has to be de-
capitalized.
In case of change in
method of depreciation,
IAS-16 requires effect to be
given prospectively.
Change in method of
depreciation is treated as
change in accounting
estimate under IAS-16.
Estimates of residual value
Revaluation is an allowed
treatment
however; revaluation will
have to be done regularly.

Depreciation on revaluation
Depreciation on revaluation portion can be recouped out
portion cannot be recouped of revaluation reserve.
out of revaluation reserve
and will have to be changed
to the P&L account.
Provision on site-
No guidance in the standard. restoration and dismantling
However, guidance note on is mandatory.
oil and gas issued by ICAI
requires capitalization of site
restoration cost.
Government AS-12 requires accounting at In case of non-monitory
Grants acquisition cost. assets acquired at nominal
rate, IAS-20 permits
accounting either at fair
value or at acquisition cost.

26
 AS-12 requires enterprises to
compute depreciation
prospectively as a result of
which the revised book value
is provided over the residual
useful life.
In respect of grant related
to a specific fixed assets
becoming refundable, IAS-
20 requires retrospective
re-computation of
depreciation and prescribes
charging off the deficit in
the period in which such
grant becomes refundable.

AS-12 has no such disclosure IAS-20 requires separate

requirement. disclosure of unfulfilled
conditions and other
contingencies if grant has
been recognized.

Related AS-18 does not include this The definition of related

Party relationship. party under IAS-24
Disclosures includes post employment
benefit plans of the
enterprise or of any other
entity, which is related
party of the enterprises.

AS-18 read with ASI-23 IAS-24 requires

requires disclosure of compensation to KMPs to
remuneration paid to key be disclosed category-wise
management persons but including share-based
does not mandate category- payments.
wise disclosures.

AS-18 provides exemption No concession is provided

from disclosure in such under IAS-24 where
cases. disclosure of information
would conflict with the
duties of confidentiality in
terms of statute or
regulating authority.

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 The definition of “control”
AS-18 includes control over under IAS-24 is restrictive
composition of board of on the count that it does not
directors in the definition of include control over
“control”. composition of board of
directors.

IAS-24 requires disclosure

No such disclosure of terms and conditions of
requirement is contained in outstanding items
AS-18. pertaining to related
parties.

AS-18 prescribes a rebuttable IAS-24 does not prescribe a

presumption of significant rebuttable presumption of
influence if 20% or more of significant influence.
the voting power held by any
party.

Transactions between state No exemption.

controlled enterprises are not
required to be disclosed
under AS-18.

Conclusion:

There are significant difference between Indian Accounting Standard

and International Accounting Standard. However, both the countries are
planning to implement IFRS to cope up with these differences.

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Comments on Balance Sheet of Infosys Technology Systems:
1) INCOME STATEMENT

Each framework requires prominent presentation of an income statement as

a primary statement.

Format

IFRS: There is no prescribed format for the income statement. The entity
should select a method of presenting its expenses by either function or
nature; this can either be, as is encouraged, on the face of the income
statement, or in the notes. Additional disclosure of expenses by nature is
required if functional presentation is used. IFRS requires, as a minimum,
presentation of the following items on the face of the income statement:

1. revenue;
2. finance costs;
3. share of post-tax results of associates and joint ventures accounted for
using the equity
4. method;
5. tax expense;
6. post-tax gain or loss attributable to the results and to remeasurement
of discontinued operations;
7. Profit or loss for the period.

The portion of profit or loss attributable to the minority interest and to the
parent entity is separately disclosed on the face of the income statement as
allocations of profit or loss for the period. An entity that discloses an
operating result should include all items of an operating nature, including
those that occur irregularly or infrequently or are unusual in amount.

Indian GAAP: Presentation in one of two formats. Either:

1. a single-step format where all expenses are classified by function and

are deducted from total income to give income before tax;

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 2. a multiple-step format where cost of sales is deducted from sales to
show gross profit, and other income and expense are then presented to
give income before tax. SEC regulations require registrants to
categorise expenses by their function. Amounts attributable to the
minority interest are presented as a component of net income or loss.

IFRS: The total of income and expense recognised in the period comprises
net income. The following income and expense items are recognised directly
in equity:

1. fair value gains/(losses) on land and buildings, intangible assets,

available-for-sale investments and certain financial instruments;
2. foreign exchange translation differences;
3. the cumulative effect of changes in accounting policy;
4. changes in fair values of certain financial instruments if designated as
cash flow hedges, net of tax, and cash flow hedges reclassified to
income and/or the relevant hedged asset/liability; and
5. actuarial gains and losses on defined benefit plans recognised directly
in equity (if the entity elects the option available under IAS 19,
Employee Benefits, relating to actuarial gains and losses).

Indian GAAP: Similar to IFRS, except that revaluations of land and

buildings and intangible assets are prohibited under US GAAP. Actuarial
gains and losses (when amortised out of accumulated other comprehensive
income) are recognised through the income statement.

2) Statement of changes in share (stock) holders’ equity

IFRS: Presented as a primary statement unless a SoRIE is presented as a

primary statement. Supplemental equity information is presented in the notes
when a SoRIE is presented (see discussion under ‘Presentation’ above). In
addition to the items required to be in a SoRIE, it should show capital
transactions with owners, the movement in accumulated profit and a
reconciliation of all other components of equity. Certain items are permitted
to be disclosed in the notes rather than in the primary statement.

30
Indian GAAP: Similar to IFRS, except that US GAAP does not have a
SoRIE, and SEC rules permit the statement to be presented either as a
primary statement or in the notes.

Bibliography

• Indian Accounting Standards and GAAP

-Dolphy D’Souza.

• Financial Reporting Volume 1.

-The institute of Chartered Accountant’s
of India.

• WWW.ICAI.Org

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