Accounting Standards 1-29 - Seth & Associates

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the assets; c. its share of any liabilities incurred jointly with other venturers in relation to the joint venture; d. any income from the sale or use of its share of the output of the joint venture, together with its share of any expenses incurred by the joint venture; and e. any expenses which it has incurred in respect of its interest in the joint venture, for example, those related to financing the venturer's interest in the assets and selling its share of the output. Because the assets, liabilities, income and expenses are already recognised in the separate financial statements of the venturer, and consequently in its consolidated financial statements, no adjustments or other consolidation procedures are required in respect of these items when the venturer presents consolidated financial statements. 21. The treatment of jointly controlled assets reflects the substance and economic reality and, usually, the legal form of the joint venture. Separate accounting records for the joint venture itself may be limited to those expenses incurred in common by the venturers and ultimately borne by the venturers according to their agreed shares. Financial statements may not be prepared for the joint venture, although the venturers may prepare accounts for internal management reporting purposes so that they may assess the performance of the joint venture. Jointly Controlled Entities 22. A jointly controlled entity is a joint venture which involves the establishment of a corporation, partnership or other entity in which each venturer has an interest. The entity operates in the same way as other enterprises, except that a contractual arrangement between the venturers establishes joint control over the economic activity of the entity. 23. A jointly controlled entity controls the assets of the joint venture, incurs liabilities and expenses and earns income. It may enter into contracts in its own name and raise finance for the purposes of the joint venture activity. Each venturer is entitled to a share of the results of the jointly controlled entity, although some jointly controlled entities also involve a sharing of the output of the joint venture. 24. An example of a jointly controlled entity is when two enterprises combine their activities in a particular line of business by transferring the relevant assets and liabilities into a jointly controlled entity. Another example is when an enterprise commences a business in a foreign country in conjunction with the government or other agency in that country, by establishing a separate entity which is jointly controlled by the enterprise and the government or agency. 25. Many jointly controlled entities are similar to those joint ventures referred to as jointly controlled operations or jointly controlled assets. For example, the venturers may transfer a jointly controlled asset, such as an oil pipeline, into a jointly controlled entity. Similarly, the venturers may contribute, into a jointly controlled entity, assets which will be operated jointly. Some jointly controlled operations also involve the establishment of a jointly controlled entity to deal with particular aspects of the activity, for example, the design, marketing, distribution or after-sales
service of the product. 26. A jointly controlled entity maintains its own accounting records and prepares and presents financial statements in the same way as other enterprises in conformity with the requirements applicable to that jointly controlled entity. Separate Financial Statements of a Venturer 27. In a venturer's separate financial statements, interest in a jointly controlled entity should be accounted for as an investment in accordance with Accounting Standard (AS) 13, Accounting for Investments. 28. Each venturer usually contributes cash or other resources to the jointly controlled entity. These contributions are included in the accounting records of the venturer and are recognised in its separate financial statements as an investment in the jointly controlled entity. Consolidated Financial Statements of a Venturer 29. In its consolidated financial statements, a venturer should report its interest in a jointly controlled entity using proportionate consolidation except a. an interest in a jointly controlled entity which is acquired and held exclusively with a view to its subsequent disposal in the near future; and b. an interest in a jointly controlled entity which operates under severe long-term restrictions that significantly impair its ability to transfer funds to the venturer. Interest in such a jointly controlled entity should be accounted for as an investment in accordance with Accounting Standard (AS) 13, Accounting for Investments. 30. When reporting an interest in a jointly controlled entity in consolidated financial statements, it is essential that a venturer reflects the substance and economic reality of the arrangement, rather than the joint venture's particular structure or form. In a jointly controlled entity, a venturer has control over its share of future economic benefits through its share of the assets and liabilities of the venture. This substance and economic reality is reflected in the consolidated financial statements of the venturer when the venturer reports its interests in the assets, liabilities, income and expenses of the jointly controlled entity by using proportionate consolidation. 31. The application of proportionate consolidation means that the consolidated balance sheet of the venturer includes its share of the assets that it controls jointly and its share of the liabilities for which it is jointly responsible. The consolidated statement of profit and loss of the venturer includes its share of the income and expenses of the jointly controlled entity. Many of the procedures appropriate for the application of proportionate consolidation are similar to the procedures for the consolidation of investments in subsidiaries, which are set out in Accounting Standard (AS) 21, Consolidated Financial Statements. 32. For the purpose of applying proportionate consolidation, the venturer uses the consolidated financial statements of the jointly controlled entity. 33. Under proportionate consolidation, the venturer includes separate line items for its share of the assets, liabilities, income and expenses of the jointly controlled entity in its consolidated financial statements. For example, it shows its share of the inventory of the jointly controlled entity
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TABLE OF CONTENTS DISCLOSURE OF ACC
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Explanation Fundamental Accounting
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21. Examples of matters in respect
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Definitions 3. The following terms
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(b) storage costs, unless those cos
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27. Information about the carrying
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performance by different enterprise
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15. The separate disclosure of cash
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22. Cash flows arising from the fol
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34. Cash flows arising from taxes o
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The appendix is illustrative only a
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Interest expense (400) Interest inc
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Interest expense 400 Operating prof
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31,850 Less : Sundry debtors at the
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Short-term funds (650) Deposits hel
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not contingencies as defined in par
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8.6 Events occurring after the bala
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Accounting Standard (AS) 5 Net Prof
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financial statements in understandi
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gratuity scheme by an employer in p
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(ii) expected useful life of the de
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19. A change in the method of depre
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Accounting Standard 7 (REVISED) Con
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8. A group of contracts, whether wi
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a. costs that relate directly to th
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estimated reliably when all the fol
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of which recovery is probable; and
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defects have been rectified. Progre
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incurred for work performed upto th
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calculated as follows: (amount in R
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4.3 Proportionate completion method
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the time of raising of any claim it
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should be based on the sales value
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Accounting Standard (AS) 10 Account
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9.3 Administration and other genera
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14.4 On disposal of a previously re
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either to the asset given up or to
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Accounting Standard (AS) 11 (Revise
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Reporting currency is the currency
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Classification of Foreign Operation
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. income and expense items of the n
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historical cost for those items in
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Appendix Note: This Appendix is not
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Accounting Treatment of Government
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8.1 Grants related to specific fixe
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(The Accounting Standard comprises
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Page 96 and 97:
fair value provides a prudent metho
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31. Investments classified as curre
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(v) No adjustment is intended to be
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Treatment of Reserves on Amalgamati
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(a) consideration for the amalgamat
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41. Where the scheme of amalgamatio
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Accounting Standard (AS) 16 Borrowi
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orrowings made specifically for the
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Accounting Standard (AS) 17 Segment
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statement of profit and loss. Segme
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segments for internal financial rep
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24. Business and geographical segme
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calculation done in applying a part
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Secondary Segment Information 47. P
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segment, both primary and secondary
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REVENUE External sales Intersegment
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101 90 Assets and additions to tang
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and intangible fixed assets by loca
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4. In the context of this Statement
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(c) the director is nominated by th
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(iii) a description of the nature o
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1. upon the occurrence of some remo
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5. The classification of leases ado
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Rs.2,27,805. As this amount is lowe
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f. a general description of the les
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commencement of the lease term is t
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48. If a sale and leaseback transac
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AS 20 Earnings Per Share (In this A
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c. options including employee stock
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merger is the aggregate of the weig
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29. For the purpose of calculating
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41. Potential equity shares are ant
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Note: These appendices are illustra
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EPS for the year 20X0 as originally
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Convertible Preference Shares Incre
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(a) the ownership, directly or indi
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the consolidated financial statemen
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subsidiary and does not become an a
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Accounting Standard (AS) 22 ACCOUNT
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accounting purposes, straight line
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(a) has a legally enforceable right
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6. If for any reason the recognitio
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Deferred tax A/c Dr. 20,000 To Prof
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(b) the associate operates under se
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Disclosure 22. In addition to the d
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. that represents a separate major
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infrequently. All infrequently occu
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g. the amount of pre-tax profit or
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35. Appendix 2 illustrates applicat
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The following is Note 5 to Delta Co
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III. Financial Statements for 20X3
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2 A separate Accounting Standard on
Page 252 and 253: 6. A complete set of financial stat
Page 254 and 255: g. segment revenue, segment capital
Page 256 and 257: 29. To illustrate: a. the principle
Page 258 and 259: Accounting Standard to assist in cl
Page 260 and 261: 1. Basic Earnings Per Share 2.Dilut
Page 262 and 263: provisions for employees (b) Other
Page 264 and 265: (condensed or complete) for the fol
Page 266 and 267: 1st Quarter 2nd Quarter 3rd Quarter
Page 268 and 269: Accounting for the Effects of Chang
Page 270 and 271: a. intangible assets that are cover
Page 272 and 273: ecoverable amount.4 Carrying amount
Page 274 and 275: supportable assumptions that repres
Page 276 and 277: Therefore, in addition to complying
Page 278 and 279: titles, customer lists and items si
Page 280 and 281: Past Expenses not to be Recognised
Page 282 and 283: The enterprise amortises the right
Page 284 and 285: assets, how it determines the recov
Page 286 and 287: e. copyrights, and patents and othe
Page 288 and 289: Appendix A This Appendix, which is
Page 290 and 291: aforesaid and expensed in an earlie
Page 292 and 293: without physical substance held for
Page 294 and 295: Application and Infrastructure Deve
Page 296 and 297: On 1-4-2003, the remaining period o
Page 298 and 299: Accounting Standard 27 Financial Re
Page 300 and 301: The arrangement identifies those de
Page 304 and 305: separately as part of the inventory
Page 306 and 307: 44 In case of transactions between
Page 308 and 309: Accounting Standard (AS) 28 Impairm
Page 310 and 311: 4. The following terms are used in
Page 312 and 313: e. evidence is available of obsoles
Page 314 and 315: 15. It is not always necessary to d
Page 316 and 317: ate can be justified. This growth r
Page 318 and 319: 38. A restructuring is a programme
Page 320 and 321: . the enterprise’s incremental bo
Page 322 and 323: generate cash inflows from continui
Page 324 and 325: determined excluding cash flows tha
Page 326 and 327: esult from synergy between the iden
Page 328 and 329: 88. In allocating an impairment los
Page 330 and 331: paragraphs 106 to 107 and for goodw
Page 332 and 333: 102. Any increase in the carrying a
Page 334 and 335: a. if the enterprise sells the disc
Page 336 and 337: ased on the enterprise’s primary
Page 338 and 339: EXAMPLE 3- EXAMPLE 4- EXAMPLE 5- EX
Page 340 and 341: determining value in use of both X
Page 342 and 343: Total 10,000 7,000 3,000 A24. T use
Page 344 and 345: of the asset for tax purposes is Rs
Page 346 and 347: Gross carrying amount 1,000 2,000 3
Page 348 and 349: in forecasting cash flows. This res
Page 350 and 351: Schedule 1. Calculation of the plan
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Schedule 5. Summary of the carrying
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End of 20X4 A B C Goodwill Z Carryi
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in Rs. lakhs) Year Future cash flow
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Accounting Standard (AS) 29 Provisi
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The objective of this Statement is
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settle the obligation; or ii. a rel
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17. Financial statements deal with
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may result in the recognition of in
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warranties). The other party may ei
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expenditures are recognised on the
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It does not form part of the Accoun
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paragraphs 14 and 21). Example 3: O
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2005, the enterprise's lawyers advi
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an onerous contract as a contract i
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Accounting Standards 1-29 - Seth & Associates

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