Accounting Standards 1-29 - Seth & Associates

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calculated as follows: (amount in Rs. lakhs) A B C D E Total Contract Costs incurred 110 510 450 250 100 1,420 Recognised profits less recognised 35 70 30 (90) (30) 15 losses 145 580 480 160 70 1,435 Progress billings 100 520 380 180 55 1,235 Due from customers 45 60 100 ---- 15 220 Due to customers --- --- --- (20) ---- (20) The amount disclosed in accordance with paragraph 39(a) is the same as the amount for the current period because the disclosures relate to the first year of operation.
<strong>Accounting</strong> Standard (AS) 9 Revenue Recognition The following is the text of the <strong>Accounting</strong> Standard (AS) 9 issued by the Institute of Chartered Accountants of India on 'Revenue Recognition'. In the initial years, this accounting standard will be recommendatory in character. During this period, this standard is recommended for use by companies listed on a recognised stock exchange and other large commercial, industrial and business enterprises in the public and private sectors. Introduction 1. This Statement deals with the bases for recognition of revenue in the statement of profit and loss of an enterprise. The Statement is concerned with the recognition of revenue arising in the course of the ordinary activities of the enterprise from — the sale of goods, — the rendering of services, and — the use by others of enterprise resources yielding interest, royalties and dividends. 2. This Statement does not deal with the following aspects of revenue recognition to which special considerations apply: (i) Revenue arising from construction contracts; (ii) Revenue arising from hire-purchase, lease agreements; (iii) Revenue arising from government grants and other similar subsidies; (iv) Revenue of insurance companies arising from insurance contracts. 3. Examples of items not included within the definition of "revenue" for the purpose of this Statement are: (i) Realised gains resulting from the disposal of, and unrealised gains resulting from the holding of, non-current assets e.g. appreciation in the value of fixed assets; (ii) Unrealised holding gains resulting from the change in value of current assets, and the natural increases in herds and agricultural and forest products; (iii) Realised or unrealised gains resulting from changes in foreign exchange rates and adjustments arising on the translation of foreign currency financial statements; (iv) Realised gains resulting from the discharge of an obligation at less than its carrying amount; (v) Unrealised gains resulting from the restatement of the carrying amount of an obligation. Definitions 4. The following terms are used in this Statement with the meanings specified: 4.1 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 goods, from the rendering of services, and from the use by others of enterprise resources yielding interest, royalties and dividends. Revenue is measured by the charges made to customers or clients for goods supplied and services rendered to them and by the charges and rewards arising from the use of resources by them. In an agency relationship, the revenue is the amount of commission and not the gross inflow of cash, receivables or other consideration. 4.2 Completed service contract method is a method of accounting which recognises revenue in the statement of profit and loss only when the rendering of services under a contract is completed or substantially completed.
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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
Page 10 and 11: (b) storage costs, unless those cos
Page 12 and 13: 27. Information about the carrying
Page 14 and 15: performance by different enterprise
Page 16 and 17: 15. The separate disclosure of cash
Page 18 and 19: 22. Cash flows arising from the fol
Page 20 and 21: 34. Cash flows arising from taxes o
Page 22 and 23: The appendix is illustrative only a
Page 24 and 25: Interest expense (400) Interest inc
Page 26 and 27: Interest expense 400 Operating prof
Page 28 and 29: 31,850 Less : Sundry debtors at the
Page 30 and 31: Short-term funds (650) Deposits hel
Page 32 and 33: not contingencies as defined in par
Page 34 and 35: 8.6 Events occurring after the bala
Page 36 and 37: Accounting Standard (AS) 5 Net Prof
Page 38 and 39: financial statements in understandi
Page 40 and 41: gratuity scheme by an employer in p
Page 42 and 43: (ii) expected useful life of the de
Page 44 and 45: 19. A change in the method of depre
Page 46 and 47: Accounting Standard 7 (REVISED) Con
Page 48 and 49: 8. A group of contracts, whether wi
Page 50 and 51: a. costs that relate directly to th
Page 52 and 53: estimated reliably when all the fol
Page 54 and 55: of which recovery is probable; and
Page 56 and 57: defects have been rectified. Progre
Page 58 and 59: incurred for work performed upto th
Page 62 and 63: 4.3 Proportionate completion method
Page 64 and 65: the time of raising of any claim it
Page 66 and 67: should be based on the sales value
Page 68 and 69: Accounting Standard (AS) 10 Account
Page 70 and 71: 9.3 Administration and other genera
Page 72 and 73: 14.4 On disposal of a previously re
Page 74 and 75: either to the asset given up or to
Page 76 and 77: Accounting Standard (AS) 11 (Revise
Page 78 and 79: Reporting currency is the currency
Page 80 and 81: Classification of Foreign Operation
Page 82 and 83: . income and expense items of the n
Page 84 and 85: historical cost for those items in
Page 86 and 87: Appendix Note: This Appendix is not
Page 88 and 89: Accounting Treatment of Government
Page 90 and 91: 8.1 Grants related to specific fixe
Page 92 and 93: (The Accounting Standard comprises
Page 94 and 95: Accounting Standard (AS) 13 Account
Page 96 and 97: fair value provides a prudent metho
Page 98 and 99: 31. Investments classified as curre
Page 100 and 101: (v) No adjustment is intended to be
Page 102 and 103: Treatment of Reserves on Amalgamati
Page 104 and 105: (a) consideration for the amalgamat
Page 106 and 107: 41. Where the scheme of amalgamatio
Page 158 and 159:
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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Accounting Standard (AS) 23 Account
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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
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6. A complete set of financial stat
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g. segment revenue, segment capital
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29. To illustrate: a. the principle
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Accounting Standard to assist in cl
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1. Basic Earnings Per Share 2.Dilut
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provisions for employees (b) Other
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(condensed or complete) for the fol
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1st Quarter 2nd Quarter 3rd Quarter
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Accounting for the Effects of Chang
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a. intangible assets that are cover
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ecoverable amount.4 Carrying amount
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supportable assumptions that repres
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Therefore, in addition to complying
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titles, customer lists and items si
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Past Expenses not to be Recognised
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The enterprise amortises the right
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assets, how it determines the recov
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e. copyrights, and patents and othe
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Appendix A This Appendix, which is
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aforesaid and expensed in an earlie
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without physical substance held for
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Application and Infrastructure Deve
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On 1-4-2003, the remaining period o
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Accounting Standard 27 Financial Re
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The arrangement identifies those de
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the assets; c. its share of any lia
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separately as part of the inventory
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44 In case of transactions between
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Accounting Standard (AS) 28 Impairm
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4. The following terms are used in
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e. evidence is available of obsoles
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15. It is not always necessary to d
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ate can be justified. This growth r
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38. A restructuring is a programme
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. the enterprise’s incremental bo
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generate cash inflows from continui
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determined excluding cash flows tha
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esult from synergy between the iden
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88. In allocating an impairment los
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paragraphs 106 to 107 and for goodw
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102. Any increase in the carrying a
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a. if the enterprise sells the disc
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ased on the enterprise’s primary
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EXAMPLE 3- EXAMPLE 4- EXAMPLE 5- EX
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determining value in use of both X
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Total 10,000 7,000 3,000 A24. T use
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of the asset for tax purposes is Rs
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Gross carrying amount 1,000 2,000 3
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in forecasting cash flows. This res
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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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