Eagle View Chart Book Complete PDF

About the Author
CA JAI CHAWLA is the core faculty of D7

DAMMINI JAI CHAWLA is the co-founder
Fortune Classes, Bhopal and V’Smart
Academy, Pune and proud owner of D7 FORTUNE CLASSES,
He has a leading experience of more than 10 BHOPAL. She is the student of CA Final and
years of CA INTER ACCOUNTS AND also pursuing CS and MBA course.
ADVANCE ACCOUNTS & CA FINAL Her management and communication skills
FINANCIAL REPORTING and has guided more made D7 FORTUNE, a known brand in a
than 1,00,000 students across India. His short span of 2 years. She is also engaged in
quality of teaching and friendly behavior counseling & managment and doubt
along with the tendency to guide and help clearing sessions of IPCC/INTER in D7
each student in the best possible ways,
CA. Jai Chawla Dammini Jai Chawla FORTUNE CLASSES. She has devoted and
makes him so loving among the students
dedicated her crucial time in supporting her
His vision is to share his knowledge and skills
husband to all the possible extent. She
to beneﬁt the students and inculcate the
belives in CA JAI CHAWLA’S dream and
tendency of learning and enchanting
vision as her own.
knowledge which may lead them towards the
She is the Co-author of Books, CA FINAL -
success.
He is also the author of Books of CA FINAL FINANCIAL REPORTING and CA INTER
FINANCIAL REPORTING on INDAS and INTER ACCOUNTS and ADVANCE ACCOUNTS
ACCOUNTS & ADVANCED ACCOUNTS
Dedicated to My Parents Shri Girish Chawla & Smt. Kanchan Chawla &
My Life long Support My Wife Dammini Chawla.
Special thanks to my Mentor CA. Vishal Bhattad Sir from whom I have derived an idea to create this book.
I also want to Thank my Team who supported me Day & Night to create this Masterpiece.
Special Message to Students,

I am delighted and overwhelmed to share that the belief and love of you students has inculcated more enthusiasm and courage to do
better and best for you all.
The Best example is My “Eagle View CHART BOOK” and I really want that every student should have something handy and précised
form of the syllabus so that substantial portion can be revised in a jiffy. So, I along with the support of V'Smart Team, has decided to
provide you this Chart Book (Which is Already Very Popular among CA FINAL Students).
It is my strong belief that if you revise the syllabus from Chart Book with the help of short revision videos uploaded on YouTube, will not
only boost your confidence, It will also help you to get a proper understanding of the concepts, so that even the off-track questions may
also be solved within the prescribed time in Exam.
I also urge you, to score good marks, so as to sail through the entire CA Inter, u must watch all the revision videos available on YouTube
covering all Important Topics of AS and Other Topics.
Also feel free to give ur feedback to me and recommend to your friends and juniors.
From My Pen
CA. Jai Chawla & Team
Index
Sr.No. Name Page No.
1 AS 1 - DISCLOSURE OF A/C POLICIES 1
2 AS 2 - INVENTORIES 2
3 AS 3 - CASH FLOW STATEMENT 3
4 AS 4 - CONTINGENCIES AND EVENTS OCCURRING AFTER THE BALANCE SHEET DATE. 5
5 AS 5 - NET PROFIT OR LOSS FOR THE PERIOD, PRIOR PERIOD ITEMS & CHANGES IN ACCOUNTING POLICIES 6
6 AS 7 - CONSTRUCTION CONTRACTS 7
7 AS 9 - REVENUE RECOGNITION 8
8 AS 10 - PROPERTY, PLANT & EQUIPMENT (PPE) 9
9 AS 11 - EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES 11
10 AS 12 - GOVERNMENT GRANTS 12
11 AS 13 - ACCOUNTING FOR INVESTMENTS 13
12 AS 14 - AMALGAMATION 14
13 AS 15 - EMPLOYEE BENEFITS 16
14 AS 16 - BORROWING COSTS 18
Index
15 AS 17 - SEGMENT REPORTING 19
16 AS 18 - RELATED PARTY DISCLOSURES 20
17 AS 19 - ACCOUNTING FOR LEASES 21
18 AS 20 - EARNINGS PER SHARE 22
19 AS 21 - CONSOLIDATED FINANCIAL STATEMENT 23
20 AS 22 - ACCOUNTING FOR TAXES ON INCOMES 26
21 AS 23 - INVESTMENT IN ASSOCIATES 27
22 AS 24 - DISCONTINUING OPERATIONS 28
23 AS 25 - INTERIM FINANCIAL REPORTING 29
24 AS 26 - INTANGIBLE ASSETS 30
25 AS 27 - FINANCIAL REPORTING OF INTEREST IN JV 32
26 AS 28 - IMPAIRMENT OF ASSETS 33
27 AS 29 - PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS 36
28 DIVISIBLE PROFITS 37
Index
29 BUYBACK OF EQUITY SHARES 38
30 INTERNAL RECONSTRUCTION 40
CA. Jai Chawla
AS 1 - DISCLOSURE OF A/C POLICIES

CA INTER
ADVANCED 7887 7887 05
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1 Meaning of 2 Basic Requirements of “Fundamental Accounting Selection of

Accounting Policy 3 4
AS - 1 Assumptions” Accounting Policy
• Specific Accounting
Principles & All Significant Such Disclosure Going Consistency Accrual Consider Following 3 Principles
• the Methods of applying A/c Policies Disclosure shall be made Concern to select any A/c Policy for
those Principles adopted by shall form part at One Place any Transaction or event
Adopted by enterprise in entities should of Financial Business will run Entity has Financial
Preparation & Presentation be Disclosed Statements For Foreseeable followed same A/c statements are
of Financial Statements Under Future Policies which it prepared as per Substance over Materiality Prudence
Financial had Followed accrual Basis not Legal form
So that users can Without the Statements in the last year as cash Basis
Examples :- Understand & disclosure disclosure is A/c Policy should
Always Consider Select the A/c
Analyse the of A/c Policies, generally made the Substance of be such that it
1) Inventories Valuation
Financial Financial in “Notes to 1) No Specific disclosures are required if above Policy based
Method - fundamental A/c Assumptions are Followed Transaction not on Material Consider
FIFO, Weighted Avg. Statements & take Statements are Accounts & its Legal Form Foreseeable
Proper decisions treated as Significant Facts
2) If Fundamental A/c Assumption are not Losses or outflows
2) Cash Flow Statement incomplete A/c Policies of future
Statements” followed by entity than Fact Should be disclosed.
Presentation -
Direct Method &
Indirect Method
5 Change in Accounting Policies
Entity can change its A/c Effect of change

Policy when any one out of in A/c Policy
three Conditions are Satisfied :-
(1) (2) (3) Material in Non-Material
(or) (or)
Adoptions of Adoptions of Change in A/c Current in current Period
different A/c different A/c Policy would Period but Ascertainable
Policy is required Policy is because result in more in later Periods
by Law/Statue of Compliance appropriate
with Accounting presentation Amt Amt not
Standards of Financial Ascertained Ascertained Fact of Such
Requirement Statements. change in later
Fact that Period should
Amount to be
amount is non- be disclosed in
disclosed Current Period
ascertainable
should be disclosed
1
CA. Jai Chawla
AS 2 - INVENTORIES
CA INTER
ADVANCED 7887 7887 05
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1 Meaning 2 Non- applicability 3 Measurement 4 5 6 Special Cases
How to Identify cost? When an Inventory
of Inventory
An Asset Recognized as an expense?
Quantity payet
.
Depends on 1) Trade Dis. vs. Cash Discount

Held for In Proces Materials 1) WIP under Construction
Sale in of or Supplies contracts (AS-7) Lower of Nature of Inventory
Ordinary Production to be When capitalized Consider Not to Consider
COGS When
course for Sale Consumed 2) WIP for Service Providers reduced to PPE
when
of Buss. (WIP) in Production Such as Software Development Not ordinarily 2) Conversion of PPE into Inventory
actually to NRV
(F.G.) (RM) o Consultancy, Medical Services Interchangeable sold When such PPE is sold regularly after
in Men
during 3) Shares, Debentures & other By way of using in the ordinary course of business
of Specific Identification Depreciation
Securities held on stock in Trade While Valuing
services (Financial Instru)
Method By way of Closing Sale of such PPE shall be booked as
(Cost sheet of each Debiting to sale of Inventory on Gross Basis
4) Livestock, Agriculture & & every inventory Stock at NRV
Forest Products & Mineral Trading A/c 3) Spares/Tools/Equipments used in PPE
shall be taken into
Oils, ores & gases. consideration)
(They are measured at NRV)
If it fulfills If it does not fulfil
Ordinarily
criteria of AS -10 the criteria of AS -10
Interchangeable
COST
OR NRV
Estimated SP (-) Cost to Sale
⑭ Historical
Approach
Non-Historical
Approach
Then treated as PPE,
may be as a separate
Expenses out as
Inventory
Purchase Price + component only if amount as per AS 2
Conversion Cost + Other Cost is material
Estimate NRV Best evidence:- Retail Standard Cost
Prod OH
bring theInventeditor
emp
Sale event after BS date FIFO WAC price 7
Allocation of Cost to Joint Products
& By-Products
Labour Tumpart How to Use?
: e
Standard price of
.
NRV of NRV of WIP ↑
NRV of Raw material

Fixed Variable not measurable
-
How to Use? a) Material

Finished Goods NRV of FG SP is to be Joint Products By Products
OH Recovery OH b) Labour
-
Lost Est. SP of FG (-) Est. Further Cost adjusted with

(-) Cost to Sale to Complete c) O/H
GP% are taken and Allocate the total Cost NRV of By-Product
Allocation on Allocation
If NRV of they are regularly of Conversion in ratio of shall be reduced from
G
Normal on Actual
Capacity basis Capacity basis
except when always
If NRV of
FG is higher
than Cost
FG is Lower
When to Use?
when there are
wide variety
reviewed based on
revised prices
relative Sales Value either at
1) Stage of Production Process
Total Cost to value the
Cost of Main Product
Actual production of Products with when Products becomes
Measure RM at When to Use:- Separately Identifiable
is more than Measure similar margin Cost records are
RM at Replacement Cost or Or
Normal
In that case use
Fut Actual Cost Org. Cost of RM
whichever is Lower Lost ESP-4p %
maintained properly &
every product is having
2) at the Completion of
Production
Actual Capacity
Rm- -
> Run Cost diff profit margin
-
F
Replacement
↳ Rm
Cost 2
CA. Jai Chawla
AS 3 - CASH FLOW STATEMENT

CA INTER
ADVANCED 7887 7887 05
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1 2 Important Meanings 3 Methods of Preparing Cash Treatment of

Applicability 4
Flow from Oper. Act. Important Items
CFS to be Prepared by Cash (1) Foreign Currency Cash Flows :-

Operating Financing Investing Direct Indirect
all Companies Equivalents Activities Activities Activities Method Method Must be recorded in
Reporting Currency Refer
example
Capitala FC Amt. X Ex. Rate on date
Except :- Held for Meeting Main Revenue Activities Related Outflows to NCA
purIsaleMajor class of of Cash Flows
Short Term Cash Generating to Capitals & acquire Resources Receipts & Payments
a) One Person Co. (OPC)
Commitments & activities of Borrowings LIST (Assets) for are directly taken (2) Companies having Financial Activities
b) Small Co.
includes Short an enterprise Generating Future into Consideration as Main activity then :- Bank/NBFC/#I
c) Dormant Co.
Term Investments:- Cash Flows & Incomes Dividend Received
Interest Paid/Received
Identify all cash
Investments Must be Examples :- Example :- Examples :- shall be covered under Operating Activity
Collections &
easily Convertible into Sale of Goods/ Issue/Buy Back Purchase/Sale
Payments Related
Cash (Highly Liquid) Services of Shares/ of Fixed Assets (3) Taxes on Income :- Must be reported
to Operating
Has low level of Risk Fees/Royalties Securities Investment in under Operating Activity except if it
Activities
in Changes in Commission Redemption of Securities/Shares could be specifically related to Investing/
Market Value Paid to Suppliers Debentures or Income from above Financing
of Goods/Services Bonds Shares/Securities Example : - Capital Gain on sale of Asset
Generally, Invst. having short Interest paid Dividend Incomes
Maturity of 3 months or less shall be transfer to Investing Act.
on Borrowings
are Cash & Cash Equivalents. Bank Loans (4) Acquisitions/Disposal of Business
Marketable Secritics
Dividend Paid Units/Subsidiaries :-
.
GP
#A
If End
-
exp
6 Any Extra-Ordinary Must be shown as Investing
2A
.
1 Start either with 2 Eliminate Non Cash 3 Eliminate Non 4 Working Capital 5 Tax Paid shall be
zud
enician
Divd Income
Activities Separately
NPBT (or) Items Operating Items - changes adjustments deducted at Last item not related to
·
2post Acy)
NPAT (or) • Interest Exp. (Fin.) under Invest/Fin. Act shall
Retained Profits
• Provision for Tax (if started
• Interest Income (Invst.) Operating Act. be +/- at Last
Gain / Loss an Sale if CA = Deduct
go
NPAT
from Retained Profit or NPAT) transferred to P&L
It pref Divd in
Declared Cy CA = Add
• Dividend Payable (if started
.
.
() Eg Divd Retained Profits = -
(If Extra-ord. Income/ Exp. is

TimestoGR Closg Reserves from Retained Profits) CL = Add already transfer to P&L a/c
7) (No need to Eliminate
(-)Openg Reserves • Depreciation always CL = Deduct then first its effect must
1 prom. an
Pol More • Transfer to Reserves Like GR Gains/Losses if directly
Red .
be eliminated from Oper. Act)

(if started from Retained profits) transfer to
T • Revaluation loss on FA always Posset Cap. Reserves)

Transfer to P&L (AS-10)
Difference bet • Prem. on redemption of Debn/
CloseBal of Pay Pref. Share (if started from
Bal. of PE Ret. Profit)
> non-Deductible
-
& up .
3 Continued to next ...

I
Insurance clain-mach Ippe

.
=
others/stace
- O
=>
2) TDS on Interatdeduct -7 non Cash

Loan to
③ Supplier & Internet there Is oper .
Loan Fram Debtors =

> Op.
Extraord
a
4)
tran Law suit
Compensation/Peratty
VRP
Trum Cam
.
If ⑯
S
prefbird Divd amt
. Y
paid
Ignore
6) Bank/NBFc FI I
Loam-> Open ,
Ent -
> open
7) NP >
=
NPAT assume always
CA. Jai Chawla
SUMMARY OF CASH FLOW STATEMENT

CA INTER
ADVANCED 7887 7887 05
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1 Net Cash Inflow 2 If nothing is specified about 3 To Calculate Tax Payment, Tax Paid shall be shown under Treatment of Dividend
we should prepare following A/c
4 Cash Flow from Operating
5
means Cash Generated Cash Sales & Cash Purchases Declared or Payable
& then we would always Activities after all Adjustments
assume the Total Sales & (Sabse Last me likhna hai)
Net Cash Outflow
Purchases in Credit Only. Opening Dividend in BS Closing Dividend in BS
means Cash Used
(Refer &401) Must have been paid in CY Non-Cash Item, it should
TAX A/c i.e. Cash Item Should be be eliminated from NP after
deducted under Financing Act. e
Tax
> or from Retained Earning
under Indirect Method.
To Opening Balance of Advance Tax By Opening Balance of Provision for Tax
To Cash Payment of Tax By Tax Provision made in CY thru P&L
I
To Closing Provision for Tax By Closing Bal. of Advance Tax
↓
CFOA
If Lastme RINPA
1- Tax poor
.
6 Pre-acquisition Dividend 7 If Debentures are shown in BS 8 If Debenture or Pref. Shares are 9 Grant Received
received on Investments with % of Interest is also given redeemed during the year
even if nothing is mentioned at Premium, if Such premium is
about interest then also we written off from P&L ,
Should be deducted from have to make adjustment then in such case Premium shall be For Capital Projects For Revenue Expenses
Investment A/c while preparing of Interest. added back under Operating Investing Activities Operating Activities.
the Investment A/c in working Activities as elimination. If such grant is amortised in P&L
note and also it should be Then less back under If Already transfer to P&L
eliminated from NP. Operating Activities then no need to eliminate under
If Nothing is mentioned then Indirect Method.
It is not income, it should be always assume that Premium
deducted from Investment A/c. is not written off in the P&L A/c
If it is wrongly credited to P&L
then sadd back from NP
G
-
·
Bank Ha
To Investment
(PreR Divd)
d To par /post Acg .
Diva)
CFOI
4
CA. Jai Chawla
AS 4 - Contingencies and Events Occurring

CA INTER
ADVANCED 7887 7887 05
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1 Meaning 2 Types of Events 3 Treatment
Any Event that occurs

After the BS date & Adjusting Event Non- Adjusting Event Adjusting Event Non- Adjusting Event
Before the Date when Fin. Stat. are Approved
is called Events Occurring After the BS Date
Those that Conditions not 1- Adjust Related Only Disclosure is
provides evidence existing on BS date Assets/Liabilities Required in
of Conditions Notes to A/C
existing on BS date 2- Second Effect on
Instead, New P&L a/c
Condition arise
Occurrence of after BS date
01/04/20xx 31/03/20xx 30/06/20xx event confirms the For Example-
Beginning of FY BS Date FS approved by BOD condition already
Recognise Loss or Make
existing on BS date
Provision in the Books
If any event occurred during this period

then Fin. Effect of these events shall be 5 Some Special Cases 4 Examples
adjusted or disclosed on BS date.
Examples:
1. Insolvency of a Debtor Dividend Declared Going Concern affected
Adjusting Event Non- Adjusting Event
2. Reduction in Value of Investments after BS Date due to occurence of
Non-Adjusting event
3. Fire occurred in the premise resulting losses
Treat Contingent 1. Insolvency of Debtors 1. Reduction in the Value
Liab. on BS date & 2. Litigation Settlement after the of Investments
Treat Adjusting Reporting Date for Event 2. Fire occurred in the premise
disclose on BS Date Event & Adj the all the Assets & Occurred before Reporting Date
Liabilities at 3. Detection of Fraud or
Realisable Value Error after Reporting Period
5
CA. Jai Chawla
AS-5 Net Profit or loss for the Period, Prior

CA INTER
ADVANCED 7887 7887 05
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Period Items & Changes in Accounting Policies

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Treatment of
Important Items
1 Net P/L for Period 2 Prior Period Items 3 Changes in Accounting
All Items of Profit & Loss Consist of Income or Exp. of P.Y.

Estimates Policies
Income Exp. are Recog. arise in C.Y.
thru P&L Due to ERROR OR OMISSION
Approximation of Departure from
P/L from Extra-Ord. Amt. when measurement previously adopted policies
except any other Ordinary Act. Items Ex:- basis is absent
AS Requires 1) Wrong % of Depreciation OR OR
otherwise 2) Wrong Provision of any Exp.
Ordinary Act. ÜIncome or Expenses Disclosure:- Required by To Comply For more
Means main ÜClearly distinct from - Nature & Amt, Statue with any AS Appropriate
Revenue Ordinary Activities having material requirement Presentation of F.S.
Generating ÜNot expected to recur Separately Disclose impact on Current
Activities frequently the Nature & Amt. in P&L & Future yrs.
and in Notes to Accounts
Disclosure:-
Disclose separately - If not Quantifiable - Changes having
Always Separately then Disclose Fact
such items if according material impact
Disclose
to Nature or Size it is
the Nature & Amt
Imp. to explain the - Impact not in
of Such Items
Performance of Entity Ex:- Change in CY but in future
- Provision for Bad Debts
Schedule III also - Life of Depreciable Asset - Disclose in year
Examples of Exceptional of adoption
requires to present
Items.:-
1) Reduction of Cost of Stock Extra-Ord.Items
separately Neither Prior Period Item
to NRV Nor Ex:- Change in Method of
2) Litigation Settlement For Ex.:- Extra Ordinary Item Inventory Valuation
3) Disposal of Fixed Assets Ü Loss due to Earthquake
(or) Ü Govt. Grant Refund
Long Term Investments Always give Prospective
Ü VRS exp. Always give Retrospective
4) Retrospective Adjustments Effect Effect
6
CA. Jai Chawla
AS 7 - CONSTRUCTION CONTRACTS
CA INTER
ADVANCED 7887 7887 05
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Applicable on Main Contract Method allowed for Is Outcome of Contract

MCa Recognition of Revenue Estimated Reliably
Accounting in the books of Contractors
Types of Construction Contracts Combining & Segmenting Percentage of Completion Method
(Recognise Revenue
Yes No G
pem
No
w.r.t. Stage of Completion) PCM Continue with ‘% of Revenue to be Recognised

Fixed Price Cost Plus Two or more Contracts A Contract of Multiple Assets Completion method’ for =
Contract Contract shall be Combined if - to be treated Separate Contract Revenue Recognition Cost incurred till date to the
(Full Price or Fixed (Cost + some % of (a) Negotiated as a Single for each Asset - if How to Measure Stage
of Completion? extent Recoverable i.e
Price P.U. of output ) fixed amount) Package (or) (a) Separate Proposal for each Asset & No Profit/Loss
-
(b) All Contracts are Part

-
(b) Separate Negotiation & (2 ways)

of Single Project (or) (c) Ability to Reject/Accept partly & 1) Cost incurred till date (work certified + work
(c) All Contracts are
Performed Continuously
(d) Cost & Revenue Identifiable
of Each Asset
÷ uncertified
Total Estimated. Contract Cost; or
E
Dependent to
other)
each If Additional Assets are Introduced 2) Survey of Work Performed
Contract Revenue Contact Cost in Existing Contract (Based on Engineer Report) Disclosure Requirement
Initial Agreed Amt Direct Specific Exp.

1. Contract Revenue & Contract cost
(+/-) (+) Treat Separate Contract Combined Contract
Variation Amt 2. Stage of Completion-Method followed
Allocable General Exp.
(+) 1. Differs Significantly 3. Amt. Payable to Customer & Receivable from Customer
(+)
Claim in Design/Technology/Function (or) Otherwise 4. Adv. Received from Customer
Customer Specific Exp.
2. Price Negotiated Separately
(+) (-) 5. Retention by Customer
Incentives (if any) Incidental income (not 6. Profit recognised
(+) included in contract revenue)
7. Progress billings
Escalation Clause Treatment of Contract Cost
(-)
Penalties
Actual cost
Incurred
If Estimated total
Contract cost
V V
Imp
.
Kemp
- Art Fram Customer
-able
.
during the period Exceeds Est. Revenue

to (v) Recoverable
Book Immediately Total Revenue ---- xxx
- Total Est. Cost ----xxx
(work uncert
Centif Cost incurred fill date = ↳500
Total Loss xxx zoor ) 0
Rewg
-
.
G (t) profit
=
- Loss Already xxx 5cV

.
(250)
.
booked
(v) Recog Loss
=
Excess Loss G
xxx
(ood)
() progres payment
received
Billing Hildaa
receivable
Make Provision &
Immediately through P&L -
7 -
CA. Jai Chawla
AS 9 - REVENUE RECOGNITION
CA INTER
ADVANCED 7887 7887 05
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1 Covers 2 Does not Cover 3 When to Recognise Revenue? Emp

&
Common Principle -
-
Revenue From
Conditions = (4 +1)
1. Profit on Sale/Settlement or
Revaluation of Fixed Asset or Liability
Control
Sale of Goods Rendering Interest/Royalty/Dividend 2. Notional Gains in value of Current Assets Significant Risk Entity does not Retain Revenue & Cost Certainty of Stage of Completion
of Services from Enterprise Resources 3. Revenue Recognition covered in other AS & Rewards of any Effective control Reliably Collection can be Measured
used by Others like-
AS 19 Leases Ownership is over Goods Sold Measurable Reliably in case
Transferred nor any Managerial of Services
↓ V Imp
.
Involvement
O
Sale a Lease Back
If Any one Uncertainty arises later

is uncertain
Make a Provision, DO NOT
Postpone the Recognition Reverse the Revenue
Some Special Cases of 6 Recognition of following How to decide if Performance

7 5 Some Special Points 4
Revenue Recognition is Achieved?
1) Mere Postponement of delivery

Interest Royalty Dividend
Sale of Goods Services Rendered - Doesn't alter period of Recognition Sale of Goods Services Rendered
2) If Insignificant part of work is done
Time Prop. Accrual When Right - No need to Recognize Revenue 1. Transfer of 1. Contract Fully Completed
1. Bill and Hold Sales 1. Installation Fees Property in Goods - if Short Term Contract
- When the buyer takes title. - With reference to the Stage Basis Basis to Receive
2. Goods Shipped Subject to of Completion. is Established
se
Customers’ approval
- When the buyer formally
2. Media Commissions
- When the related Advertisement
month as per
Substance i.e When
2. Risk & Rewards of
Ownership are
2. Proportionate Completion
- if Long Term Contract
Sixmant Transferred
accepts the shipment appears before the Public. of the Dividend
4. Consignment Sales 3. Tuition Fees Agreement is Declared 3. No Effective Control
- After the buyer sells goods - Over the period of Instructions/Lectures with seller
to the final customer. 4. Franchise Fees
5. Cash on Delivery Sales - Depends on Agreement.
- When delivery is made & 5. Fees from Development of
Cash is received by the seller Customized Software
(eg. Flip Kart) - With reference to the Stage of
Completion, including the Post-delivery
service support stage.
8
AS 10 - Property, Plant & Equipment (PPE) CA INTER
CA. Jai Chawla
ADVANCED 7887 7887 05
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~ What is PPE
1 2
Recognition
of PPE Recording 3 O
Initial Reg. at Cost - Different Cases 4
Subsequent
Expenditures
5 Depreciation
soodr
Payment 1
Exchange
is
Beyond Normal Consolidated F. lease On components
Aircraft
-ings
Tangible Item ETody
I
Initial Books
Conditions Credit Periods Price Lessee's Day to day Replacement wise-based on
Recognition G
Grant Service Cost Estimated life engine
were e ↓
-
es more & Major

1st Priority:- Apply AS 19
Interior
I
12
than
P&L of components
Inspection overhau
a) FEB probable FV of AssetSGiven up
G
Held for Use in Expected to flow AS 12 Cash Price Entire Price 2
(or)
-
-
At Cost
ÜProduction to be b) Cost-Reliably Equivalent shall be At end of B/S date
ÜSupply gals used for measured
2nd Priority:-acquired
apportioned in por 1 Dep. Method
-
more than FV of Asset Received ach Method
ÜRental the ratio of FV T o GCapitalize if
(
or OR
Regulaa
-
ÜAdministration 12 M It means at -
of each PPE recognition should be

If
Decommissioning CA of Asset given If Free - PV of Future criteria meets Review
Concessional -
-
Purchase
-
Bearer plant is PPE or Restoration if FV not Nominal Outflow 2 based an

Cost + Non
Value Actual
- &
esp
-
available or 3
-
Biological Assets for Cost G

at PV
Refundable Previous Carrying
Acq. pattern
-
-
↓ when there is Lack

-
agriculture purpose - Not PPE
3
Directly
-
Taxes Amount if any If any change arise
↓
101
Cost
-
Attributable
Discounting of Commercial Finance Cost Charge OF FEB
E
then it is change in
-
al De-recognise
to P&L A/c
-
Substance
↓
-
Cost i.e Labour,

-
S
Out of scope of PPE A/c Estimate
10
Testing Exp.,
-
-
Ü Lease, Biological. Assets

Ü Held for sale PPE
Installation Timportation No Profit
motive
AS16 Prospective
Ü Exploration & Evaluation Expenditure PPEDr 10
Poto Asset
ire DAC ~
Effect
.
Resear
To
Rental should be of fringing 4
if
to its
PPE
/
ord Busines activity
Usablecurrent location
G
Cessation of Dep.
.
a
Biological Asset
2 Condition
⑮
-
↳
↳
Animal plants
Excludes OR
↳
:
↓ - -
E
if related Non
Residual value CA Earlier of:-
Bea
-
cost
inquaration
Bearer
to agriculture a) Retired from active use
(Not
↓ - & Held for sale
PromotionalAdvenaa Depreciation
PPE)
-
PPE are No
or
-
-
if not
to
related
agai
put now
-
b) De-recognition of PPE
(it may relocation eup · (W/off/sold)
PPE)
Crops
be
Abnormal Losses Commencementof Dep .
/Start up (Legal emp) PPE is available
Dir SB
O Se
E
Pal Internal profit for Use
OH (Gen 2 Adm .
/SQD)
/Ready to use)
.

AS 10 - Property, Plant & Equipment (PPE) For Most Recent Updates
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-
· G
Revised
6 Measurment at
temp
De-Recognition
B/S date
7 Revaluation 8
of PPE Fra
Removing 9
Change in
Existing De-Comm. Liability Dis Rate
Value
Books
. .
as per
&
Life
Option 1 Techniques:- Loss/Gain - Revised
accounting P&l a/c OR Teum
j
PPE is Under PPE is Under
Cost
Model
Revaluation
Model i .
FV
e
Gross Net
Cost model
PRE (a
Source
Revaluation Model
O CA
of Liak
Adjust original Acc Dep shall

Original Cost Q Fv at Measurement first be W/off
-
(-) accumulated date cost &Acc Dep (A) (B) Glau (C) (D)
-
by % of with Org. Cost
-
Depreciation (-) subsequent -

Increase in Liability (Loss) Decrease in Liability (Gain) Increase in Liability (Loss) Decrease in Liability (Gain)
change then Net Carrying
(-) accumulated Depreciation Setoff the loss with Transfer the Gain First to
amount shall be PPE A/C Dr.
-
Impairement (-) Subsequent Prov. for De-comm. Liab A/C Dr. Revaluation Surplus if available P&L to the extent of any earlier
Increase/ Decrease To Provision for De-comm. Liab A/C -
As28 Impairement To PPE A/C & if loss exceeds the available Revaluation Loss which was
↓ Surplus then transfer the Excess Transferred to P&L A/C.
PPE Dr. Net CA (If Decrease is More than C.A. loss to P&L A/c
To Acc Dep A/c Compare of PPE than difference Remaining Gain transfer to
Revaluation Surplus A/c Dr.G
Est
Revaluation surplus
To Rev. Surplus Fairvalue
Revaluation - in P&L A/C)
c
Profit and Loss A/c Dr. 24a
To Prov. for De-Comm. Liab. A/c
Frequency
~
2 Transfer Rev. Surplus Provision A/c Dr.
(A)
-
⑭
/
to Retained Earning To Profit and Loss A/c
Change
PPE shall be Reduced to ⑳
sX
-
(to the extent of earlier loss)

e Cand
the Extent of its Book Values. To Revaluation Surplus A/c
mandatory If Earlier Loss was transfer
-
Equal to Excess
↑
Transfer full amt, Remaining Gain should be to P&l then this Gain should
-
: nif
Sa
Depreciation When finally transfer to P&L a/c be First setoff with P&l
-
.
if PPE is being used disposed

in
signf
Retrospective
.
-
(optional)
Volatile Change Gain a/c Dr.
effect 3 Treatment of Revaluation

Change Mr
To PPE a/c
To P&L a/c
Provision a/c Dr.
To P&l (to the extent of earlier loss)
To Revaluation Res.
Gain Loss
↓ ↓
a) P&L Annual 3-5
Revaluation Exception:- or
surplus If Earlier downward
b) If Rev. Surplus
year
then this Gain
shall be transfer to
exist then transfer Revaluation
to Rev. Surplus
P&L to the extent of Loss
10
CA INTER
CA. Jai Chawla
AS 11 - EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES ADVANCED 7887 7887 05

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88
1 Currencies 2 Foreign Currency Transactions 3 Forward Ex. Contracts
sstain settten
Reporting Foreign
Currency Currency
Means First
} Initial Subsequent Measurement
Time Recording Recognition Hedge Means -
} }onMeans To Earn Immediate Profit
↑
Hedging Speculation
On Every B/S Date To Cover Risk of Loss on Foreign Currencies without
In Which Financial Other than Assets or Liabilities Physical Delivery
Reporting @
Statements are
Spot Rate
Reported Currency
(rate Prevailing Non-Monetary Items Translate FCMI*
Calculate Forward Premium Exp. O
Calculate G/L on Settlement date
or Forward Discount Gain & Directly Charged to P&L
-
on Transaction which are measured at & Amortise over Contract Period Immediately
-
Date) Other than Cost or

Example :- @ (Forward Premium =
Items of
Ü Assets $ Closing Rate SPOT Rate (-) Forward Rate) Fixed Assliab Fixed
-
Apply Closing Rate

Ü Liabilities € @ Measurement Date Monetary Items Non- Monetary Items
Ü Incomes £
Treatment of Ex. Difference Forward Premium is Expense
Ü Expenses Debtors Investment
are Presented Forward Discount is Income
Bills Receivable Buildings
}Long Term Foreign Currency Monetary Items
in Reporting
Currency Short Term FCMI LT FCMI Advances Land
Prepaid Exp.
-
Inventory
Option Which are to be Settled beyond Loans Creditors Machines
Example:- 12 months from Transaction Date Bills Payable Furniture
₹ Ex. difference = P&L
Always OR Loans Taken Share Capital
} This Option is Irrevocable i.e. once O/S Expenses

` Either P&L Apply Para 46
-
Applied shall be followed always

-
* FCMI
OR
Foreign Currency Monetary Items
If LTFCMI is Related If LTFCMI is Not Related
to Depreciable Asset to Depreciable Asset
Assets &
Liabilities
Value is Determinable Receivable or
or Fixed under the Contract Payable in
( eg.:- Foreign Loan taken
(
to Purchase Machine ( eg. Foreign Loan taken
for working Capital
Requirements
(
Foreign Currency
Ex. Loss added to Carrying Amount Ex. Diff. Transfer to
Example :-
Ex. Gain Deducted from Carrying Amount (C.A.) FC MIT Diff.A/C } Foreign Currency Monetary items
-
1) Cash /Bank Translation diffence A/c

2) Debtors/Creditors (Under R&S Head)
3) Loans * Depreciation for further Period Shall Amortise to P&L Over the life of LTFCMI
be Charged to Revised C.A.
11
For open .
(Fo
-
Integral Non-Lategeaf
↓ ↓
all
M2(Als) Clocate
se
=
A/L Es Closg ↑
Rate
Norm (Alx Same
Revie
. =
Spot
Revenue item =
Aug .
actual Rate
Rate
Rate
opng stock = ophate

-
-
Dif
Diff
en
-
↓
Par FTR
((ras)
~ sale
Par
CA. Jai Chawla
AS 12 - GOVERNMENT GRANTS
CA INTER
ADVANCED 7887 7887 05
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1 When to Recognise a 2 Grant for Rev. Expenditure 3 Grant for 4 Non cash Grant
GG? or Revenue Nature Grant Depreciable Assets (i.e. in Kind)
(OR)
Conditions Relating Reasonable When Received When expenditure Option - 1 Option - 2 Received Free Received @
to Receipt of Grant Certainty Treat Liability is made then either of Cost Concessional
have been complied of Collection untill Expenditure deduct from such Price
with. of Grant Incurred if any expense or charged as Deduct from Cost or Treat Grant as deferred
other Income in P&L Carrying amt of Asset Income & credit to DGG a/c
Recognize at Recognize at
& &
Nominal Value Actual Acquisition
If Grant is Received but Charge Depreciation on Grant shall be Amortised
(eg. 1/- or 100/-) Cost
there is no Reasonable Revised value of Asset over the Economic life of Asset
certainty about in proportion of Depreciation
compliance of Conditions Fixed Asset A/c Dr.
then Treat LIABILITY To Capital Reserve
(No Depr. is required)
Grant in the nature Grant for Non Depreciable

7 Refund of Grant 6 5
of Prom. Contributions Asset (Eg. Land & Stock)
(to be shown as Extra
- Ordinary Item as per AS 5) Transfer to Capital Reserve (CR) - If it requires certain obligations
to be fulfilled in the future
periods then Amortise over such
Treatment Ÿ This CR is not Allowed period of fulfilling the obligations
to be distributed as Dividend
(OR)
(a) Any Un-Amortised balance not yet Ÿ Also Not allowed to be
charged to P&L shall be Reversed deferred to P&L - If there is no such obligation to be
(e.g. Remaining Bal. of DGG a/c) fulfilled then transfer to Capital
Reserve immediately
(b) Bal. if any shall be transfer to P&L
(c) If Grant was earlier credited to CR

then CR shall be reversed
(d) If Earlier credited to Fixed Asset A/c

then to be charged to Fixed Asset A/c.
12
CA. Jai Chawla
AS 13 - ACCOUNTING FOR INVESTMENTS

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1 Not Applicable to 2 Types of Investments 3 Cost of Investment
Recognition Invst in Retirement Current Investments (CI) Long Term Investments (LTI) Acquisition cost Incidental Costs
of Income Benefit Plans
From Investments
(AS - 15) Readily Realisable Other than i.e Purchase Cost Ex: Brokerage Fees & Duties
(Dividend / Rent / + CI
Interest) Intention to hold for
less than one year Cash Issue of Asset Right
Paid Shares/ Exchanged Shares
Securities
if
Cash FV of FV of Asset Subscribed Sold in Market
Amt Securities Given up or (Not Subscribed)
Issued FV of Investment Cost to
Acquired if clearly be added on
evident General Exception
Rule
Trf. Sales Proceeds If Org. Shares Purchased

to P&L A/c on Cum-Right Basis
5 Important Notes 4 Important Areas &
MV After being
* Compulsory Acquisition of shares Ex-right is less than
of Co-op Soc. Disclosure Req. Cost then Reduce Sale Proceeds (SP)
Duration Valuation at BS Date Reclassification
- Add cost to value of Investment. from Carrying Amt. (CA)
* Any Reduction in CA & Reversal CI = 1 Yr. CI = LTI = LTI to CI CI to LTI 1. A/c policy to
- Charge to SPL Or Lower Lower of Cost -Lower of - Lower of Calculate CA
Cost & FV Cost & CA Cost & FV 2. Show LTI & CI Separately
* On Sale- Diff between CA & Net LTI = More (BV) 3. Amt included in SPL
- Charge to SPL than 1 Yr. If Permanent 4. Total MV of
decline then Quoted Investment.
5. Total value of
Unquoted Investment.
then reduce
the CA
13
CA. Jai Chawla
AS 14 - AMALGAMATION
CA INTER
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T’ree => Transferee T’ror => Transferor
1 Basics 2 How to Calculate PC? 3 Treatment of PC 4 Books of Tree Co.

(AS-14)
1) Types of Amalgmation
I Priority
st
IInd Priority Books of Books of
Exchange Ratio Method Net Asset Method Tree Tror In the Nature
In the Nature
of Merger
Merger Exter. Reco.
Purchase
Aborption
A+B=C A+B=A A=B When to Use? When only Selected/Specific 1. Bus. Pur. a/c Dr. 1. Tree a/c Dr.
All Assets / Liab. are Taken Assets / Liab are T.over (not all) To Liquid. of Tror To Realisation When there is
2) Parities involved no Merger then
How to Use? Assets T. over - XXX (mp) 2. Liq a/c Dr. 2. Eq. shares in Tree it is Nature of Purchase
(-) Liab Assumed - XXX (Payable) To ESC a/c Pref sh. in Tree
PC To PSC a/c Cash Hint :- How to check Purchase Nature
Exchange Ratio Not Given
Transferor Transferee Given To SP a/c To Tree a/c 1. Assets / Liab may be taken
To Cash a/c (Receipt of PC) over at MV
Apply Deemed (Discharge of PC) 2. Only Partial A/L may be Taken over
Selling Co. Buying the - Apply the Same Ex. Ratio
- Fraction if any 3. PSH A/C 3. PC may be in other than Eq. shares
Business (NA)
pay in cash ESH A/C
Result of Purchase Method
MP/IV Per share [Tror] PC > NA = Goodwill To Eq sh. in Tree
Shareholders of AS - 14 is PC Discharged ----- XXX
MP/IV/issue Price [Tree] PC < NA = Cap. Res. To Pref sh. in Tree (-) NA Acquired — XXX
T’ror applicable
get PC To Cash Goodwill / CR
How to (Distribution of PC)
T’ree gets Net Calculate IV? +/- Liq. Exp
Assets born by Tree XXX
+/- Unrealised Profit
All Assets ---------- MV an Unsold stock XXX
(-) all Liab --------- Payable Value Net G/CR
(-) PC to PSH ----- PC
Net Assets Conditions (All Conditions Must be Fulfilled)
÷
No. of Eq sh.
All A/L at same At least PC only Same Buss.
Must be BV 90% External in Eq. shares Must be
Taken Over Eq Sh. Consent Carried on.
Result of Pooling of Int. Method
PC discharged ------------ XXX
(-) NA Merged ------------ XX
(-) Reserve Maintained – XXX
GR /P&L
+/- Liq. Exp XX

+/- Unrealised Profit XX
Net GR/P&L

CA. Jai Chawla
AS 14 - AMALGAMATION
CA INTER
ADVANCED 7887 7887 05
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5 Treatment of Reserve & Surplus 7 Inter Co. Stock (unsold) 8 Inter Co. Debts
Tree Co. is making settlement
of T’ror in the books of T’ree 6
with Deb Holders of Tror
n
Cancellation of Inter Company

Loans / Payables
Stock in Stock in
Purchase Pooling of Transferee Transferor
Method Interest Method Book the Liability Settlement Entry Books Books Give Opposite Effect
towards Deb Holders
n
to the Original Entry
at Agreed Value Upstream Downstream
Ignore all Reserves Maintain all Reserves;
Except Statutory Reserves Payables A/c Dr.
Statutory Reserves & Other Reserves (Under 2nd entry Deb Holders a/c Dr. (Agreed Value)
n
G/w Dr General Res. Dr To Receivables A/c
of A/L Recog.) To New Debn (Face Value) To Stock To Stock
(if Purchase
(Diff in above - Goodwill/CR/FR) method)
Amalg. Adj Res. Dr. Merger & Purchase Both
any Diff will be adjusted
To St. Res. General Res. Dr
in Free Reserves
To Stock
Note : Amal. Adj. Res. Must (if Merger
be shown Separately method)
Under R&S in BS Example of Statutory Reserves
1) Investment Allw. Reserve
2) Export Profit Reserve Only Profit Component.
3) Revaluation Reserve
4) Tea Development Fund
15
CA. Jai Chawla
AS 15 - EMPLOYEE BENEFITS
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1 2 3 4
Applicability Types of Employee Benefits Classification of Post Employment Benefit Plans & Accounting for DBP
Other Long-term Employee Benefits
Recognise
All Employee Benefits Short Term Other Long Post Terminal
Except - Share Based Employee Term Employee Employment Benefits Defined Defined Benefit
2)
Payments Benefits Benefits Employee Contribution Plans (DCP) Plans (DBP) DEFINED BENEFITS PLAN ASSETS
↓ Benefits Eg. VRS Ü Employer’s Ü Employer’s Contribution OBLIGATION (LIABILITY)
Eg. Salaries, Eg. Long Expenditure Contribution is Fixed may not be fixed
Esop Incentives Term Eg. Gratuity,
Ü Actuarial & Investment Ü Agreed Benefits are
1
Through
Bonus Plans Provident Through
Always Charged Risk is on the Employee Required to be Provided
Funds a) Contributions
Always Charged to P&L in the under DBP a) Current Service
Ü Actuarial Assumptions Made by Employer
to P&L in the Year in which Cost (CSC)
are not Required Ü Actuarial & Investment b) Return on above
Year in which it Occurs &
it Occurs Ü Entire Contribution Risk is on the Employer Contributions
ogement
b) Interest Cost (IC)
During
Expense is Charged to Ü Actuarial Assumptions
P&L a/c are required
CSC & IC both are charged to P&L
Ü Expense is Recognised
et
divema Based on “Projected Unit
Credit Method”
6
5
Remeasurement
Remeassurment
How to Calculate Following Items?
Defined Benefit Obligations Plan Assets
CSC IC Finance Income
Plan Assets Shall be Measured on Plan Assets
DBO Shall be Measured as per (Expected Return on Plan Assets)
the Discount Rate Revised by at Fair Value at each BS Date Discounted Value Calculate on
Actuary & Other Revised Assumptions of Estimated Defined Benefit
Annual Benefits If Contribution Calculate Six Monthly Rate
Liability Using
any Change due to above Shall be
Any Change Due above Shall be
Actuarial G/L & Transfer to P&L
is made &
Same Discounting Benefits are paid (
1 + Annual Rate - 1 )
Actuarial G/L & Transfer to P&L (Discounting to be Rate of CSC. at Beginning of Six monthly Rate shall be
made downstream) year or End of year applied on Net Contribution,
then take Annual Rate. if Contribution is
For eg. From Later Year to made & Benefits are
Earlier Year paid in Mid. of year.

CA. Jai Chawla
AS 15 - EMPLOYEE BENEFITS
CA INTER
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7 8 9
Short Term Emp. Benefits
Curtailment & Settlement
Past Service Cost (PSC)
Defined Benefit Liability Short Term Compensated Profit Sharing

It means Change (Increase) is reduced with or without Absences & Bonus Plan
in Defined Benefit Obligation Settlement due to Modification
(Liability) due to Plan made by Employer
Amendments made by Entity Recognise Exp. & Not
Non-Accumulating Accumulating
from Retrospectively Distribution of
Leaves Leaves
Profits, only if :-
Gain on Curtailment 1) There is Legal or
shall always be Constructive obligation to Pay
PSC is divided into two parts: transfer to P&L No Recognitian Accumulating Accumulating
of any Provision Vested Benefits Unvested Benefits &
-
1. Amortised PSC -
for benefits already vested , (i.e. Cash Compensation (Compensation through 2) Reliable Estimate
it is expense & transfer to P&L DBO Liab. A/c Dr. (Liability Reduced) against Un-used Leaves) leaves aganst Un-used can be made
immediately & Increase To Un-amortised PSC A/c (Bal. Available) Leaves)
DBO Liability A/c To Bank A/c (Settlement Amt.)
To Gain on Curtailment A/c (B/f) Make 100% Make provision for
2. Un-Amortised PSC - Provision for Estimated Leaves C|F
for benefits not yet vested, Compensation & to be used in the next
it is to be recognised on SLM Period
basis over the remaining Period. (Per day Salary X
Estimated Leaves to be utilized)
17
CA. Jai Chawla
AS 16 - BORROWING COSTS
CA INTER
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Definition of Recognition
Borrowing Cost (B.C.)
Qualifying Assets (Q.A.) 1 Commencement of Types of Borrowing Misc Provisions
Any Asset of B.C. Capitalization Cost
armore
-
Incurred in Relation Interest on Temp.
12m If B.C. is incurred
to Arrangement of Necessary Investment of
That takes To get For Intended in relation to:- Expenditure B.C. must
Funds, it includes - must be be Activities Specific General Borrowed Funds
**Substantial Ready Use or Sale Acquisition (A)
(a) Interest Cost Period of Time incurred incurred Should be B.C. B.C.
-
- -
Construction (C)
-
(b) Other Costs

-
Production (P) on ACP in Progress.

Eg:- IP/PPE/Intangible Asset (Software) Deduction From Total
of Q.A., then
B.C. Covers Exclusively Capitalised One to One One to Many Borrowing Cost before
Suspension
-
2 Relation of Q.A. (or) Capitalization & before

Is Inventory a Q.A.? otherwise P&L
& Borrowing Many to Many Calculating W.A.C.R.
If Yes Active Development is Interrupted
1) Interest: Short term & When ? during Extended Period.
Long Term both But When such Interruption is Capitalise B.C. To Capitalise
2) Finance Charges Necessary for active Development to a Specific B.C. Calculate:
in Leases (AS 19) Inventory must Not Produced then No Suspension of Capitalization Q.A. only W. Avg
3) Ancilliary Cost Such as not be Produced & on Repetitive Basis Capitalisation
Stamp Duty, Processing in Larger Quantities Rate
Fees - Amortised Part 3 Cessation
and takes Substantial Period
4) Discount on Issue &
Premium on Redumption Eg:- Aircrafts or Ships A/C/P is Substantially Completed
Manufactured on Special Total B.C. During the Year
of Debn - Amortised Part If Completion takes place in Parts, then
Total Borrowings O/s During the Period
↑
Orders Cessation for Such Part of QA only

5) Ex. Diff. to the extent (Take months as Weight)
of Saving in Interest on when the Part is Capable of being
F.C. Loan* Used/Sold Separately What to do now when W.A.C.R.
is Calculated?
**Subsantial Period :- Generally 12months or
more but a Lesser period can also be Expenditure
Substantial based on Facts & Circumstances on Q.A. x W.A.C.R. x Months
Weight
*Lower of :-
(a) Ex. Loss
Expenditure Incurred till last year xxx
OR
(Including BC Capitalised)
(b) Saving in Interest
+ Cash Payment on Material & Lab. xxx
+ Non - Cash Exp. xxx
(-) Grant / Subsidy xxx
(-) Progress Payments Received if any xxx
xxxx
18
CA. Jai Chawla
AS 17 - SEGMENT REPORTING
CA INTER
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1 Segments 2 How to Decide Primary or Secondary?

- -
-
Check Dominant Source of Risk and Return (RR)
Business Geographical RR Affected by

Segments (BS) Segments (GS)
* Distinguishable Component & * Distinguishable Component & Product & Geographical Both
E
* Individual Product or Service * Product or Service services Location BS=Primary
Or
* Related Group of Product or Services &
within Economic Environment &
-
* Independent Risk and Returns

BS=Primary
GS=Secondary
GS=Primary
BS=Secondary
GS=Secondary
-
primary . 3 Important Terms Emp ↑
* Independent Risk and Returns

-
Reportable Segment = Segment Segment

Business Segment Wise Revenue (SR) Expense (SE)
or
Geographical Segment Wise
Includes Excludes Includes Excludes
4 Disclosure Requirements
1. Directly Attributable Revenue 1. Extraordinary Items 1. Directly Attributable Exp. 1. Extraordinary Items
Reconciliation 2. Allocable Revenue from 2. Interest & Dividend 2. Allocable Exp. from 2. Interest
>
- Enterprise Common Revenue (Unless Financing Business) Enterprise Common Exp. (Unless Financing Business)
Total Segment Segment Segment External Reco. of Segment 3. Inter Segment Revenue Gain on Sale of Investment 3. Inter Segment Exp. 3. Loss on Sale of Investment
O
Revenue Revenue Result A/L Revenue & Enterprise Internal 3. Income Tax Expense
of Entity 4. General Enterprise Expense
external
-
Most Imp: (Para 27) Segment Asset (SA)

& How To decide Reportable Segment? (Same with Segment Liability)
↳ Ho level
Important Points: 1) S. Revenue = 10% or more of All Segments esp .
· Any Segment which was Reportable in PY bcoz of Revenue; OR Vo

Para 27, such Segment shall be Reportable segment
in CY even though it does not Fulfill Para 27
2) Result= 10% or more of all Emp Operating Asset
Segment in loss -
-
· First time Reportable segment = Restate PY Comparative Info
-
or whichever is ~
Directly Attributable
Segment in profit higher OR
Choice of segment + Reasonably Attributable allocable
management ->
·
any
=>
3) SA= 10% or more of all S. Assets
Can be reported
based a manget .
+
External Revenue of = 75% or more
IDTL
Note: 1) DO NOT include DTA.
2) Take Advances and Investments
Reportable Segment of Total External Revenue when Interest or Dividend
Choiceerom though -
-
is considered in revenue.
If Not
it doesn't Add More Segments to make
Minimum of 75% of the Total Revenue
Fulfill Pasa 27
19
CA. Jai Chawla
AS 18 - Related Party Disclosures

CA INTER
ADVANCED 7887 7887 05
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Consolidated FS
Independent FS Applicability (Except for Intra group trans.)
Important Terms RP Does not cover
Related Party Related Party Transactions Two Comp. Significant Volume Normal dealings Relationship between
(RP) (RPT) having of Business with an with Financer/ One State Control
Common Agent/Customer/ Trade Unions/ Entity & Another.
Directors Supplier/Distributor Govt. Officials
(Common KMP)
Ability to Exercise of Transfer of Between Whether or Related Party - Disclosure
Control Significant Resources RPs not charged Disclosure Requirements
Influence(SI) i.e. Price Involved
or Not Exercise Control Exercise SI
1. More than half VP Participation in - Name & description of Relationship
1. Disclose Name Disclose only if
- Description of Nature of Trans.
Fin. &/or Op. & Relation transaction is there
2. Power to Compose - Volume of Transaction (in amt or in Proportion)
Policy Decision 2. Transaction is
- Any Outstanding amt to/ from RP.
BOD/ Governing Body there or not
- Any Provision made against receivables from RP
- Amt W/off or W/back in respect of Debts.
3. A substantial Interest - Any other element of RP transaction to understand Fin. Statement.
(20% or more VP)
Who is Related Party (Para )- 3
A) Enterprises that directly or B) Joint Venture (JV) C) Individuals having D) Key Manag. E) Enterprises on which
indirectly Control or be Controlled Control OR Sig. Inf. Person (KMP) Persons described in
through Intermediaries or under Contractual obligation to undertake (C) or (D) Exercises Sig. Infl.
Common Control (Includes) Eco. Activity subject to Joint Control (Includes)
Relative
- KMP means
Associate Those having authority
Holding Subsidiary Fellow In relation to 1. Enterprise controlled by
& Respo. to plan, Direct
Subsidiary Individual Directors or Majority
& Control Activities
- Father/Mother Share holders.
Having one Holding co. holds Investing (Reporting) Not being 2. Enterprises with common
- Spouse - Relatives of KMP
or more & Controls Two Cos. having Party having Sig. Inf. Subsidiary KMP of Reporting Entity.
- Brother/Sister
Subsidiaries Composition of same Holding co. on Other Entity or JV - Son/Daughter
BOD
Investor or Venture for whom
Reporting Entity is JV or Associate.
20
CA. Jai Chawla
AS 19 - ACCOUNTING FOR LEASES

CA INTER
ADVANCED 7887 7887 05
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1 Common Terms 2 Types Sale and Lease Back

3
(A/c Treatment of Gain/Loss on Sale by Seller = Lessee)
1. MLP= Total LR + GRV + DP

Finance Lease Operating Lease Finance Lease Back Operating Lease Back
2. GI = MLP + UGRV
3. Unearned FI= GI less PV of GI
4. Discount rate= Substantial Risk & Rewards Defer & Amortise (D&A) Golden Rules
Implicit Interest rate (IRR) Transfer by Lessor to Total P/L over Lease
Lessee Lessor Term in Proportion of
Lessee
Depreciation 1. Loss:- (CA - SP) 2. Profit 3. If FV < CA
1. Lease Payment 1. Show as Fixed Asset Always transfer to P&L
Indicators - (any One) (SP - CA) then Recog. Loss
1. Trnf. of Ownership at end of
Exp. in SPL 2. Income - SLM Basis (if Loss is Compensated with
Bank a/c Dr. (Sale Value) Immediately in
L. Term 2. On SLM basis 3. IDC - Deferred & future Lease Payment then D&A)
To Asset a/c P&L
2. Option to Purchase at Reduce until and unless Amortised if material To Profit on Sale
↓
Price Certain Lessee avail any other basis is 4. Charge Dep. profit
3. Major Economic Life Covered more systemetic Upto above FV SP-Ev
under L. Term 71% Fair Value ↓
4. Specialised Asset for Lessee, DA
can not be Used by others D&A
Recog. in P&L
without Major Modification Immediately (SP - FV)
5. PV of MLP = Initial FV Can
P
- ice (FV- CA)
go..
4 Disclosure Requirement
In The Books of
Lessee (Deemed Buyer) Lessor (Deemed Seller)
1. Recognise Leased Asset & Lessee Lessor

Lease Liability Non- Dealer Mfr./ Dealer
2. Recognise at PV of MLP*
or FV (whichever is lower) 1. Recognise Lease 1. Divide Total Profit into - FL OL FL OL
3. Apportion Lease rent in Receivable at Net Invest. 1) CA. of Each Asset 1) Future LP 1) Recog. of GI & PV 1) Total Dep.
in Lease (NIL) 2) Recog. of MLPs & 2) LP recognized of MLP 2) Imp. Loss
2. Recognise Finance Income Selling Profit * FI PV of MLPs in P&L 2) Unearned FI (GIL -NIL)
(FI) as per Implicit Interest (NIL - BV of Asset) 3) Future MLPs 3) UGRV
Finance Principle
Charge (P&L) rate Ü Recognize Finance
3. Initial Direct Cost Income (FI) as per
4. Charge Depreciation Ü Trf. to SPL OR * ÜMLP - Min. Lease Payment, Ü LR - Lease Rentals, Ü FI - Finance Income
Implicit Interest rate Ü GRV / UGRV - Guaranteed / Unguaranteed Residual Value, Ü GI - Gross Investment
5. Initial Direct Cost- Ü Amortise FI over LT Ü Initial Direct cost -
Add to Cost of Asset Ü LT - Lease Term Ü IMP - Impairment Ü IDC - Initial Direct Cost
Expense in SPL always
Ü DP - Down Payment Ü CA - Carrying Amount
21
CA. Jai Chawla
AS 19 - ACCOUNTING FOR LEASES

CA INTER
ADVANCED 7887 7887 05
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1 Common Terms 2 Types Sale and Lease Back

3
(A/c Treatment of Gain/Loss on Sale by Seller = Lessee)
1. MLP= Total LR + GRV + DP

Finance Lease Operating Lease Finance Lease Back Operating Lease Back
2. GI = MLP + UGRV
3. Unearned FI= GI less PV of GI
4. Discount rate= Substantial Risk & Rewards Defer & Amortise (D&A) Golden Rules
Implicit Interest rate (IRR) Transfer by Lessor to Total P/L over Lease
Lessee Lessor Term in Proportion of
Lessee
Depreciation 1. Loss:- (CA - SP) 2. Profit 3. If FV < CA
1. Lease Payment 1. Show as Fixed Asset Always transfer to P&L
Indicators - (any One) (SP - CA) then Recog. Loss
1. Trnf. of Ownership at end of
Exp. in SPL 2. Income - SLM Basis (if Loss is Compensated with
Bank a/c Dr. (Sale Value) Immediately in
L. Term 2. On SLM basis 3. IDC - Deferred & future Lease Payment then D&A)
To Asset a/c P&L
2. Option to Purchase at Reduce until and unless Amortised if material To Profit on Sale
Price any other basis is 4. Charge Dep.
3. Major Economic Life Covered more systemetic Upto above FV
under L. Term Fair Value
4. Specialised Asset for Lessee,
can not be Used by others D&A
Recog. in P&L
without Major Modification Immediately (SP - FV)
5. PV of MLP = Initial FV
(FV- CA)
4 Disclosure Requirement
In The Books of
Lessee (Deemed Buyer) Lessor (Deemed Seller)
1. Recognise Leased Asset & Lessee Lessor

Lease Liability Non- Dealer Mfr./ Dealer
2. Recognise at PV of MLP*
or FV (whichever is lower) 1. Recognise Lease 1. Divide Total Profit into - FL OL FL OL
3. Apportion Lease rent in Receivable at Net Invest. 1) CA. of Each Asset 1) Future LP 1) Recog. of GI & PV 1) Total Dep.
in Lease (NIL) 2) Recog. of MLPs & 2) LP recognized of MLP 2) Imp. Loss
2. Recognise Finance Income Selling Profit * FI PV of MLPs in P&L 2) Unearned FI (GIL -NIL)
(FI) as per Implicit Interest (NIL - BV of Asset) 3) Future MLPs 3) UGRV
Finance Principle
Charge (P&L) rate Ü Recognize Finance
3. Initial Direct Cost Income (FI) as per
4. Charge Depreciation Ü Trf. to SPL OR * ÜMLP - Min. Lease Payment, Ü LR - Lease Rentals, Ü FI - Finance Income
Implicit Interest rate Ü GRV / UGRV - Guaranteed / Unguaranteed Residual Value, Ü GI - Gross Investment
5. Initial Direct Cost- Ü Amortise FI over LT Ü Initial Direct cost -
Add to Cost of Asset Ü LT - Lease Term Ü IMP - Impairment Ü IDC - Initial Direct Cost
Expense in SPL always
Ü DP - Down Payment Ü CA - Carrying Amount
21
CA. Jai Chawla
AS 20 - EARNINGS PER SHARE

CA INTER
ADVANCED 7887 7887 05
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1 Presentation 2 Measurement & Restatement
Present Basic EPS Diluted EPS

- Both EPS & DEPS
on the Face of SPL When to calculate this DEPS?
- with equal Prominence When Co. has O/s Potential Eq.Sh.
Numerator Denominator
to both
- Negative EPS & DEPS Net Profit Available for Eq.Sh. Weighted Avg. Eq.Shares O/s
( )
shall also be Presented
NP/loss Dilutive Anti-dilutive
- Consolidated EPS & DEPS Opening New Bought
in CFS to be Presented (-) Tax Exp. (CT +/- DT) O/s Shares + issue - Back x Time weight
(-) Pref Divd. EPS Increases
EPS Decreases
Pref Divd.
Numerator Denominator
(a) Cumulative PSC (b) Non Cumulative PSC
( )
Deduct the Dividend will be From When...? Diluted NPAESH
Dividend always deducted if declared EAESH WAES for Basic EPS
+
NP/Loss + Post Tax + Saving in + CDT/ New Issue on
Public Conversion Issue in Issued in Issue in case of available Saving in Pref. Div DDT · Conversion
of Deb. / Pref. Sh. X Time Weight
Issue of lieu of Int. Exchange Amalgamation for ESH Interest on on
Debenture or Principle of Liability for Debentures Conversion +
or Pref. Sh. on other Settlement Basic EPS Issue of Stock Option
3 Right Issue see below Cash Loans Merger Purchase for Free of Cost
Receivable from Beg. from
Conversion Settlement of Reporting Acquisition
Steps Date When
becomes Period Date
Interest
STEP - 1:- Calculate Theoretical Ex - Right Price Effective
Ceases to
[Before RightX Before Right ] + Shares X

(Cum - Right Price)
Fair Value No. of Shares Right Excercise Accrue 5 Example of Potential Eq. Sh.
= Price
4 Special Cases
No. of Shares after Right Issue
- Convertible Debn
STEP - 2:- Right Factor OR Adjustment element A] (i) Reduce Cum. Prf. Divd. - if Declared or not
A
- Convertible Pref. Sh.

= Fair Value Prior to Right (Cum - Right Price) (ii) Reduce Non Cum. PD - Only if Declared - ESOP for Free Portion
Theoretical Ex - Right Price - Share Warrants
B] Different Face Value OR Partly paid Sh. - Share Application Money
STEP - 3:- Basic EPS - Use Amount of Equity Capital instead of Nos. Pending Allotment
Net P/L for ESH C] Bonus / Split / Reverse split -
Date is always irrelevant (time weight always
[(O/s Eq. Share Before Right x Right Factor)xTime Weight]
+ [Total no. of shares after Right Issue x Time Weight] 12/12)
22
CA. Jai Chawla
AS 21-CONSOLIDATED FINANCIAL STATEMENT (CFS)

CA INTER
ADVANCED 7887 7887 05
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1 When to Prepare CFS? 2 Elements of CFS 3 Items Required to Prepare CBS 4 Abnormal Items
When One Entity (Holding)

Controls Over Business of other CBS CSPL CCFS Analysis of Cost of Minority Interest Conso. R&S Post Column Time Adjst. Restate After
Entity (Subsidiary) + Notes to A/c Profit (AOP) of S Control (COC) (M/I) of H Time Adj.
Loss = (+) Assume Profit
OR How to Prepare CFS? Sub-Divided always Prepare Prop. Share Post Acq Profit Gain = (-) is Earned Evenly
Loss = (-)
By Acquisition By Power over into on Date of in the N.A. Share of H throughout the
Gain = (+)
of More than Composition of Year
Line by Line Consolidation Acquisitions (DOA) of Subsd. (Refer in AOP of S Before Time
50% Eq. Shares BOD or Merging of all Assets, Point No. 12 in Shall be added Adjust.
• Pre Acq Period Make Time Adj. In Pre or Post
(Voting Rights) Liab., Incomes & Expenses Next Page)
& of Profit after Column depends
No Investment
Comparison between Tax, After Rectification, on date of
• Post Acq Period • Investment Value (PC)
Investment must is appeared in but before Bonus occurrence of
be appeared in SFS of H - 100% & & before Dividend Abnormal Items
M/I in CFS Refer Format of • Prop. Net Assets (N.A.) of S Always.
SFS of Holding
AOP in Page 3 of =
this Topic Goodwill OR CR
Investment is Higher Investment is Lower
than Prop. N.A. than Prop. N.A.
7 Revaluation of Net Assets of Subs. 6 Bonus Issue by Subsd. 5 Rectification of Error
Why?
OR Adjust Post Column
Entry already Entry not Profit before Time Adjst.
We need NA of Subs at MV to Passed yet Passed
Compare them with Investments
which are already at MV as on DOA So that we can get
F Add Back in Post Directly deduct Rectified Profit
How? Column before from Pre Column
T.adj
F Less in Pre Column
Calculate Revaluation Profit Additional Dep./Saving at the same time
or Revaluation Loss as on DOA in Dep. for Post Acq. Period
Shares held by H (with Bonus)
% of Holding => X 100
MV as on DOA — XXX Dep. actually charged for Post Period ----- XXX Total Issued Share of S (with Bonus)
BV as on DOA ---- XXX Dep. that should be charged Post Period ---- XXX * While Preparing COC & M/I :- Proportionate ESC of S
RP/RL Add. Dep./Saving in Dep. shall be taken with Bonus Issue
- -
Transfer to Pre Column Post Column after Time Adj.

after Time Adj. always Add. Dep = (-) Saving = (+)

CA. Jai Chawla
AS 21-CONSOLIDATED FINANCIAL STATEMENT (CFS)

CA INTER
ADVANCED 7887 7887 05
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8 Elimination of Unrealised Profit/Loss 9 Dividend Declared &

on Unsold Stock on Inter Co. Transaction Paid by Subsd.
Downstream Upstream Declared During the Year Declared in CY on B/S date

(Sale by H to S) (Sale by S to H)
(Unsold Stock with S) (Unsold Stock with H) OR
(Profit Earned by H) (Profit Earned by S) AOP & Received by
Entry not yet Entry Passed
Passed (Not Shown (Shown on
Holding Co.
on Liab. Side of BS) Liab. Side)
• Add Back in Post Acq
Deduct Profit Deduct Profit AOP Consol. Inventory • Time Adj If Pre-Acq Divd. AOP AOP
from Consolidated from Consolid. Deduct Profit Deduct Profit • Deduct from Pre Column
R&S of H figure of Inventory from Post Column from Consolid. or Post Column depends Directly Deduct • Add Back in Post Acq
(Loss to be added) in BS after T.adj figure of Inventory on Period of Dividend & after Time adj • Time Adj
(Loss to be added) (Loss to be added) (Loss to be added) from Pre/Post • Deduct from Pre Column
Deduct under COC Deduct from
or Post Column depends
from Cost of Consol. P&L of on Period of Dividend
Investment if H if Wrongly Cr.
Wrongly Cr. to P&L to P&L
by H
Inter. Company Debts Oping Bal. of 12 Minority Interest 11 Treatment of Pref. S. Capital of S 10 Dividend Received by Holding
14 13 R&S of Sub. Missing
(Contra Adjustment)
Prop. Share in Pre Acq
Portion Held Not Held Post Acq
Payables a/c Dr. P&L Other NA of Sub. Divd
by H by H Divd
To Receivable a/c (GR or CR)
Zero If Negative M/I • Part of Investment Balance Should be deducted Should be
Same as Calculation
(Coz of Loss) in COC Part from Investment Cr. to P&L
Closing
(Para 26 of AS 21) • Deduct Prop. Pref. in M/I of H
Prop. ESC Sh. Cap from
+ Prop. PSC Investment under COC
+ Pre-Acq Profit The Negative Bal. If actually If Wrongly
+ Post Acq Profit born by H Temporarily deducted from Cr. to P&L a/c
Investment
When Subsd. starts
Earning Profit Do nothing, your Deduct from& Deduct from
Investment is Investment Consolidated
already shown under COC P&L of H
That amt. of Loss already borne by H shall be after deduction
Compensated with the Profit Share of M/I of Dividend

CA. Jai Chawla
FORMAT OF AOP
CA INTER
ADVANCED 7887 7887 05
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Particulars a
Pre-Acq DOA Posts
Acq Total B/S Date
Balances Of R&s XXX XXX (Bal. Fig.) XXX
+/- Abnormal Items Elimination ---- (XX)
+/- Bonus Issue (XX) +XX (If already entry Passed)
+ Dividend Paid/ Declared ---- XX (If already entry Passed)

+/- Rectification of Errors XX
Bal. of R&s ------- -------
+/- Time Adjustment XX (XX)
Balance XX XX
+/- Abnormal Items XX XX
(-) Dividend XX XX
+/- Revaluation Of Assets XX XX (Additional Dep. saving in Dep)
Balance XX XX
+/- Elimination Of Unrealised ---- XX
P/l On Unsold Stock (Upstream Transaction)
↓
Final Balance XXX XXX
SOID stat
by
Holding’s M/I’s Holding’s M/I’s

Share Shares Share Shares
25
CA. Jai Chawla
AS 22 - ACCOUNTING for TAXES ON INCOME

CA INTER
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opposite
1 Imp. Definitions 2 Difference between A/c Income & Taxable Income 3 Types of Taxes (as per AS 22)
prudence Based
↑
or
Concept an
Purdence
Accounting Income Difference Current Tax and Deferred Tax Concept
Temporary
-
PBT as per P&L a/c Permanent Diff. Timing Diff.>

E
-
Arises in One Period Arises in One Period &

Taxable Income but no Reversal in Future to be Reversed in Future
Tax Calculated as per - CT Asset CT Liab. DTA DTL
Tax Law (IT Act, 1961) Examples : Examples : TDS Income Tax Tax Saving in Future Tax Liab. of Future
- Donations, - Bonus not yet paid (Sec. 43 B) Adv. Tax payable for Current
Current Tax - Penalty, - Interest to Nationalised bank (Sec. 43 B)
Tax on Taxable & Previous years DTA ---- Dr P&L A/c ---- Dr
- Personal Expenses - PF Contribution (Sec. 43 B) Incorre
Income - Govt. taxes (Sec. 43 B) To P&L A/c To DTL
P&L a/c Dr.
Deferred Tax
- Prov. for BD / Legal damages (Sec. 36) To CT/ Prov. for Tax DTA subject to below Check Prod. of future Taxable
No DTA/DTL - Depreciation (Sec. 32) Income
Tax on Timing
Difference Para 15 Para 17
Items other than B/F Losses Entity has B/F Losses
Tax Exp. (Pal) & Unabsorbed Depn soa & Unabsorbed Depn& ar
more
than 90 %
-
CT + DTL - DTA
more
Chancer
Check- Reasonable Certainty Check Virtual Certainty with Convincing
-DTL Reversal of Future Taxable Income Evidence (VCCE) of Future Taxable Income
+ DTA Reversal
Yes No =
Yes No
Customer
Timing Difference Create DTA Do not Create DTA Do not
order
Difference of A/c
Income & Taxable Income Special Cases
5 Other Areas 4
Offsetting of Presentation of CT & DT Remember Tax Holiday Period (THP) Minimum Alternative Tax (MAT)
CTA & CTL / DTA & DTL (Eg. Sec 80 IA)
1. DTA/DTL - No discounting
BS P&L No Impact on Treatment of MAT
at Present Value
Possible If Otherwise 2. Measurement at applicable Timing TD arise in THP DT Calculation
Not Possible After PBT Diff arise in & to be Revered If MAT is more
Tax Rate
CTA/CTL DTA/DTL THP & after THP for DT than Regular Tax
- Entity has Legal 3. Reviewed / Recalculated at
Show Tax each B/S date
-
Reversed in THP Calculation

Right to set off Current Non
and Expense on Created & ignore - Excess of MAT
(Short Term Current Current Tax -Book Profit over Regular Tax
Ignore - No DTA/DTA
-
- Intention to Settle Provision CTL + DTL Recog DTA/DTL of MAT

-
as Net Basis in the year

Other Current - DTA Recog &
&
Recognise Additional Tax

-
For Eg. Entity has right to of Occurrence

Assets - CTA + DTA Reversal - Mat Rate
↑
Expense in P&L
-
Setoff TDS of AY 20-21 - DTL Reversal

with Tax Liability of AY 20-21 + MAT Excess Liad .
26
CA. Jai Chawla
AS 23 - INVESTMENT IN ASSOCIATES
CA INTER
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1 2 3
Applicability Who is Associate Co. Equity Method For Associates / JV
For this purpose Investment Shall Ÿ Goodwill under

When there is Ü Where Investment is 20% or Investment at cost in Ass. / J.V. - xxx be compared with Fair Value of Associate is not required
Investment in more but upto 50% Net Assets as on Date of to be Recognised
(including Goodwill / CR) Acquisition
Associate, then (+) Post Acquisitions share in Profit - xxx Separately.
Investor has to apply ÜInvestor gets “Significant Ÿ If value of Investment is
(-) Dividend Distributed - xxx If there is CR :- Then
AS 23 in its Influence” over the Investee Investment A/C Dr.
more than value of N.A.
(+/-) Depreciation additional / Saving due to
Consolidated but not “Control” To CR A/C as on DOA (under equity
Revaluation of Assets - xxx
Financial Statements method) the Excess Amt.
(-) Unrealised Profit to the Extent of is Goodwill, which is
Ü Significant Influence means Investor’s Share (xx)
If there is Goodwill then No
“Power to Participate in recognition separately Included in Investment
decision making on Financial
/ Operating Decisions” Value of Investment as per Equity Method XX
4
Treatement of share in Profit / Loss
of Ass./JV in CFS of Investor
In case of Profit in Ass/JV In case of Loss in Ass./JV
Investor's share of above (a) Investors share in loss of Associate entity shall be allocated to
Profit shall be allocated in Investment in Equity A/c (as per Equity method) only to extent of
“Invst. in Equity Sh. A/c" Carrying value of Invest. in Eq. Share A/c
as per Equity method
(b) Any Remaining Loss (i.e Ur-recognised Loss) shall be ignored unless
investor is obliged to contribute for such losses.
(c) When Associate Subsequently generates profits the investor resumes

including its share of those profits only after its share of the profits
equals the share of net losses that have not been recognised.
27
CA. Jai Chawla
AS 24 - DISCONTIUNING OPERATIONS
CA INTER
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Areas Covered
Meaning Initial Disclosure Special Cases Impotent Notes
Disposal of Component 1) Binding Agreement on a Specific date Below cases are not 1. Separate Disclosure for each.
Whichever
- In Substantial entirety OR always a Discontinued Operations. 2. Disclosure until completion.
is earlier
- Piecemeal sell of Assets & In a single BOD approves & Announces 1. Phasing out- P/S 3. Revenue/Exp. Or A/L calculation
Liability settlement. plan Formal Plan 2. Cutting down any process - As per other AS.
- Abandonment of Operations for Cost Reduction. 4. Date of Agreement is important
3. Shifting Plant/Dept. to - Sale off/ Receipt may be later
2) Initial disclosure Event new Location 5. Going Concern Assumption
Component after B/S date- Apply AS 4 4. Cutting down several products - Not affected.
- Non Adjusting Event 5. In CFS- Sale of Subsidiary in
similar business line
Represents Major
3) Initial disclosure:
Separate Business
> Operation Description
line or Geographical
> Date & Nature Plan is cancelled
Business area
> Expected completion of - Disclosure with reason
&
Discontinuation
Distinguished
> CA of A/L
Operationally & for
> Revenue & expenses of
FR Purpose
Ordinary Act.
> PBT or loss of Ordinary Act & Tax*
> CFs from Operating,
Financing, Investing Act. (Net)
4) Other Disclosures:
(When Asset sold/ Liabilities settled)
> Recognised PBT/loss & Tax*
> SP of assets / Range of Price
> Expected time of receipt of CFs
> CA of such A/L
Disclosure of face SPL

Others - In Notes to A/c
28
CA. Jai Chawla
AS 25 - INTERIM FINANCIAL REPORTING

CA INTER
ADVANCED 7887 7887 05
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1 5 6 ↑
7
2 3
WHAT IS IFR ? Types of IFR Form & Content of Seasonal / Occasional Cost Incurred Unevenly Important Notes
Condensed Fin. Statements Revenue (eg. Property Tax;
Advert. Exp; Bad-debts)
F/S for a period Less than
12m Period Complete set of F/S OR Set of Condensed F/S · Same Headings / Sub-headings to be No Deferment or
used as per most recent Annual F/s anticipation is allowed Can be Deferred or Anticipated if it is
· Selected Explanatory Notes (Jis Period me mila ussi appropriate to do so
AS 25 doesn't require Same as Annual Preparing F/S · Additional line items & Notes if their period me report Hoga) (i.e. fulfilling the definition of
which entity should Reporting covering with minimum omission may result in misleading Asset/Liab.
prepare IFR & how all Disclosures as per disclosures & Information. then only allowed to Differ or
Frequent it should all AS & following Content considering · Basic & DEPs EPS to be Disclosed Anticipated)
prepare. Complete Schedule New Changes During also (Agar Exp. Ka benefit next interim
III requirements. the Interim Period.
period me milega to differ kar sakte hai)
AS 25 Requires (Shortcut Approach)
(Agar Exp ka Benefit last interim period
minimum content to Periods for Which Interim Financial
4 me mila hai to last interim period me
be disclosed while Statements are Required to be Presented bhi anticipate kar sakte hai)
preparing IFR. -
Statement Current period Comparative period

Balance sheet End of current interim period End of immediately preceding financial year • Interim financial results (as per clause 41 of SEBI listing agreement) is
Example – Current FY = 22-23 not Interim Financial Report as per AS 25
Statement of Current interim period and Comparable interim period and year-to-date
Current Interim Period - profit and loss cumulatively for the year – to – of immediately preceding financial year • Change in Estimate from one Interim Period to another is justified &
Q2 = (July to Sep) date (YTD) allowed if it is as per any AS. Nature & Amt. of Such change should be
1) Balance Sheet disclosed in selected Explanatory Notes of IFR
Cash flow Cumulatively for the current Comparable year-to-date of immediately
Current Period Comparative statement financial year-to-date preceding financial year
30/9/22 31/03/22 • While recognizing Tax Exp of each Interim Period, it should be
Estimated based on Annual Calculation first (i.e Calculate
2) Statement of P&L (Financial Results) W. Arg Tax Rate => Total Estm. Tax x 100
Current Period Comparative Total Estm. Income
Q2 Q2 Interim Income X W. Avg. Tax Rate
1/7/22 to 30/9/22 1/7/21 to 30/9/21
YTD YTD
1/4/22 to 30/9/22 1/4/21 to 30/9/21
3) Cash Flow Statement
Current Period Comparative
1/4/22 to 30/9/22 1/4/21 to 30/9/21
Only YTD Only YTD
29
-
&
- -
-
CA. Jai Chawla
AS 26 - INTANGIBLE ASSETS (I.A.)

CA INTER
ADVANCED 7887 7887 05
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1 7 Conditions of I.A. 2 Some Important Terms 3 Recognition & Measurement of I.A. (V.Imp)
1. Identifiable
2. No Physical Substance Recognition Measurement
FEB Identifiable Control Non-Monetary
3. Non Monetary (no Fixed value
4. Enterprise can Control me)
i.e. Ownership If & only if - Initial Measurement
5. Expected Future Eco. Increase Saving in Separate Identity Can be Sold/ Can Arise Power to Restrict others No Fixed or • Probable FEB are at COST
benefits. (FEB) in Revenue Cost / Tax & Distinguishable Rented from receive FEB from use of Asset Determinable Expected to flow
6. Held for Use (not Far sale) from Goodwill Exchanged Contract Amt. (Eg. &
7. Cost can be Measured Independently Eg. License Fixed Asset) • Cost can be
Reliably Measured Reliably
4 How to Measure the Cost?
above
if all
Condition Fulfilled
Cambe
then I A I.A. Purchased Internally Generated I.A.
. .
recognised
Cost
Goodwill Research &
Do not Recognise Development Exp.
Research Development
Separately Shares / Acquired by Asset Acquired in an Phase Phase
Acquired Securities Govt. Grant Exchanged Amalgamation
Exchanged
-
Whether Separately Identified ? Expense Cost = Asset

in P&L (if 6 conditions
-
Cost of Acq. FV of IA Concessional Free of FV of IA

whichever Rate whichever Yes No Immediately are met)
(COA) ~ Acquired Cost Acquired
is more is more in the Same
+ or or
Clearly COA Clearly Purchase Year
Non Refundable Nominal FV of Asset Purchase Merger • Technical Feasibility of
Completion
Evident Evident Method
Duties/Taxes FV of
E(p()
Value Given up Method Method • Intention to Complete
+
Direct Exp.
Securities
issued
↓ #I Included in
• Ability to Sell or Use
• Generation of FEB
at FV at Same BV
-
Cost of 101- Goodwill • Adequate Resource (Financial & other) available

[A =
> PP + DAC
Acquisition • Cost can be Measured Realiably
PPE= PP + DAC + DeWmm .

(actual put.
paid)
Cost
30
CA. Jai Chawla
AS 26 - INTANGIBLE ASSETS (I.A.)

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5 Amortisation Treat as Expense 6 Other Imp Areas
Method Period Residual Review of Subsequent Following

- Generally upto 10 years Value Method Exp. are Not I.A.
- If more than 10 years & Period (always P&L)
Capitalized
In the Pattern If Pattern
Generally Exception : At least Once if FEB Expected 1. Preliminary Exp.
of FEB can’t be
Provide Estimate Recoverable Amt. Zero Commitment to in a year to Increase 2. Pre-Operating Exp.
Consumption Determined
proper Annually & Provide Purchase by 3rd Party 3. Staff Training Cost
on Asset
Evidence for Imp. Loss through P&L is available 4. Heavy Advertisement Exp.
- Ist Priority SLM If there is a change,
⑮ then it is a Change in A/c Estimate
Prospective effect on Financial Statement
31
CA. Jai Chawla
AS 27 - Financial Reporting of Interest in JV

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1 2 3 4 5 6 7
What is JV? Classification JCO JCA JCE Proportionate Consolidation Transaction between
of JV Method (JCE) Ventures & JV
Contractual Arrangement • No Separate Legal
of Two or more Parties 1. Jointly Control Entity
• No Separate Legal Entity • A Separate Legal Entity is created • Venture shall Consolidate its → Venturer shall not
sharing Control over Operations (JCO) • Each Venturer uses own share of Asset/Liab./ record its own share
• Common Asset is maintained/ • It has its own Books & Financial
Business Activity. 2. Jointly Controlled his own Asset & Revenue & Exp. in its CFS of Profit/loss made
Purchased by Venturers Statements
Assets (JCA) incurs own Liability from or thru JV
• Each Venturer shall record its • JCE has its own Assets /Liabilities • No Minority Interest unlike
3. Jointly Controlled • Common Revenue Subsidiary Co.
• Contract must specify own share in such Asset & Revenue/Exp.
Entities (JCE) & Exp. are shared → Own share of Loss
“Sharing of Control” • No separate financial statements • Each Venturer has defined share • Goodwill / CR to be
only can be recognised
of JCA in Net Assets & NP of JCE recognised by preparing Cost
• JCO doesn't have of Control (COC) only when there is
• Specific % of Holding • Venturer shall follow
its Separate reduction to NRV of
is not necessary maintained “Proportionate Consolidation
financial Goods or there is an
method in their CFS
statatements Impairment Loss of
Asset
→ Assets/Inventory
purchased &
recorded by Venturer
shall exclude its Own
share of Profit.
32
Reduction in Value
>
- CA. Jai Chawla
AS 28 - IMPAIRMENT OF ASSETS
CA INTER
ADVANCED 7887 7887 05
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Scope
- 3
Indications of Impairment & Indications of Reversal
Applicable to Not Applicable to
1. PPE As 10 1. Inventory
Impairment Reversal of
2. Intangible Assets A526 2. DTA Ce cost
arti
3. Assets taken on 3. Financial Assets Lower
Impairment
Finance Lease
As19
>
-
e.g. Investment in
For Assets Other
4. Investment Euity
G
H13-17 Cost =>
Property As13 4. Assets arising in than Investments

-
Construction Contract As7 in

- Sub/JV/Ass. External Indicators Internal Indicators
Ü Signf. Increase in M.V. Ü Fav. Effect Due to enhanced
2 of Assets performance & Improved
External Indicators Internal Indicators Ü Favourable Effect Business operations
Important Definitions Ü Significant Decline Ü Damage & Obsolescence Due to
in Market Value of Asset of Assets C Technological Changes Ü Economic Performance of Asset is
Ü Adv. Effect Due to :- C Legal Changes Better than Expected
1) Carrying Amt :- Ü Adverse Effect Due to C Economical Changes
C Asset is Idle C Market Changes
Book value of Asset after charging Depreciation C Technological Changes C Discontinuation of Business
C Legal Changes Ü Market Interest Rate
C Restructuring of Operation
2) Net selling Price :- SP-SlEzp C Economical Changes Decreases Significantly
.
C Market Changes C Plan to Dispose of Assets

Amount obtainable from Sale of an Asset in an
-
C Reassessing the life from

Arm’s length transaction between Knowledgeable,
Market Interest Rate Infinite to Finite
willing parties, Less Costs of disposal. Ü
Increased Significantly Ü Economic Performance of Asset How to Calculate Impairment
4
is Worse
Loss & its Reversal
-
3) Cost of disposal :- selling exp.

↑
- than expected
Directly attributable cost to dispose the Asset Ü Book Value of N.A. > Market Value of
excluding Finance Cost & Income Tax. Net Assets
4) Value in Use :-~ PV of FCF Impairment Reversal

PV of Estimated Future Cash Flows from Loss of Imp. Loss
continuing use of an Asset including its disposal at
end of its useful life. Carrying Amt. (C.A.) After Reversal the Revised
Less CA should be lower of :-
5) Recoverable Amount Recoverable Amt. (R.A.) Lower of
Higher of (a) Recoverable Amount
a) Net Selling Price &
& (b) C.A. after Dep. had there been
b) Value in Use no Impairment

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CA INTER
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For
5 Recoverable Amt. R.A .of CGU
Take all Assets of CGU
+ Liabilities of CGU if such
-
& Liab. are Necessary Part of CGU

- -
C.A. of CGU
- -
Higher of -
- allocated Goodwill
(a) Value in Use &
(b) Net Selling Price + Corporate Assets
6 ④
allocated
Treatment of Impairment Loss
Value in Use depends on - How to Estimate Net Selling
Price
Projected Cash Discount Rate Check Binding Sale Agreement Providing Reversal of
Flows Impairment Loss Imp. Loss
Not Available
Consider When Asset specific rate Check Active Market & Identify
How to Estm. Cash Flows?
is not available then Current Bid Price of Asset Charge to Charge to Reverse it Then Transfer
Ü Reasonable / Supportable Ü Time Value consider following Revaluation P&L to Rev. Surplus to P&L
Assumptions of Management of Money Surplus if & thereafter thereafter
& Ü WACC Not Available (Had there been
Ü Greater Weight to Available if there is no no Impairment
Ü Risk Specific Ü Incremental Price From Most Recent Transaction From Active Market
External Evidences Borr. Rate Revaluation what would be
to Asset -
Surplus
Ü Take most Recent Financial Ü Other Market the Bal of Rev.
Forecasts Approved by Mang. Borr. Rate No Active Market Surplus)
Ü Projections not more than
0-
5 years unless Evidenced Best Estimate of Management
Agar Humse No Ho Payega

then Take Value in Use Only.
of
Est => Impairment Testing Single Asset
primity
2 cau
In =
)
priority
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7
Impairment Testing
8
Ü Smallest Identifiable group
of Assets
Impairment in case of
First Preference When Individual Asset is Ü Generate Cash Inflows
Ü Independently from other
Discontinuing Operations
to Individual Asset only not able to Generate group of Assets
Independent Cash Inflows
C.A. of Asset
(-) Consider Cash Generating Unit (CGU) If Discontining Operation If entity Plans to dispose
R.A. of Asset is Planned to be Sold the Assets individually
How to Impair the entire CGU in its Entirety (Piecemeal Sale)
Apply Impairment Apply Impairment

How to Allocate Total Impairment Loss Goodwill and
-
- Test for whole Test for Individual Asset
Goodwill & Corp. Assets (-) Goodwill Value Corporate Assets
-
-
operation or Grp of Asset wise
In absence of any info, Bal. Imp. Loss

If Value is If
allocate Goodwill in Allocable to Un-allocable
Ratio of Fair Values of Apportion to all all CGU’s to all CGU’s
all CGU’s at
time of Acquisition
Assets including
Corp. Assets in
9
Bottom Up First Bottom up
Ratio of Carrying
Amount Approach then Top Down Misc. Provisions
Allocate Corp. Assets in
Proportion of respective
Carrying Amt. of CGUs Under Bottom Up - Under Top Down -
Entire Entity’s CA is
-
CA of CGUs is I/L of No Impairment
=>>
compared with R.A. of CGUs. compared with Entity’s
R.A. Goodwill Testing on Following Assets
If Impairment Loss arise If Impairment Loss arise
then allocate the loss first to then allocate the loss first to Reversal Ü Biological Assets
Goodwill, then all Remaining Unallocable Goodwill not (IndAS 41)
Assets Including Corp. Assets. then Unallocable Corp. Assets. Permissible Ü Non-Current Assets
Held For Sale (IndAS
105)
Ü DTA (IndAS 12)
Ü Inventories (IndAS 2)
Ü Financial Assets
(IndAS 109)
35
CA. Jai Chawla
AS 29 - PROVISIONS, CONTINGENT LIABILITIES

CA INTER
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CHARTS
AND CONTINGENT ASSETS

Vsmart Academy channel &
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Contract -where
Over our :
cost to Complete
to onerous
contracts
Areas Coverage Contract
The
will be Higher
applicable
#23 than est RevenueFrom
is .
such Contract.
Scope
↓
1 2 Important Terms 3 When to Recognition -
Provision = exceed
Cost
-Non Applicability
Obligation Liability Present Obligation Possible Obligation to be
incurred
Def"Creditas
F Financial Instruments
The state of having Present Obligation Existence of an Existence of an
(or) Compensation to Cancel
F Executory Contract
to do something as arising from Past Obligation that is Obligation
obligation which
which the Contract
(other than Onerous Contract)
Promised because Events (result in “More likely than Not” is
is Not
not probable.
Probable.
where Parties have not Performed or it is a Law or Duty. Outflow of Resources)
Whichever is
lowes
Performed till equal Extent
-
F Insurance Enterprises diability = Pres oflig

&
. .
Liability Provisions Contingent liabilities Contingent asset

F Provisions & Liabilities outfou
Covered by other AS (AS 7, 22, 19, 15) of Resour
-
When Outflow When Liability Possible Asset

is Certain isi measured Present Obligation
-
Possible obligation arising from Past

4 Other Imp. Areas or using Substantial arising from Past Event Events that will be
-
arising from Past

Determined
-
Degree of Estimation not Recog. because Events that will be confirmed by
confirmed by Future Future Uncertain
Outflow not Probable Uncertain events Not Event Not Controlled
(a) Reimbursement (b) Review of Provision/ c) Provision for Restructuring Cost - Present Obligation (or) Controlled by Entity by Entity.
of any Amt. if Virtually Cont. Liab
-
- Due to Past events Obligation can’t be

Certain to be Received
-
- - Exists one
BS data Reliably Estimated
Once in a year Planned & Controlled To change scope & - Probable future - Realisation is
by Entity Manner of Business Outflow - Present Obligation Virtually Certain
- Reliably Estimation
-
B/S P&L - Due to Past Events

- Not Recognised as Provision
-
If there is No Provision Includes Cost Excludes

Create Recognise Change Change Incurred to - - Shifting of staff
- NOT Probable Yes No
Provision Receivable - Sale the Business - Marketing Yes No future Outflow Recognise Don’t
Net of as Separate - Relocation of Business - New Investments Create Don’t - Possibility of Outflow is Asset Recognise
Convert Contign. Ignore
Reimbursement Income - Change in Management Provision Create NOT Remote Also No
Liab. into Provision Need to
(or) Structure - Reliably Measurable Obligation
Disclose
Reverse Provision
as the Case Maybe Yes No
Disclose CL Discloure
36
CA. Jai Chawla
DIVISIBLE PROFITS
CA INTER
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Payment of Dividend
Only out of Profits (excluding Following Conditions Must be Fulfilled to

Notional Gains & Revaluation Pay Dividend out of Previous years Profits
Surplus ets.)
Condition - 1 Condition - 2 Condition - 3

(Esc + Psc)
Ist Priority II Priority Both CY & PY Profits Out of the Money
Provided by Central Dividend Rate shall Maximum withdrawal of Balance Remaining in Acc. Profits/
-
can be utilised
& -
or State Govt. if not exceed Avg. Profit out of Accumulated Free Reserve should be at-least
- -
if CY Profits
-
Out of CY Profits Out of Undistributed of Dividend Rates Profits for Dividend shall 15 % of Paidup Sh. Capital
-
without any are Insufficient Guaranteed

E
-
Profits of Previous of Previous 3 years be upto 10% of Paidup sh. Capital

-
Condition
-
years (if CY profit

is not adequate)
E
+ Free Reserves of last Audited B/S
Free Reserves includes
}14.33%
15%
Subject to fulfillment 16% 543 000 0 Genral Reserve
of Certain Conditions 12% & P&L A/c Cr. Bal.
Ex :-I ODV
80 lace.
.
plant
-Esc
We Can not Use Following:
=
Undistributed Profit 1. CRR

also called Accumulated Gr = Go Man . 2. DRR
Profits or Free Reserves 3. SP a/c
lastyear 4. Revaluation Reserve
la 5. Capital Reserve
-
10
Cynp
=
EF Ast
8) Cy is
year for Company .
:- NO Dividend
Eise
2
Esc Islac 35
2) EF Cy gudyo Only Company
=
is For Take Aug

.
. : -
13
lac
-
of Last PS = 20 . -
Bal = 22
2 .
years Gr = 50 lace
.
KartyyPosDB
3) Companyneverdistributedany Dividenda d
If Dividend of Last
4) 3 are in
years Max
-
1 15 % -
8 33 %
Avg =>
to to
.
2 E =
3 10
:
1 .
Aug .
37
BuyBack of Equity CA INTER
CA. Jai Chawla
ADVANCED 7887 7887 05
(Sec 68 of the Companies Act 2013)

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(Page 1)
1 2 3 4 5
Meaning Source of BuyBack Threshold Limit Accounting Treatment Creation & Utilization of CRR
of BuyBack
Purchase of Own 1- Fresh Issue of Securities When BuyBack is Announced

Shares by the Co. and OR Share Capital A/c Dr (FV) When to Create CRR? When to utilize CRR?
Cancellation thereof 2- Out of Free Reserves & By BOD By Members Premium on BB A/c Dr (Prem)
Securities Premium A/c Upto 10% of To Eq share BB a/c (BB price)
1. Upto 25% of PSUC in any CRR is Created in Two Cases :- Only in 1 Case:-
PUSC ~
Financial year a) Buy Back of Equity Shares When company Announce
Fresh Issue Proceed b) Redemption of Preference Shares. Bonus Equity Shares
2. Upto 25% of PSUC + FR Bank A/c Dr
(Aggregate Buy Back of all To New Security A/c
To Sec. Premium A/c How much CRR is required to
Classes of Equity) be Created? CRR A/c Dr.
To ESC A/c
If any Investment/ Asset is Sold for BB
In any case, Post BuyBack D/E Bank A/c Dr Equal to Face Value of Buy Back or
Ratio must not be more than 2:1 To Investment A/c Redemption, if it is out of Free Reserves
(Balance to P/L) or Security Premium A/c
(No CRR, if Buybak or Redemption is

To Create CRR out of Fresh Issue Proceeds)
General Reserve Dr
P/L Dr
Sec. Prem Dr
To CRR
(Note- In any preference)
Payment for BB
Eq. Share BB Dr
PUSC= Paid Up Share Capital To Bank A/c
FR= Free Reserves
To Write off Prem on BB
Sec Prem A/c Dr (1st Pref.)
Free Reserve Dr (2 Pref.)
nd
To Prem on BB

BuyBack of Equity CA INTER
CA. Jai Chawla
ADVANCED 7887 7887 05
(Sec 68 of the Companies Act 2013)

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(Page 2)
6 7
Maximum Permissible Buy Back Other Points
1. If Buy Back is out of Securities Premium

Perform Following 3 Tests First:
-
Free Reserves, then create Capital
Redemption Reserve (CRR) equal to
Nominal Amt of Shares brought back
Lower of below will be Maximum Buyback Allowed
-
2. Only fully paid up shares can be brought

back
Test 1 Test 2 Test 3
Shares Outstanding Resource Test Debt Equity Test 3. Not defaulted in filing of FS for 3PFY
Test (Funding for BB)
4. No default in payment of Dividend
px -
eg +
Total No. of (Total PUSC + D/E Ratio post BB

Outstanding Issued Free Reserves) shall not exceed
Shares x 25% x 25% = 2:1
(Refer Note below)
O no &
Total BB Value
Total BuyBack Value

Note :- Following Equation to be Solved:
Buy Back Price
Assume Maximum No. of BuyBack = “A” No.
We will get
Total Equity Before BB (ESC + FR + SP)
No. of Shares
(-) Effect of BB on Equity [Face Value x A + Premium on BB x A + Face Value x A (for CRR)]
that can be Bought
= Minimum Equity (Debt ÷ 2)
Back
General Reserve
+ P&L
+ SP A/c shall be a part of Free
Reserves for Buyback Purpose
39
CA INTER
CA. Jai Chawla
Internal Reconstruction
ADVANCED 7887 7887 05
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1 2 3
Meaning Method of Internal Utilisation of Capital
Reconstruction Reduction A/c
Process of Reconstruction of B/S

by making arrangements with SH 1. To write off Dr bal of P/L A/c
and outside Liability Holders to Settlement with SH Settlement with O/S
provide True & Fair Presentation Liability Holders 2. To write off Overvalued Assets
where co. has suffered significant
amount of Losses during the 3. To write off Fictitious Assets
past years. Compromise & Arrangement
Reduction in Face No Reduction in Surrender of Amount Sacrificed by Liability 4. To write off Intangible Assets
Value with Red. in FV of share but Shares Holders transfer to Capital if asked in the question
Paid Up Capt. Red. in Paid up Reduction A/c
Surrender of Shares: Journal Entry:
Consolidation/Sub Journal Entry: Shares Surrendered by Journal Entry: Cap. Reduction A/c Dr
Division of Shares Share Cap. A/c Dr SH for the purpose of Liability A/c Dr To P&L A/c
Eq. Share Cap. A/c Dr To Capital Reduction A/c Reissue in settlement To Capital Reduction A/c To Assets A/c (if Overvalued)
To Eq. share Cap. with other Pref. SH To Intangible Assets A/c
(No Change in Share or Liab. Holders (Bal. of Cap. Red. transfer to
Capital, Only Change (Remaining Shares not Capital Reserve)
in No. of Shares) Reissued should be
Cancelled)
1. Coversion of Partly Paid to
Fully Paid: Share Capital A/c Dr.
Share Cap. A/c Dr (Partly Paid) To Share Surrender A/c
To Share Cap A/c (Fully paid)
2. Cancellation of Share Cap.

Share Cap. A/c Dr (Old FV)
To Share Cap. A/c. (New FV)
To Cap. Reduction A/c (b/f)
40

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About the Author

CA JAI CHAWLA is the core faculty of D7

Special Message to Students,

1 AS 1 - DISCLOSURE OF A/C POLICIES 1

3 AS 3 - CASH FLOW STATEMENT 3

4 AS 4 - CONTINGENCIES AND EVENTS OCCURRING AFTER THE BALANCE SHEET DATE. 5

8 AS 10 - PROPERTY, PLANT & EQUIPMENT (PPE) 9

9 AS 11 - EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES 11

11 AS 13 - ACCOUNTING FOR INVESTMENTS 13

16 AS 18 - RELATED PARTY DISCLOSURES 20

17 AS 19 - ACCOUNTING FOR LEASES 21

18 AS 20 - EARNINGS PER SHARE 22

19 AS 21 - CONSOLIDATED FINANCIAL STATEMENT 23

20 AS 22 - ACCOUNTING FOR TAXES ON INCOMES 26

23 AS 25 - INTERIM FINANCIAL REPORTING 29

25 AS 27 - FINANCIAL REPORTING OF INTEREST IN JV 32

27 AS 29 - PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS 36

29 BUYBACK OF EQUITY SHARES 38

AS 1 - DISCLOSURE OF A/C POLICIES

1 Meaning of 2 Basic Requirements of “Fundamental Accounting Selection of

5 Change in Accounting Policies

Entity can change its A/c Effect of change

Depends on 1) Trade Dis. vs. Cash Discount

NRV of NRV of WIP ↑

NRV of Raw material

How to Use? a) Material

Lost Est. SP of FG (-) Est. Further Cost adjusted with

AS 3 - CASH FLOW STATEMENT

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1 2 Important Meanings 3 Methods of Preparing Cash Treatment of

CFS to be Prepared by Cash (1) Foreign Currency Cash Flows :-

() Eg Divd Retained Profits = -

(If Extra-ord. Income/ Exp. is

be eliminated from Oper. Act)

T • Revaluation loss on FA always Posset Cap. Reserves)

3 Continued to next ...

Insurance clain-mach Ippe

2) TDS on Interatdeduct -7 non Cash

Loan Fram Debtors =

SUMMARY OF CASH FLOW STATEMENT

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AS 4 - Contingencies and Events Occurring

after the Balance Sheet date.

1 Meaning 2 Types of Events 3 Treatment

Any Event that occurs

If any event occurred during this period

AS-5 Net Profit or loss for the Period, Prior

Period Items & Changes in Accounting Policies

1 Net P/L for Period 2 Prior Period Items 3 Changes in Accounting

All Items of Profit & Loss Consist of Income or Exp. of P.Y.

Applicable on Main Contract Method allowed for Is Outcome of Contract

w.r.t. Stage of Completion) PCM Continue with ‘% of Revenue to be Recognised

(b) All Contracts are Part

(b) Separate Negotiation & (2 ways)

Initial Agreed Amt Direct Specific Exp.

during the period Exceeds Est. Revenue

Total Loss xxx zoor ) 0

- Loss Already xxx 5cV

1 Covers 2 Does not Cover 3 When to Recognise Revenue? Emp

If Any one Uncertainty arises later

Some Special Cases of 6 Recognition of following How to decide if Performance

1) Mere Postponement of delivery

es more & Major

of each PPE recognition should be