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UNIVERSITY OF MUMBAI
RAYAT SHIKSHAN SANSTHAS

KARMAVEER BHAURAO PATIL COLLEGE

VASHI, NAVI MUMBAI

COLLEGE CODE 33
PROJECT REPORT
ON
ACCOUNTING

STANDARDS

SUBMITTED BY
GAUTAMI .J.KOLI

PROJECT GUIDE
PROF. SHIVAJI GHUTUKADE
IN PARTIAL FULFILLMENT FOR THE COURSE OF
MASTER OF COMMERCE
M.COM.PART I (SEMESTER I)
ACADEMIC YEAR 2014-15

ACKNOWLEGEMENT
On the occasion of completion and submission of project we would like to express our deep
sense of gratitude to Mr. PROF. SHIVAJI GHUTUKADE.for providing us platform of
accounting studies. We thank to our chairman and faculty members for their moral support
during the project. We are glad for providing us an opportunity to carryout project on European
Union and also their help and tips whenever needed. Without his co-operation it was impossible
to reach up this stage. At last, I sincere regards to my parents and friends who have directly or
indirectly helped me in the project.

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RAYAT SHIKSHAN SANSTHAS

KARMAVEER BHAURAO PATIL COLLEGE

VASHI, NAVI MUMBAI 400 703.

CERTIFICATE
This is to certify that GAUTAMI KOLI, student of M.Com.Part-I
Semester I has completed his project on ACCOUNTING
STANDARDS and has submitted a satisfactory report under the
guidance of PROF. SHIVAJI GHUTUKADE In the partial fulfillment of
M.Com. Course of University of Mumbai in the academic year
2014-15.

.
Project guide

....
Coordinator

....
University Examiner

Principal

DECLARATION
I, GAUTAMI J KOLI student of KARMAVEER BHAURAO PATIL
COLLEGE, studying in M.Com.Part-I. (Semester I) hereby
declare that I have completed this project report on ACCOUNTING
STANDARDS And has not been submitted to any other University
or Institute for the award of any degree, diploma etc. The
information is submitted to me is true and original to the best of
my knowledge.

Date .

..
(Name & Sign of Student)

Place Vashi, Navi Mumbai.

Contents
ACKNOWLEGEMENT.................................................................................................... 3
DECLARATION............................................................................................................. 4
CERTIFICATE............................................................................................................... 5
INTRODUCTION........................................................................................................... 6
HISTORY..................................................................................................................... 7
LIST OF INDIAN ACCOUNTING STANDARDS.................................................................9
AS 1 : DISCLOSURE OF ACCOUNTING POLICIES:..........................................................9
AS 2: VALUATION OF INVENTORIES:.........................................................................10
AS 3: CASH FLOW STATEMENT................................................................................. 11
A4: CONTENGENCIES AND EVENTS OCCURRING AFTER BALANCE SHEET DATE.........12
A5: NET PROFIT OR LOSS FOR THE PERIOD, PRIOR PERIOD ITEMS AND CHANGES IN
ACCOUNTING POLICIES........................................................................................... 13
A6: DEPRECIATION ACCOUNTING:............................................................................13
A7: CONSTRUCTION CONTRACTS............................................................................. 14
A9: REVENUE RECOGNITION....................................................................................14
A10: ACCOUNTING FOR FIXED ASSETS.....................................................................16
A11: THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES................................17
A12: ACCOUNTING FOR GOVERNMENT GRANTS.......................................................17
A13: ACCOUNTING FOR INVESTMENTS.....................................................................18
A14: ACCOUNTING FOR AMALGAMATIONS...............................................................19
A15: EMPLOYEE BENEFITS....................................................................................... 19
A16: BORROWING COSTS......................................................................................... 20
A17: SEGMENT REPORTING...................................................................................... 20
A18: RELATED PARTY DISCLOSURES.........................................................................20
A19: LEASES........................................................................................................... 20
A20: EARNINGS PER SHARE..................................................................................... 21
A21: CONSOLIDATED FINANCIAL STATEMENTS.........................................................21
A22: ACCOUNTING FOR TAXES ON INCOME..............................................................21

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A23: ACCOUNTING FOR INVESTMENTS IN ASSOCIATES IN CONSOLIDATED FINANCIAL
STATEMENTS.......................................................................................................... 22
A24: DISCONTINUING OPERATIONS..........................................................................22
A25: INTERIM FINANCIAL REPORTING......................................................................23
A26: INTANGIBLE ASSETS........................................................................................ 23
A27: FINANCIAL REPORTING OF INTERESTS IN JOINT VENTURES...............................23
A28: IMPAIRMENT OF ASSETS...................................................................................23
A29: PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS...................24
BIBLIOGRAPHY.......................................................................................................... 25

INTRODUCTION
Indian Accounting Standards (abbreviated as India AS) are a set of accounting
standards notified by the Affairs which are converged with International Financial
Reporting Standards (IFRS). These accounting standards are formulated by Accounting
Standards Board of Institute of Chartered Accountants of India. Now India will have two
sets of accounting standards viz. existing accounting standards under Companies

(Accounting Standard) Rules, 2006 and IFRS converged Indian Accounting Standards
(Ind AS). The Ind AS are named and numbered in the same way as the corresponding
IFRS. NACAS recommend these standards to the Ministry of Corporate Affairs. The
Ministry of Corporate Affairs has to spell out the accounting standards applicable for
companies in India. As on date the Ministry of Corporate Affairs notified 35 Indian
Accounting Standards(Ind AS). But it has not notified the date of implementation of the
same.[1]
OBJECTIVE The basic objective of Accounting Standards is to remove variations in the
treatment of several accounting aspects and to bring about standardization in
presentation. They intent to harmonize the diverse accounting policies followed in the
preparation and presentation of financial statements by different reporting enterprises
so as to facilitate intra-firm and inter-firm comparison.

HISTORY
As in other spheres, India was a pioneer in the field of accounting too. As Prof. Max
Mueller observed
Whatever sphere of the human mind you may select for your study , whether be
it language, or religion, or mythology , or philosophy, whether be it laws or
customs , primitive art or primitive science, everywhere you have to go to India,
whether you like it or not , because some of the most valuable & most instructive
materials are treasured up in India, & in India only.
Sufficient evidence exists to conclude that art and practice of accounting existed even in
Vedic times. There are references to kraya (sale), Vanij (merchant), sulka (price) in
Rigveda. Kautilyas Arthashastra contains details on business of keeping up accounts
in the office of accountants .It provides details of matters which should be recorded,
registers to be maintained, system of examination of accounts and even details of
punishments for default.
Authors, however, generally trace the origin to times of Babylonian Empire around 3500
B.C. Some of the oldest records of commerce have been found in the Assyrian,
Chaldaean-Babylonian and Sumerian civilizations which were flourishing in the
Mesopotamian Valley.
During this era (which lasted until 500 B.C.), Sumeria was a theocracy whose rulers
held most land and animals in trust for their gods, giving impetus to their record-keeping
efforts. Moreover, the legal codes that evolved penalized the failure to memorialize
transactions. The Code of Hammurabi, for example, required that an agent selling
goods for a merchant give the merchant a price quotation under seal or face invalidation
of a questioned agreement.
The Mesopotamian equivalent of todays accountant was the scribe. His duties included
writing up the transaction and ensuring that the agreements complied with the detailed
code requirements for commercial transactions. A typical transaction involved :

The parties willing to transact sought the scribe at the gates to the city.

They would describe their agreement to the scribe, who use a small quantity of
specially prepared clay to record the transaction.

The moist clay was molded into a size and shape adequate to contain the terms
of the agreement.

Using a wooden stylus, the scribe recorded the names of the contracting parties,
the goods and money exchanged and any other promises made.

The parties then signed their names to the tablet by impressing their respective
seals.

Men carried their signatures around their necks in the form of stone amulets
engraved with the wearers mark,

The scribe would dry the tablet in the sun or in a kiln for important transactions
which needed a more permanent record.

Sometimes a thick clay layer was fashioned and wrapped around the tablet like
an envelope.

For extra security, the whole transaction would be rewritten on this outer crust,
in effect making a carbon copy of the original. Attempted alterations of the envelope
could be detected by comparing it with its contents, and the original could not be altered
without cracking off and destroying the outer shell.

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LIST OF INDIAN ACCOUNTING

STANDARDS
The following are the mandatory Accounting Standards (AS) as on July 1, 2012 as listed
on the site of The Institute of Chartered Accountants of India (ICAI).
AS 1 : DISCLOSURE OF ACCOUNTING POLICIES:
This Standard deals with the disclosure of significant accounting policies
Followed in preparing and presenting financial statements.
The view presented in the financial statements of an enterprise of its state
of affairs and of the profit or loss can be significantly affected by the
accounting policies followed in the preparation and presentation of the
financial statements. The accounting policies followed vary from enterprise
to enterprise. Disclosure of significant accounting policies followed is

necessary if the view presented is to be properly appreciated.

The disclosure of some of the accounting policies followed in the
preparation and presentation of the financial statements is required by law

in some cases.
The Institute of Chartered Accountants of India has, in Standards issued
by it, recommended the disclosure of certain accounting policies, e.g.,

translation policies in respect of foreign currency items.

In recent years, a few enterprises in India have adopted the practice of
including in their annual reports to shareholders a separate statement of
accounting policies followed in preparing and presenting the financial
statements

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AS 2: VALUATION OF INVENTORIES:
A primary issue in accounting for inventories is the determination of the
value at which inventories are carried in the financial statements until the
related revenues are recognised. This Standard deals with the determination
of such value, including the ascertainment of cost of inventories and any
write-down thereof to net realisable value.
Scope
1. This Standard should be applied in accounting for inventories other
Then:
(a) Work in progress arising under construction contracts,
including directly related service contracts.
(b) Work in progress arising in the ordinary course of business of
Service providers;
(c) Shares, debentures and other financial instruments held as
Stock-in-trade; and
(d) Producers inventories of livestock, agricultural and forest
products, and mineral oils, ores and gases to the extent that
they are measured at net realizable value in accordance with
well established practices in those industries.

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AS 3: CASH FLOW STATEMENT

Information about the cash flows of an enterprise is useful in providing
users of financial statements with a basis to assess the ability of the
enterprise to generate cash and cash equivalents and the needs of the
enterprise to utilise those cash flows. The economic decisions that are taken
by users require an evaluation of the ability of an enterprise to generate cash
and cash equivalents and the timing and certainty of their generation.
The Standard deals with the provision of information about the historical
changes in cash and cash equivalents of an enterprise by means of a cash
flow statement which classifies cash flows during the period from operating,
investing and financing activities.
Scope:
1. an enterprise should prepare a cash flow statement and should present
it for each period for which financial statements are presented.
2. Users of an enterprises financial statements are interested in how the
enterprise generates and uses cash and cash equivalents. This is the case
regardless of the nature of the enterprises activities and irrespective of
whether cash can be viewed as the product of the enterprise, as may be the
case with a financial enterprise. Enterprises need cash for essentially the
same reasons, however different their principal revenue-producing activities
might be. They need cash to conduct their operations, to pay their obligations,
And to provide returns to their investors.

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A4: CONTENGENCIES AND EVENTS OCCURRING AFTER BALANCE SHEET DATE

. This Standard deals with the treatment in financial statements of
(a) Contingencies, and
(b) Events occurring after the balance sheet date.
The following terms are used in this Standard with the meanings
specified:

A contingency is a condition or situation, the ultimate outcome of

which, gain or loss, will be known or determined only on the occurrence,

or non-occurrence, of one or more uncertain future events.

Events occurring after the balance sheet date are those significant

events, both favourable and unfavourable, that occur between the balance
sheet date and the date on which the financial statements are approved by
the Board of Directors in the case of a company, and, by the corresponding
approving authority in the case of any other entity.
Two types of events can be identified:
(a) those which provide further evidence of conditions that existed
at the balance sheet date; and
(b) those which are indicative of conditions that arose subsequent
to the balance sheet date.

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A5: NET PROFIT OR LOSS FOR THE PERIOD, PRIOR PERIOD ITEMS AND
CHANGES IN ACCOUNTING POLICIES.
The objective of this Standard is to prescribe the classification and disclosure
of certain items in the statement of profit and loss so that all enterprises
prepare and present such a statement on a uniform basis. This enhances the
comparability of the financial statements of an enterprise over time and with
the financial statements of other enterprises. Accordingly, this Standard
requires the classification and disclosure of extraordinary and prior period
items, and the disclosure of certain items within profit or loss from ordinary
activities. It also specifies the accounting treatment for changes in accounting
estimates and the disclosures to be made in the financial statements regarding
changes in accounting policies.
A6: DEPRECIATION ACCOUNTING:
1. This Standard deals with depreciation accounting and applies to all
depreciable assets, except the following items to which special considerations
apply:
(i) forests, plantations and similar regenerative natural resources;
(ii) wasting assets including expenditure on the exploration for and extraction of
minerals, oils, natural gas and similar non- regenerative resources;
(iii) expenditure on research and development;
(iv) goodwill and other intangible assets;
(v) live stock
This standard also does not apply to land unless it has a limited useful life

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for the enterprise

. 2. Different accounting policies for depreciation are adopted by different
enterprises. Disclosure of accounting policies for depreciation followed by an enterprise
is necessary to appreciate the view presented in the financial
statements of the enterprise.
A7: CONSTRUCTION CONTRACTS
The objective of this Standard is to prescribe the accounting treatment of
revenue and costs associated with construction contracts. Because of the
nature of the activity undertaken in construction contracts, the date at which
the contract activity is entered into and the date when the activity is completed
usually fall into different accounting periods. Therefore, the primary issue
in accounting for construction contracts is the allocation of contract revenue
and contract costs to the accounting periods in which construction work is
performed. This Standard uses the recognition criteria established in the
Framework for the Preparation and Presentation of Financial Statements to
determine when contract revenue and contract costs should be recognised
as revenue and expenses in the statement of profit and loss. It also provides
practical guidance on the application of these criteria.

A9: REVENUE RECOGNITION

1. This Standard deals with the bases for recognition of revenue in the
statement of profit and loss of an enterprise. The Standard is concerned

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with the recognition of revenue arising in the course of the ordinary activities
of the enterprise from
the sale of goods,
the rendering of services, and
the use by others of enterprise resources yielding interest, royalties
and dividends.
2. This Standard does not deal with the following aspects of revenue
recognition to which special considerations apply:
(i) Revenue arising from construction contracts;3
(ii) Revenue arising from hire-purchase, lease agreements;
(iii) Revenue arising from government grants and other similar
subsidies;
(iv) Revenue of insurance companies arising from insurance contracts.
3. Examples of items not included within the definition of revenue for
the purpose of this Standard are:
(i) Realised gains resulting from the disposal of, and unrealised gains
resulting from the holding of, non-current assets e.g. appreciation
in the value of fixed assets;
(ii) Unrealised holding gains resulting from the change in value of
current assets, and the natural increases in herds and agricultural
and forest products;

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(iii) Realised or unrealised gains resulting from changes in foreign

exchange rates and adjustments arising on the translation of
foreign currency financial statements;
(iv) Realised gains resulting from the discharge of an obligation at
less than its carrying amount;
(v) Unrealised gains resulting from the restatement of the carrying
amount of an obligation.

A10: ACCOUNTING FOR FIXED ASSETS

1. Financial Statements disclose certain information relating to fixed assets.
In many enterprises these assets are grouped into various categories, such
as land, buildings, plant and machinery, vehicles, furniture and fittings,
goodwill, patents, trade marks and designs. This standard deals with
accounting for such fixed assets except as described in paragraphs 2 to 5
below.
2. This standard does not deal with the specialised aspects of accounting
for fixed assets that arise under a comprehensive system reflecting the effects
of changing prices but applies to financial statements prepared on historical
cost basis.
3. This standard does not deal with accounting for the following items to
which special considerations apply:
(i) forests, plantations and similar regenerative natural resources;

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(ii) wasting assets including mineral rights, expenditure on the

exploration for and extraction of minerals, oil, natural gas and
similar non-regenerative resources;
(iii) expenditure on real estate development.
A11: THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES
An enterprise may carry on activities involving foreign exchange in two
ways. It may have transactions in foreign currencies or it may have foreign
operations. In order to include foreign currency transactions and foreign
operations in the financial statements of an enterprise, transactions must
be expressed in the enterprises reporting currency and the financial
statements of foreign operations must be translated into the enterprises
reporting currency.
The principal issues in accounting for foreign currency transactions and
foreign operations are to decide which exchange rate to use and how to
recognise in the financial statements the financial effect of changes in
exchange rates.

A12: ACCOUNTING FOR GOVERNMENT GRANTS

1. This Standard deals with accounting for government grants. Government
grants are sometimes called by other names such as subsidies, cash incentives,
duty drawbacks, etc.

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2. This Standard does not deal with:

(i) the special problems arising in accounting for government grants
in financial statements reflecting the effects of changing prices
or in supplementary information of a similar nature;
(ii) government assistance other than in the form of government
grants;
(iii) government participation in the ownership of the enterprise.
A13: ACCOUNTING FOR INVESTMENTS
1. This Standard deals with accounting for investments in the financial
statements of enterprises and related disclosure requirements.2
2. This Standard does not deal with:
(a) the bases for recognition of interest, dividends and rentals earned
on investments which are covered by Accounting Standard 9 on
Revenue Recognition;
(b) operating or finance leases;
(c) investments of retirement benefit plans and life insurance
Enterprises.
(d) mutual funds and venture capital funds and/or the related asset
management companies, banks and public financial institutions
formed under a Central or State Government Act or so declared
under the Companies Act, 1956.

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A14: ACCOUNTING FOR AMALGAMATIONS

1. This standard deals with accounting for amalgamations and the
treatment of any resultant goodwill or reserves. This Standard is directed
principally to companies although some of its requirements also apply to
financial statements of other enterprises.
2. This standard does not deal with cases of acquisitions which arise when
there is a purchase by one company (referred to as the acquiring company)
of the whole or part of the shares, or the whole or part of the assets, of
another company (referred to as the acquired company) in consideration for
payment in cash or by issue of shares or other securities in the acquiring
company or partly in one form and partly in the other. The distinguishing
feature of an acquisition is that the acquired company is not dissolved and
its separate entity continues to exist.COUNTING FOR AMALGAMATIONS

A15: EMPLOYEE BENEFITS

The objective of this Standard is to prescribe the accounting and disclosure
for employee benefits. The Standard requires an enterprise to recognise:
(a) a liability when an employee has provided service in exchange for
employee benefits to be paid in the future; and
(b) an expense when the enterprise consumes the economic benefit
arising from service provided by an employee in exchange for

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employee benefits.
A16: BORROWING COSTS
The objective of this Standard is to prescribe the accounting treatment for
borrowing costs.
A17: SEGMENT REPORTING
The objective of this Standard is to establish principles for reporting financial
information, about the different types of products and services an enterprise
produces and the different geographical areas in which it operates. Such
information helps users of financial statements:
(a) better understand the performance of the enterprise;
(b) better assess the risks and returns of the enterprise; and
(c) make more informed judgements about the enterprise as a whole.

A18: RELATED PARTY DISCLOSURES

The objective of this Standard is to establish requirements for disclosure of:
(a) related party relationships; and
(b) transactions between a reporting enterprise and its related
parties.
A19: LEASES
The objective of this Standard is to prescribe, for lessees and lessors, the
appropriate accounting policies and disclosures in relation to finance leases
and operating leases.

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A20: EARNINGS PER SHARE

The objective of this Standard is to prescribe principles for the determination
and presentation of earnings per share which will improve comparison of
performance among different enterprises for the same period and among
different accounting periods for the same enterprise. The focus of this
Standard is on the denominator of the earnings per share calculation. Even
though earnings per share data has limitations because of different accounting
policies used for determining earnings, a consistently determined
denominator enhances the quality of financial reporting.
A21: CONSOLIDATED FINANCIAL STATEMENTS
The objective of this Standard is to lay down principles and procedures for
preparation and presentation of consolidated financial statements.
Consolidated financial statements are presented by a parent (also known as
holding enterprise) to provide financial information about the economic
activities of its group. These statements are intended to present financial
information about a parent and its subsidiary(ies) as a single economic entity
to show the economic resources controlled by the group, the obligations of
the group and results the group achieves with its resources.
A22: ACCOUNTING FOR TAXES ON INCOME
The objective of this Standard is to prescribe accounting treatment for taxes
on income. Taxes on income is one of the significant items in the statement
of profit and loss of an enterprise. In accordance with the matching concept,
taxes on income are accrued in the same period as the revenue and expenses

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to which they relate. Matching of such taxes against revenue for a period
poses special problems arising from the fact that in a number of cases, taxable
income may be significantly different from the accounting income. This
divergence between taxable income and accounting income arises due to
two main reasons. Firstly, there are differences between items of revenue
and expenses as appearing in the statement of profit and loss and the items
which are considered as revenue, expenses or deductions for tax purposes.
Secondly, there are differences between the amount in respect of a particular
item of revenue or expense as recognised in the statement of profit and loss
and the corresponding amount which is recognised for the computation of
taxable income.

A23: ACCOUNTING FOR INVESTMENTS IN ASSOCIATES IN CONSOLIDATED

FINANCIAL STATEMENTS
The objective of this Standard is to set out principles and procedures for
recognising, in the consolidated financial statements, the effects of the
investments in associates on the financial position and operating results of a
group.
A24: DISCONTINUING OPERATIONS
The objective of this Standard is to establish principles for reporting
information about discontinuing operations, thereby enhancing the ability
of users of financial statements to make projections of an enterprise's cash
flows, earnings-generating capacity, and financial position by segregating

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information about discontinuing operations from information about

continuing operations.
A25: INTERIM FINANCIAL REPORTING
The objective of this Standard is to prescribe the minimum content of an
interim financial report and to prescribe the principles for recognition and
measurement in a complete or condensed financial statements for an interim
period. Timely and reliable interim financial reporting improves the ability
of investors, creditors, and others to understand an enterprise's capacity to
generate earnings and cash flows, its financial condition and liquidity.
A26: INTANGIBLE ASSETS
The objective of this Standard is to prescribe the accounting treatment for
intangible assets that are not dealt with specifically in another Accounting
Standard. This Standard requires an enterprise to recognise an intangible
asset if, and only if, certain criteria are met. The Standard also specifies
how to measure the carrying amount of intangible assets and requires certain
disclosures about intangible assets.
A27: FINANCIAL REPORTING OF INTERESTS IN JOINT VENTURES
The objective of this Standard is to set out principles and procedures for
accounting for interests in joint ventures and reporting of joint venture
assets, liabilities, income and expenses in the financial statements of
venturers and investors.
A28: IMPAIRMENT OF ASSETS
The objective of this Standard is to prescribe the procedures that an enterprise

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applies to ensure that its assets are carried at no more than their recoverable
amount. An asset is carried at more than its recoverable amount if its carrying
amount exceeds the amount to be recovered through use or sale of the asset.
If this is the case, the asset is described as impaired and this Standard requires
the enterprise to recognise an impairment loss. This Standard also specifies
when an enterprise should reverse an impairment loss and it prescribes certain
disclosures for impaired assets.
A29: PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
The objective of this Standard is to ensure that appropriate recognition criteria
and measurement bases are applied to provisions and contingent liabilities
and that sufficient information is disclosed in the notes to the financial
statements to enable users to understand their nature, timing and amount.
The objective of this Standard is also to lay down appropriate accounting
for contingent assets.

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BIBLIOGRAPHY
Introduction:
http://en.wikipedia.org/wiki/Indian_Accounting_Standards
Accounting standards by ICAI:
http://www.icai.org/post.html?post_id=8660

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