What Is The Use Of Accounting (2)

Financial AccountingIn recent years the need for improved auditing standards has risen with the public’s demand for increased corporate accounting regulation. Events occurring after the balance sheet date are those significant events (favourable as well as unfavourable) that occur between the balance sheet date and the date on which financial statements are approved by the approving authority (Le. The concept of events occurring after the balance sheet date with their treatment and disclosure in the financial statements have been discussed in detail under Unit 8 of Chapter5.

This statement should be applied by an enterprise in presenting profit and loss from ordinary activities, extraordinary items and prior period items in the statement of profit and loss, in accounting for changes in accounting estimates, and disclosure of changes in accounting policies. As per AS 5, prior period items are income or expenses which arise in the current period as a result of errors or omissions in the preparation of financial statements of one or more prior periods. The statement deals with accounting for investments in the financial statements of enterprises and related disclosure requirements.

This standard requires that the depreciable amount of a depreciable asset should be allocated on a systematic basis to each accounting period during the useful life of the asset and the depreciation method selected should be applied consistently from period to period. If there is a change in the method of providing depreciation, such a change should be treated as a change in accounting policy and its effect (deficiency or surplus arising from retrospective recomputation of depreciation as per new method) should be quantified and disclosed. The depreciation method used and depreciation rates are also required to be disclosed in the financial statements.

AS 12 deals with accounting for government grants and specifies that the government grants should not be recognised until there is reasonable assurance that the enterprise will comply with the conditions attached to them, and the grant will be received. The standard prescribes the accounting treatment for borrowing costs (i.e. interest and other costs) incurred by an enterprise in connection with the borrowing of funds.

The enterprises are required to disclose (i) the accounting policy adopted for government grants including the methods of presentation in the financial statements; (li) the nature and extent of government grants recognised in the financial statements, including non-monetary grants of assets given either at a concessional rate or free of cost. The standard also describes the disclosure requirements for both types of W amalgamations in the first financial statements.Financial Accounting

Financial Accounting