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Accounting std 20 21 22

Accounting standards 20 21 22

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Accounting std 20 21 22

  1. 1. 20,21,22 ACCOUNTING STANDARD
  2. 2. ACCOUNTING STANDARD (AS) 20 EARNINGS PER SHARE Objective 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.
  3. 3. Scope 1. This Standard should be applied by all companies. However, a Small and Medium Sized Company, as defined in the Notification, may not disclose diluted earnings per share (both including and excluding extraordinary items). 2. In consolidated financial statements, the information required by this Statement should be presented on the basis of consolidated information.
  4. 4. Definitions For the purpose of this Standard, the following terms are used with the meanings specified: 1. An equity share is a share other than a preference share. 2. A preference share is a share carrying preferential rights to dividends and repayment of capital. 3. A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity shares of another enterprise. 4. A potential equity share is a financial instrument or other contract that entitles, or may entitle, its holder to equity shares. 5. Share warrants or options are financial instruments that give the holder the right to acquire equity shares. 6. Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.
  5. 5. Applicability • This statement is applicable to the enterprise whose equity shares or potential equity shares are listed in stock exchange & It is to be reported by the enterprises on the face of the statement of profit and loss a/c.
  6. 6. TYPES OF EPS • Basic Earnings Per Share • Basic earnings per share should be calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. • Diluted Earnings Per Share • For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period should be adjusted for the effects of all dilutive potential equity shares.
  7. 7. ACCOUNTING STANDARD (AS) 21 CONSOLIDATED FINANCIAL STATEMENTS • OBJECTIVES  The objective of this statement is to present financial statements of parent and its subsidiaries as a single economic entity. They are treated as one.  Consolidated profit/loss account and consolidated balance sheet are prepared for disclosing the total profit/loss of the group and total assets and liability of the group.  PARENT COMPANY:- It is an enterprise that has one or more subsidiaries.  SUBSIDIARY COMPANY:- It is an enterprise that is controlled by other enterprises known as parent.
  8. 8. Scope • 1. This Standard should be applied in the preparation and presentation of consolidated financial statements for a group of enterprises under the control of a parent. • 2. This Standard should also be applied in accounting for investments in subsidiaries in the separate financial statements of a parent.
  9. 9. FORMAT OF CONSOLIDATED FINANCIAL STATEMENTS  Application of other accounting standards in preparation of consolidated financial statements would be in the same manner as they apply in preparing the separate financial statements.  Consolidated financial statements are no substitutes for separate financial statements.  Dissimilar activities of parent and its subsidiaries cannot be the ground for non-consolidation of financial statements.  The parent company has to consolidate the financial statements of all its subsidiaries, whether domestic or foreign.
  10. 10. CONSOLIDATED FINANCIAL STATEMENTS MEANING • Consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge the overall health of an entire group of companies as opposed to one company's stand alone position.
  11. 11. ACCOUNTING STANDARD – 22 ACCOUNTING FOR TAXES ON INCOME INTRODUCTION  Comes into effect from 1st April, 2001  Mandatory in Nature  Applicable for all enterprises  For accounting periods commencing on or after 1st April 2003
  12. 12. OBJECTIVE  Prescribe accounting treatment for taxes on income in accordance with the matching concept:  Matching of taxes with the corresponding revenue and expenses since taxable income significantly varies with the accounting income  Reasons  Difference between items of Revenue and expense as per profit & Loss account and those considered for tax purpose.  Difference between the amount of the items of Revenue and expenses as per profit and loss account and those considered for tax purpose.
  13. 13. Scope  Applied For accounting for taxes on income:  Determination of expenses or savings related to taxes on income for a particular period.  Disclosure of such amount in Financial Statement.  Includes both domestic and foreign taxes.  Tax payable on distribution of dividends and other distribution not covered.
  14. 14. Definitions 1. Accounting income (loss) is the net profit or loss for a period, as reported in the statement of profit and loss, before deducting income tax expense or adding income tax saving. 2. Taxable income (tax loss) is the amount of the income (loss) for a period, determined in accordance with the tax laws, based upon which income tax payable (recoverable) is determined. 3. Tax expense (tax saving) is the aggregate of current tax and deferred tax charged or credited to the statement of profit and loss for the period. 4. Current tax is the amount of income tax determined to be payable (recoverable) in respect of the taxable income (tax loss) for a period. 5. Deferred tax is the tax effect of timing differences. 6. Timing differences are the differences between taxable income and accounting income for a period that originate in one period and are capable of reversal in one or more subsequent periods. 7. Permanent differences are the differences between taxable income and accounting income for a period that originate in one period and do not reverse subsequently.

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