Amity: Accounting & Finance

AMITY
Bhubaneswar
Accounting & Finance
assignment on
Accounting Standard
MBA+PGPM
1st SEMESTER
Accounting Standard
(22,23,24,25)
Presentation by-
Soumya Ranjan Sahoo(22,25)
Rohit Kumar(23,24)
Accounting standard -22
-Accounting For Taxes on Income-
• The objective of this AS-22 is to prescribe accounting

treatment for taxes on income .
• This standard comes into effect in respect of accounting
periods commencing on or after 1-4-2001 and the
mandatory in nature according to the standard,
accounting income or loss is the net profit or loss for a
period as reported in the statement, before deducting
income task or expense adding income tax saving.
• i.e(net profit-the excess of all revenues over expenses and losses)
• Expense or saving related to taxes in income in
respect of an accounting period should be determined
and such an amount should be disclosed in the
financial statements.
• According to this standard, tax expenses for the
period, comprising current tax and differed tax should
be included in the determination of the net profit or
loss for the period .Deferred tax should be recognized
for all the timing differences .
• i.e (timing differences-A timing difference arises when an item of income
or expense is recognised for tax purposes but not accounting purposes, or
vice versa, and is therefore consistent with a profit and loss approach to
deferred tax)
• i.e(Deferred tax- assets and liabilities should be disclosed under separate
beading in the balance sheet of the enterprise, separately from current
assets and current liabilities ).
• Subject to the consideration of prudence in respect of
deferred tax assets
• Current tax is the amount of income tax determined to be
payable or recoverable in respect of the taxable income or
tax loss for a period using the applicable tax rates and tax
laws.
• As per AS-22 deferred tax assets and liabilities should be
distinguished from assets and liabilities representing
current task for the period .
• Deferred tax assets and liabilities should be disclosed
under separate beading in the balance sheet of the
enterprise, separately from current assets and current
liabilities .
• Deferred tax liabilities
• generally arise where tax relief is provided in advance of an
accounting expense, or income is accrued but not taxed until
received.
• Examples of such situations include:
• a company makes pension contributions for which tax relief is
provided on a paid basis, whereas accounting entries are
determine in accordance with actuarial valuations
• Deferred tax assets
• Deferred tax assets generally arise where tax relief is provided after an
expense is deducted for accounting purposes.
• The nature of the evidence supporting the
recognisation of deferred tax asset should be
disclosed .
• Current tax should be measured at the amount
expected to be paid to (recover from ) the taxation
authority, using the applicable tax rates.
Accounting Standard-25
-Interim Financial Reporting-
• As-25 “interim financial reporting” comes into effect
in respect of accounting periods commencing on or
after 1-4-2002.
• Interim period- is a financial reporting period
shorter than a full financial year.
• Interim financial report -means a financial report
containing either a complete set of financial
statements or a set of condensed financial
statements (as described in this Statement) for an
interim period.
• Timely and reliable financial reporting enhances the
ability of investors ,creditors ,bankers and others to
understand an enterprise’s capacity to generate earnings
and cash flows, its financial position and liquidity.
• The objective of AS-25 is to prescribe the minimum
content of an interim financial report and to lay down
the principles for recognition in measurement of assets,
liabilities revenue and expenses for an interim period.
• If an enterprise is required or elects to prepare and
present an interim financial report, it should comply
with AS-25.IN case of new enterprise, financial
reporting period may be shorter than a financial year
and that shorter period is not to b taken as interim
report.
• According to AS-25 “interim financial report means a
financial report containing either a complete set of
financial statement or setup condensed financial
statement for an interim period.”
• This Statement does not prohibit or discourage an
enterprise from presenting a complete set of financial
statements in its interim financial report, rather than a
set of condensed financial statements.
• A user of an enterprise's interim financial report will
ordinarily have access to the most recent annual
financial report of that enterprise. It is, therefore, not
necessary for the notes to an interim financial report
to provide relatively insignificant updates to the
information that was already reported in the notes in
the most recent annual financial report.
• An enterprise should include the flowing information
(if material and not disclosed elsewhere), as a
minimum, in the notes to its interim financial
statements:
a) A statement that the same accounting policies are
followed in the preparation of interim financial
statements as was followed in the most recent
annual financial statements. If the accounting
policies have been changed, a description of the
nature and effect of the change should also be stated.
b) Explanatory comments about the seasonality of
interim operations.
c) The nature and amount of items effecting assets,
liabilities, equity, net income, or cash flows that is
unusual because of their nature, size, or incident.
d) The nature and amount of changes in estimates of
amount reported in prior interim periods of the
current financial year.
e) issuances, buy-backs, repayments and restructuring
of debt, equity and potential equity shares.
f) dividends, aggregate or per share (in absolute or
percentage terms), separately for equity shares and
other shares;
g) The effect of changes in the composition of the
enterprise during the interim period, such as
amalgamations, acquisition or disposal of subsidiaries
and long-term investments, restructurings, and
discontinuing operations
h) Material changes in contingent liabilities since the
last annual balance sheet date.
• As per AS-25, “the measurement procedures to be
followed in an interim financial report should be
designed to ensure that the resulting information is
reliable and that all material financial information
that is relevant to an understanding of the financial
position of performance of the enterprise is
appropriately disclosed.
• While measurements in both annual and interim
financial reports are often based on reasonable
estimates, the preparation of interim financial reports
generally will require a greater use of estimation
methods than annual financial reports.
Thank you

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• The objective of this AS-22 is to prescribe accounting

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