THINGS THAT ONLY CA STUDENT WILL UNDERSTAND

Being a CA student is not easy . Even though situations varies from person to person here are few things most of you can relate to :)

01.Calculating the Net Income of all the coaching teachers

Teaching those batches of 200+ Students is no joke after all,…

Receipts: Tuition Fee ; expenses: Study material, building rent etc etc

Aprx Income tax

Net Income!!

Holy cow!!

02.Experiencing the luxury of travelling in all modes of Transport

After all you have to be on time for College and all the Coaching classes that are miles apart and not to forget reaching office on time.

You have had experienced it all - Buses, train, two wheeler, taking lift and what not.

3. Championing the art of failing

Whats a CA who hasnt tasted failure in exams unless you are the lucky one’s who have cleared the exams in the first go. Even if you fail you know its not a big deal because most of your friends have failed miserably too! #Thats friendship :-P

Well CA results are the only results where you get tears no matter whether you fail or pass.

4. Watching Morning , Evening shows

Well these shows are different than what other people see. These shows are exclusively for us  in the Satellite coaching centers nearby and the snacks shop people near your class are the happiest and richest people Afterall it's not easy to watch this film easily for 4 hours without those packets!

5. Time is a privilege you don’t have

You are always in a hurry. Thanks to the busy scehdule you have.

6. You miss all those Family Functions , Birthdays. And celebrating Diwali is an unachievable dream if you have November attempt

"Sorry dude, ONLY 4 months to go for exams. Both groups dena hai..." 

7.  Trying your best not to sleep

You have tried it all from tea to coffee so that you can stay awake longer and study a bit more!

8. You Pursuing CA = You are Hardworking + Smart

At least this is what people think about you…

9. Your Parents are just proud of you 

"Aakhir hamara bachha CA kar raha h….!!"

10. Exploring different career options simultaneously

What if I dont clear?

What am I gonna do?

Did choose wrong career path?

What are the other backup plans?

After all cracking the CA exams is not a child’s play..

11. Before you realise you reach a marriagable age .

While people keep asking you as when you are going to marry you are still struggling with amendments in CA final!

"Bhai yeh is attemot ke liye applicable hoga kya?"

Source:cacharya.com

Accounting Standard-15 Accounting For Employee Benefits (Key Points)

1).The method of accounting of retirement benefits depends on the nature of retirement benefits and in practice

it may not be incorrect to say that it also depends on the mode of funding.

2).On the basis of nature, a retirement benefit scheme can be classified either as defined benefit plan or defined

contribution plan.

3).Defined contribution schemes are schemes where the amounts to be paid as retirement benefits are

determined by contributions to a fund together with earnings thereon; e.g., provident fund schemes.

4). Defined benefit schemes are retirement benefit schemes under which amounts to be paid as retirement benefits are determinable usually by reference to employee’s earnings and/or years of service; e.g., gratuity schemes.

5).For defined contribution schemes, contribution payable by employer is charged to Profit & Loss Account.

For defined benefit schemes, accounting treatment will depend on the type of arrangements which the

employer has made.

6).If payment for retirement benefits is made out of employers funds, appropriate charge to Profit & Loss

Account to be made through a provision for accruing liability, calculated according to actuarial valuation.

If liability for retirement benefit is funded through creation of trust, the excess/shortfall of contribution paid

against amount required to meet accrued liability as certified by actuary is treated as pre-payment or charged

to Profit & Loss Account.

7).If liability for retirement benefit is funded through a scheme administered by an insurer, an actuarial

certificate or confirmation from insurer is obtained. The excess/shortfall of the contribution paid against the

amount required to meet accrued liability as confirmed by insurer is treated as pre-payment or charged to

Profit & Loss Account.

8).Any alteration in the retirement benefit cost should is charged or credited to Profit & Loss Account and

change in actuarial method is to be disclosed.

9).Financial statements to disclose method by which retirement benefit cost have been determined.

The institute has issued AS-15 which is broadly on lines of IFRS-19. It is applicable for accounting periods

commencing after December 7, 2007. The Standard improves the existing practices mainly in the following

areas.

— It is broad in its applicability as it covers all short-term and long term employee benefits. For example,

annual paid leave (though not encashable), long-term service rewards, subsidised goods or services, etc. are

also covered

— Additional disclosures are required in relation to any defined benefits plans including:

(i) The reconciliation of (opening to closing) of Projected Benefit Obligation.

(ii) The reconciliation of (opening to closing) of Fair Value of Plan Assets.

(iii) The reconciliation of (opening to closing) of Net Liability/Prepaid Asset.

(iv) Components of charge during the year.

(v) Principal actuarial assumptions.

Accounting Standard-14 Accounting For Amalgamation (Key Points)

1).The Accounting Standard is applicable only where it is made in pursuant to a scheme sanctioned by statute.

2).The accounting method to be adopted depends whether the amalgamation is in the nature of merger or not as

defined in para 3(e) of the Standard. The definitions list out five criteria, all of which must be satisfied for an

amalgamation to be accounted on the basis of "Pooling of Interest Method".

3). If any criterion is not met then the amalgamation is accounted on by using "Purchase Method".

4).It may be mentioned that these criteria relates to mode of payment of consideration of merger, shareholding pattern pre and Post Merger, intention to carry-on business after the merger, pooling of all assets and liabilities after the merger and an intention to continue to carry the carrying amounts of assets and liability after the merger.

5).Under Purchase Method, all assets and liabilities of the transferor company is recorded either at existing

carrying amount or consideration is allocated to individual identifiable assets and liabilities on basis of its fair

values at date of amalgamation. The excess or shortfall of consideration over value of net assets is recognised

as goodwill or capital reserve.

6).Under the Pooling of Interest Method, assets, liabilities and reserves of the transferor company be recorded at

existing carrying amount and in the same form as on date of amalgamation. In case of conflicting accounting

policies existing in transferor and transferee company a uniform policy be adopted on amalgamation, as per

AS-5.

7).Certain specific disclosures are required to be made in financial statements after amalgamation. In case of amalgamation effected after Balance Sheet date but before issue of financial statements of either party, the event be only specifically disclosed and not given effect in such statements.

Accounting Standard-13 Accounting For Investments

1).Current investments and long-term investments shall be disclosed distinctly with further sub-classification.

2).Cost of investment to include acquisition charges, e.g., brokerage, fees and duties.

3).Current investments shall be disclosed at lower of costs and fair value.

4Long-term investments shall be disclosed at cost.

5).Provision for decline (other than temporary) to be made.

6).Adequate disclosure is required for: the accounting policy adopted — classification of investments — income

from investments, profit/loss on disposal and changes in carrying amount of such investment — aggregate

amount of quoted and unquoted investments giving aggregate market value of quoted investments.

7).Significant restrictions on right of ownership, realisation of investment and remittance of income and

proceeds of disposal thereof be disclosed.

Accounting Standard -12 Accounting for Government Grants (Key Points)

1).Grants should not be recognised unless reasonably assured to be realised.

2). Grants towards specific assets be presented as deduction from its gross value. Alternatively, be

     treated as deferred income in Profit & Loss Account on rational basis over the useful life

     of the asset when depreciable. For non-depreciable asset requiring fulfilment of any obligations, it be credited        to Profit & Loss Account during the concerned period to fulfil obligations.

3). Balance of deferred income be disclosed appropriately as to promoter’s contribution, be credited to capital

     reserves and considered as shareholders’ funds

4).Grants in the form of non monetary assets given at concessional rate be accounted at their acquisition cost.

5).Asset given free of cost be recorded at nominal value.

6).Grants receivable as compensation of losses/expenses incurred be recognised and disclosed in Profit & Loss

    Account in the year it is receivable and shown as extraordinary item if appropriately read with AS-5.

7).Contingency related to grant be treated in accordance with AS-4. Grants when become refundable, be shown

    as extraordinary item read with AS-5.

8).Grants related to revenue on becoming refundable be adjusted first against unamortised deferred credit

    balance of the grant and then be charged to Profit & Loss Account.

9).Grants against specific assets on becoming refundable be recorded by increasing the value of the respective

     assets or by reducing Capital Reserve/Deferred Income balance of the grant.

10).Grant to promoter’s contribution when refundable be reduced from the Capital Reserve.

11).Accounting policy adopted for grants including method of presentation, extent of recognition in financial

      statements, at concession/free of cost be disclosed.

Accounting Standard 11 -ACCOUNTING FOR EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES (Key Points)

1).Applicable to all enterprises for which accounting period commences on or after 1-4-2004. It is applicable to

transactions in foreign currency and translating financial statements of foreign subsidiary/branches.

2).Monetary items denominated in Foreign Currency shall be reported using closing rates.

   Non monetary items carried in terms of historical cost in foreign currency shall be reported at the exchange

   rate on the date of the transaction.

3).Exchange differences shall be recognised as income/expenses in the period in which they arise except in case

   of fixed assets and differences on account of forward contracts

4).Translation of foreign exchange transaction of revenue items except opening/closing inventories and

depreciation shall be made by applying rate at the date of the transactions. For convenience purposes an

average rate or weighted average rate may be used, provided it approximates the rate of exchange.

5). Opening and closing inventories shall be translated at rates prevalent on opening and closing dates, respectively and depreciation amount shall be converted by applying the rate used for translation of the asset.

6).Translation gains and losses for branches/subsidiaries forming integral part of operations of the entity shall be

accounted as stated in above. However translation gains and losses for non-integral operations shall be

directly credited to reserves. It may be mentioned that that the method of arriving translation gains or losses

shall be different from that stated above; i.e., all assets and liabilities are converted at closing rates and

revenue items are converted at average rates, where it approximates the rates at the date of transactions.

7).Integral foreign operation is a foreign operation, the activities of which are an integral part of those of the reporting enterprise.

8).Exchange differences arising on repayment of liabilities incurred for purchase of fixed assets shall be

expensed through profit and loss account. {Note, in case of a Company (read as required by Schedule VI),

where the fixed asset is purchased from outside India, the related exchange gains and loss, if any, are required

to be capitalized}. Also in case of a company, other exchange differences arising out of long-term monetary

items can be initially deferred and later amortized over the period up to March 31, 2012 or the life of the

related long-term monetary asset whichever is lower with corresponding adjustments in balance sheet

through "Foreign Currency Monetary Item Translation Difference Account".

9).Gains or losses on accounting of forward contracts is recognised through profit and loss account (unless it

relates to fixed assets as described in above for a Company).However, measurement of gains or losses on forward contract depends upon the intention for which it is taken. Where it is not for trading or speculative purposes the premium/discount is amortised over the term of the contracts. Where these are held for either speculative or trading purposes, the gain or loss is arrived at each reporting date after comparing the FAIR VALUE of contract for its remaining term of maturity with the carrying amount at the reporting date.

10).Profit/Loss on cancellation or renewal of forward exchange contract shall be recognised as income/expenses

of the respective period (unless it relates to fixed assets as described in above for a Company).

11).Amount of exchange difference included in Profit & Loss Account adjusted in carrying forward or amount of

fixed assets or due to forward contracts recognised in Profit & Loss Account for one or more accounting

period must be disclosed.

Accounting Standard-10 Accounting For Fixed Assets(Key Points)

1).The cost of a fixed asset should comprise its purchase price and any attributable cost of bringing the asset to

its working condition for its intended use.

2).Self-constructed asset shall be accounted at cost.

3).In case of exchange of asset, fair value of asset acquired or the net book value of asset given up whichever is

more clearly evident shall be considered.

4).Revaluation is permitted provided it is done for the entire class of assets. The basis of revaluation should be

disclosed.

5).Increase in value on revaluation shall be credited to Revaluation Reserve while the decrease should be

charged to Profit and Loss Account.

6).Goodwill to be accounted only when paid for.

7).Assets acquired on hire purchase shall be recorded at its fair value.

8).Gross and net book values at beginning and end of year showing additions, deletions and other movements is

required to be disclosed.

10).Assets should be eliminated from books on disposal or when of no utility value.

11).Profit/loss on disposal be recognised on disposal to Profit and Loss Account.

12).Machinery spares that can be used only in conjunction of specific asset shall be capitalised.

Accounting Standard-9 Revenue Recognition (Key Points)

1).Revenue from sales or service transactions should be recognised when the requirements as to performance as

set out are satisfied, provided that at the time of performance it is not unreasonable to expect ultimate

collection. If at the time of raising of any claim it is unreasonable to expect ultimate collection, revenue

recognition should be postponed.

2).In a transaction involving the sale of goods, performance should be regarded as being achieved when the

following conditions have been fulfilled:

 (i) the seller of goods has transferred to the buyer the property in the goods for a price or all significant risks and rewards of ownership have been transferred to the buyer and the seller retains no effective control of the goods transferred to a degree usually associated with ownership; and

(ii) no significant uncertainty exists regarding the amount of the consideration that will be derived from the

sale of the goods.

3).In a transaction involving the rendering of services, performance should be measured either under the

completed service contract method or under the proportionate completion method, whichever relates the

revenue to the work accomplished.

4).Such performance should be regarded as being achieved when no significant uncertainty exists regarding the

amount of the consideration that will be derived from rendering the service.

5).Revenue arising from the use of other enterprise resources yielding interest, royalties and dividends should

only be recognised when no significant uncertainty as to measurability or collectability exists. These revenues

are recognised on the following bases:

(i) Interest: on a time proportion basis taking into account the amount outstanding and the rate applicable.

(ii) Royalties: on an accrual basis in accordance with the terms of the relevant agreement.

(iii) Dividends from investments in shares: when the owner’s right to receive payment is established.

Disclosure

1).In addition to the disclosures required by Accounting Standard 1 on ‘Disclosure of Accounting Policies’

(AS-1), an enterprise should also disclose the circumstances in which revenue recognition has been

postponed pending the resolution of significant uncertainties.

2).In cases where revenue cycle of the entity involves collection of excise duty the enterprise is required to

disclose revenue at gross as reduced by excise amount thereby finally arriving net sales on the face of the

profit and loss account.

3).The standard is followed by an appendix that though is not part of the Standard, illustrate the application of

the Standard to a number of commercial situation deals with various situations in an endeavour to assist in

clarifying application of the Standard.

Accounting Standard-7 Accounting For Construction Contracts (Key Points)

1).It may be mentioned that the standard is applicable in accounting of contracts in the books of the contractor.

    It is not applicable for construction project undertaken by the entity on behalf of its own, for example, a

    builder constructing flats to be sold.

2). It is also not applicable to Service Contracts which are not related to the construction of asset.

3).According to AS-7 (Revised) the enterprise should follow only percentage completion method.

4).Where in case the contract revenue or the stage of completion cannot be determined reliably, the cost incurred

on the contract may be carried forward as work-in-progress.

5). All foreseen losses must be fully provided for.

6).Under percentage of completion method, appropriate allowance for future contingencies shall be made.

WIP, receipt of progressive payments, advances, retentions, receivables and certain other items are required

to be disclosed.

Accounting Standard-6 Depreciation Accounting (Key points)

1).Allocate depreciable amount of a depreciable assets on systematic basis to each accounting year over useful

life of asset, useful life may be reviewed periodically.

2).Basis must be consistently followed and disclosed. Any change to be quantified and disclosed.

3).Rates of depreciation should be disclosed.

4).A change in method followed be made only if required by the statute, compliance to Accounting Standard,

appropriate preparation or presentation of the financial statement.

3).In cases of extension, revaluation or exchange fluctuation, depreciation to be provided on adjusted figure

prospectively over the residual useful life of the asset.

4).Deficiency or surplus in case of transfer/change in method be disclosed.

5).Historical cost, depreciation for the year and accumulated depreciation be disclosed.

6).Revision in method of depreciation be made from date of use. Change in method of charging depreciation is

change in accounting policy be disclosed.

Accounting Standard-5 Net Profit/Loss for the period,Prior period items & changes in Accounting policies (Key Points)

Definitions:

1).Ordinary activities are any activities which are undertaken by an enterprise as part of its business and such related activities in which the enterprise engages in furtherance of, incidental to, or arising from, these activities.

2).Extraordinary items are income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the enterprise and, therefore, are not expected to recur frequently or regularly.

3).Prior period items are income or expenses which arise in the current period as a result of errors or omissions in the preparation of the financial statements of one or more prior periods.

4).Accounting policies are the specific accounting principles and the methods of applying those principles adopted by an enterprise in the preparation and presentation of financial statements.

Accounting treatment and disclosures

1).OrdinaryActivities :When items of income and expense within profit or loss from ordinary activities are of

such size, nature or incidence that their disclosure is relevant to explain the performance of the enterprise for

the period, the nature and amount of such items should be disclosed separately.

2).Extraordinary Items should be disclosed in the statement of profit and loss as a part of net profit or loss for

the period. The nature and the amount of each extraordinary item should be separately disclosed in the

statement of profit and loss in a manner that its impact on current profit or loss can be perceived.

3.).Prior Period : The nature and amount of prior period items should be separately disclosed in the statement of

profit and loss in a manner that their impact on the current profit or loss can be perceived.

4).Accounting Estimate : The effect of a change in an accounting estimate should be included in the

determination of net profit or loss in;

 (a) the period of the change, if the change affects the period only; or

 (b) the period of the change and future periods, if the change affects both.

5).Accounting Policy : Any change in an accounting policy which has a material effect should be disclosed.

The impact of, and the adjustments resulting from, such change, if material, should be shown in the financial

statements of the period in which such change is made, to reflect the effect of such change. Where the effect

of such change is not ascertainable, wholly or in part, the fact should be indicated.

6). If a change is made in the accounting policies which has no material effect on the financial statements for the current period but which is reasonably expected to have a material effect in later periods, the fact of such change should be appropriately disclosed in the period in which the change is adopted.

7)A change in accounting policy consequent upon the adoption of an Accounting Standard should be accounted

for in accordance with the specific transitional provisions, if any, contained in that Accounting Standard.

However, disclosures required by paragraph 32 of the Statement should be made unless the transitional

provisions of any other Accounting Standard require alternative disclosures in this regard.

8).Where any policy was applied to immaterial items in any earlier period but the item is material in the current

period, the change in accounting policy, if any, shall not be treated as a change in accounting policy and

accordingly no disclosure is required e.g., gratuity booked on cash basis in earlier period for relatively

insignificant number of employees which in current period has become material and thus provided on basis of

report of Actuary.

Accounting Standard-4 Contingencies & Events Occuring after the Balance Sheet date (Key points)

Contingencies

1).The amount of a contingent loss should be provided for by a charge in the statement of profit and loss if it is

probable that future events will confirm that, after taking into account any related probable recovery, an asset

has been impaired or a liability has been incurred as at the balance sheet date, and a reasonable estimate of

the amount of the resulting loss can be made.

2).The existence of a contingent loss should be disclosed in the financial statements if either of the conditions in

above paragraph is not met, unless the possibility of a loss is remote.

3).Contingent gains should not be recognised in the financial statements.

Events occurring after the Balance Sheet Date

1).Assets and liabilities should be adjusted for events occurring after the balance sheet date that provide

additional evidence to assist the estimation of amounts relating to conditions existing at the balance sheet date

or that indicate that the fundamental accounting assumption of going concern (i.e., the continuance of

existence or substratum of the enterprise) is not appropriate.

2).Dividends stated to be in respect of the period covered by the financial statements, which are proposed or

declared by the enterprise after the balance sheet date but before approval of the financial statements, should

be adjusted.

3).Disclosure should be made in the report of the approving authority of those events occurring after the balance

sheet date that represent material changes and commitments affecting the financial position of the enterprise.

Disclosure

1).If disclosure of contingencies is required by paragraph 11 of the Statement, the following information should

be provided: the nature of the contingency, the uncertainties which may affect the future outcome, an estimate

of the financial effect, or a statement that such an estimate cannot be made.

2).If disclosure of events occurring after the balance sheet date in the report of the approving authority is

required by the Standard then it shall disclose; the nature of the event, an estimate of the financial effect, or a

statement that such an estimate cannot be made.