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.
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