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Thread: 25 Accounting Standard 25 - Interim Financial Reporting - AS 25

  1. #21
    Accounting Standards
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    Default Balance Sheet of Accounting Standard (AS) 25 - Interim Financial Reporting

    Balance Sheet of Accounting Standard (AS) 25 - Interim Financial Reporting

    As at 30 September 2001 31 March 2001

    Statement of Profit and Loss:

    6 months ending 30 September 2001 30 September 2000
    3 months ending 30 September 2001 30 September 2000

    Cash Flow Statement:

    6 months ending 30 September 2001 30 September 2000

    Enterprise whose business is highly seasonal Preparing and Presenting Interim Financial Reports Quarterly

    3. An enterprise whose financial year ends on 31 March, may present financial statements (condensed or complete) for the following periods in its interim financial report for the second quarter ending 30 September 2001:

    Balance Sheet:

    As at 30 September 2001 31 March 2001
    30 September 2000

    Statement of Profit and Loss:
    6 months ending 30 September 2001 30 September 2000
    3 months ending 30 September 2001 30 September 2000
    12 months ending 30 September 2001 30 September 2000


    Cash Flow Statement:
    6 months ending 30 September 2001 30 September 2000
    12 months ending 30 September 2001 30 September 2000

  2. #22
    Accounting Standards
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    Default Appendix 3 Examples of Applying theRecognition and Measurement Principles

    Appendix 3

    Examples of Applying theRecognition and Measurement Principles



    This Appendix, which is illustrative and does not form part of the Accounting Standard, provides examples of applying the general recognition and measurement principles set out in paragraphs 27-38 of this Standard. The purpose of the appendix is to illustrate the application of the Accounting Standard to assist in clarifying its meaning.

  3. #23
    Accounting Standards
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    Default Gratuity and Other Defined Benefit Schemes of Accounting Standard (AS) 25 - Interim Financial Reporting

    Gratuity and Other Defined Benefit Schemes of Accounting Standard (AS) 25 - Interim Financial Reporting



    1. Provisions in respect of gratuity and other defined benefit schemes for an interim period are calculated on a year-to-date basis by using the actuarially determined rates at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-time events.

  4. #24
    Accounting Standards
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    Default Major Planned Periodic Maintenance or Overhaul of Accounting Standard (AS) 25 - Interim Financial Reporting

    Major Planned Periodic Maintenance or Overhaul of Accounting Standard (AS) 25 - Interim Financial Reporting


    2. The cost of a major planned periodic maintenance or overhaul or other seasonal expenditure that is expected to occur late in the year is not anticipated for interim reporting purposes unless an event has caused the enterprise to have a present obligation. The mere intention or necessity to
    incur expenditure related to the future is not sufficient to give rise to an obligation.

  5. #25
    Accounting Standards
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    Default Provisions of Accounting Standard (AS) 25 - Interim Financial Reporting

    Provisions of Accounting Standard (AS) 25 - Interim Financial Reporting


    3. This Statement requires that an enterprise apply the same criteria for recognising and measuring a provision at an interim date as it would at the end of its financial year. The existence or non-existence of an obligation to transfer economic benefits is not a function of the length of the reporting period. It is a question of fact subsisting on the reporting date.

  6. #26
    Accounting Standards
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    Default Year - End Bonuses of Accounting Standard (AS) 25 - Interim Financial Reporting

    Year-End Bonuses of Accounting Standard (AS) 25 - Interim Financial Reporting


    4. The nature of year-end bonuses varies widely. Some are earned simply by continued employment during a time period. Some bonuses are earned based on monthly, quarterly, or annual measure of operating result. They may be purely discretionary, contractual, or based on years of historical precedent.


    5. A bonus is anticipated for interim reporting purposes if, and only if, (a) the bonus is a legal obligation or an obligation arising from past practice for which the enterprise has no realistic alternative but to make the payments, and (b) a reliable estimate of the obligation can be made.

  7. #27
    Accounting Standards
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    Default Intangible Assets of Accounting Standard (AS) 25 - Interim Financial Reporting

    Intangible Assets of Accounting Standard (AS) 25 - Interim Financial Reporting


    6. An enterprise will apply the definition and recognition criteria for an intangible asset in the same way in an interim period as in an annual period. Costs incurred before the recognition criteria for an intangible asset are met are recognised as an expense. Costs incurred after the specific point in time
    at which the criteria are met are recognised as part of the cost of an intangible asset. "Deferring" costs as assets in an interim balance sheet in the hope that the recognition criteria will be met later in the financial year is not justified.

  8. #28
    Accounting Standards
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    Default Other Planned but Irregularly Occurring Costs of Accounting Standard (AS) 25 - Interim Financial Reporting

    Other Planned but Irregularly Occurring Costs of Accounting Standard (AS) 25 - Interim Financial Reporting


    7. An enterprise's budget may include certain costs expected to be incurred irregularly during the financial year, such as employee training costs. These costs generally are discretionary even though they are planned and tend to recur from year to year. Recognising an obligation at an interim financial reporting date for such costs that have not yet been incurred generally is not consistent with the definition of a liability.

  9. #29
    Accounting Standards
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    Default Measuring Income Tax Expense for Interim Period of Accounting Standard (AS) 25 - Interim Financial Reporting

    Measuring Income Tax Expense for Interim Period of Accounting Standard (AS) 25 - Interim Financial Reporting


    8. Interim period income tax expense is accrued using the tax rate that would be applicable to expected total annual earnings, that is, the estimated average annual effective income tax rate applied to the pre-tax income of the interim period.


    9. This is consistent with the basic concept set out in paragraph 27 that the same accounting recognition and measurement principles should be applied in an interim financial report as are applied in annual financial statements. Income taxes are assessed on an annual basis. Therefore, interim period income tax expense is calculated by applying, to an interim period's pre-tax income, the tax rate that would be applicable to expected total annual earnings, that is, the estimated average effective annual income tax rate. That estimated average annual income tax rate would reflect the tax rate structure expected to be applicable to the full year's earnings including enacted or substantively enacted changes in the income tax rates scheduled to take effect later in the financial year. The estimated average annual income tax rate would be re-estimated on a year-to-date basis, consistent with paragraph 27 of this Statement. Paragraph 16(d) requires disclosure of a significant change in estimate.


    10. To the extent practicable, a separate estimated average annual effective income tax rate is determined for each governing taxation law and applied individuallytotheinterimperiodpre-taxincomeunder suchlaws.Similarly, if different income tax rates apply to different categories of income (such as capital gains or income earned in particular industries), to the extent practicable a separate rate is applied to each individual category of interim period pre-tax income.While that degree of precision is desirable, itmay not be achievable in all cases, and a weighted average of rates across such governing taxation laws or across categories of income is used if it is a reasonable approximation of the effect of using more specific rates.

    11. As illustration, an enterprise reports quarterly, earns Rs. 150 lakhs pretax profit in the first quarter but expects to incur losses of Rs 50 lakhs in each of the three remaining quarters (thus having zero income for the year), and is governed by taxation laws according to which its estimated average annual income tax rate is expected to be 35 per cent. The following table shows the
    amount of income tax expense that is reported in each quarter:

    (Amount in Rs. lakhs)
    1st 2nd 3rd 4th
    Quarter Quarter Quarter Quarter Annual
    Expense 52.5 (17.5) (17.5) (17.5) 0

  10. #30
    Accounting Standards
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    Default Difference in Financial Reporting Year and Tax Year of Accounting Standard (AS) 25 - Interim Financial Reporting

    Difference in Financial Reporting Year and Tax Year of Accounting Standard (AS) 25 - Interim Financial Reporting

    12. If the financial reporting year and the income tax year differ, income tax expense for the interim periods of that financial reporting year is measured using separate weighted average estimated effective tax rates for each of the income tax years applied to the portion of pre-tax income earned
    in each of those income tax years.

    13. To illustrate, an enterprise's financial reporting year ends 30 September and it reports quarterly. Its year as per taxation laws ends 31 March. For the financial year that begins 1 October, Year 1 ends 30 September of Year 2, the enterprise earns Rs 100 lakhs pre-tax each quarter. The estimated weighted average annual income tax rate is 30 per cent in Year 1 and 40 per cent in Year 2.

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