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

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    Accounting Standards
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    Default 25 Accounting Standard 25 - Interim Financial Reporting - AS 25

    Accounting Standard (AS) 25 - Interim Financial Reporting

    Accounting Standard (AS) 25
    (issued 2002)
    InterimFinancialReporting
    (This Accounting Standard includes paragraphs set in
    bold italic type and plain type, which have equal authority. Paragraphs in bold italic type indicate the main principles. This Accounting Standard should be read in the context of its objective and the Preface to the Statements of Accounting Standards.)

    Accounting Standard (AS) 25, 'Interim Financial Reporting', issued by the Council of the Institute of Chartered Accountants of India, comes into effect in respect of accounting periods commencing on or after 1-4-2002. If an enterprise is required or elects to prepare and present an interim financial report, it should comply with this Standard.
    The following is the text of the Accounting Standard.

  2. #2
    Accounting Standards
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    Default Objective of Accounting Standard (AS) 25 - Interim Financial Reporting

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


    The objective of this Statement is to prescribe the minimum content of an interim financial report and to prescribe the principles for recognition and measurement in a complete or condensed financial statements for an interim period. Timely and reliable interimfinancial reporting improves the ability of
    investors, creditors, and others to understand an enterprise's capacity to generate earnings and cash flows, its financial condition and liquidity.

  3. #3
    Accounting Standards
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    Default Scope of Accounting Standard (AS) 25 - Interim Financial Reporting

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


    Interim Financial Reporting 473

    1. This Statement does not mandate which enterprises should be required to present interim financial reports, how frequently, or how soon after the end of an interim period. If an enterprise is required or elects to prepare and present an interim financial report, it should comply with this Statement.


    2. A statute governing an enterprise or a regulator may require an enterprise to prepare and present certain information at an interim date which may be different in formand/or content as required by this Statement. In such a case, the recognition and measurement principles as laid down in
    this Statement are applied in respect of such information, unless otherwise specified in the statute or by the regulator.

    3. The requirements related to cash flow statement, complete or condensed, contained in this Statement are applicable where an enterprise prepares and presents a cash flow statement for the purpose of its annual financial report.

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    Default Definitions of Accounting Standard (AS) 25 - Interim Financial Reporting

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


    4. The following terms are used in this Statement with the meanings specified:


    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.


    5. During the first year of operations of an enterprise, its annual financial reporting period may be shorter than a financial year. In such a case, that shorter period is not considered as an interim period.

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

    Content of an Interim Financial Report of Accounting Standard (AS) 25 - Interim Financial Reporting


    6. A complete set of financial statements normally includes:

    (a) balance sheet;
    (b) statement of profit and loss;
    (c) cash flow statement; and
    (d) notes including those relating to accounting policies and other statements and explanatory material that are an integral part of the financial statements.


    7. In the interest of timeliness and cost considerations and to avoid repetition of information previously reported, an enterprise may be required to or may elect to present less information at interimdates as compared with its annual financial statements. The benefit of timeliness of presentationmay be partially offset by a reduction in detail in the information provided.


    Therefore, this Statement requires preparation and presentation of an interim financial report containing, as a minimum, a set of condensed financial statements. The interim financial report containing condensed financial statements is intended to provide an update on the latest annual financial statements. Accordingly, it focuses on new activities, events, and circumstances and does not duplicate information previously reported.

    8. 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. This Statement also does not prohibit or discourage an enterprise from including, in
    condensed interimfinancial statements,more than theminimumline items or selected explanatory notes as set out in this Statement. The recognition and measurement principles set out in this Statement apply also to complete financial statements for an interimperiod, and such statements would include all disclosures required by this Statement (particularly the selected disclosures in paragraph 16) as well as those required by other Accounting Standards.

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    Accounting Standards
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    Default Minimum Components of an Interim Financial Report of Accounting Standard (AS) 25 - Interim Financial Reporting

    Minimum Components of an Interim Financial Report of Accounting Standard (AS) 25 - Interim Financial Reporting


    9. An interim financial report should include, at a minimum, the following components:

    (a) condensed balance sheet;
    (b) condensed statement of profit and loss;
    (c) condensed cash flow statement; and
    (d) selected explanatory notes.

  7. #7
    Accounting Standards
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    Default Form and Content of Interim Financial Statements

    Form and Content of Interim Financial Statements


    10. If an enterprise prepares and presents a complete set of financial statements in its interim financial report, the form and content of those statements should conform to the requirements as applicable to annual complete set of financial statements.


    11. If an enterprise prepares and presents a set of condensed financial statements in its interim financial report, those condensed statements should include, at a minimum, each of the headings and
    sub-headings that were included in its most recent annual financial statements and the selected explanatory notes as required by this Statement. Additional line items or notes should be included if their omission would make the condensed interim financial statements misleading.

    12. If an enterprise presents basic and diluted earnings per share in its annual financial statements in accordance with Accounting Standard (AS) 20, Earnings Per Share, basic and diluted earnings per
    share should be presented in accordance with AS 20 on the face of the statement of profit and loss, complete or condensed, for an interim period.

    13. If an enterprise's annual financial report included the consolidated financial statements in addition to the parent's separate financial statements, the interim financial report includes both the consolidated financial statements and separate financial statements, complete or condensed.

    14. Appendix 1 provides illustrative formats of condensed financial statements.

  8. #8
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    Default Selected Explanatory Notes of Accounting Standard (AS) 25 - Interim Financial Reporting

    Selected Explanatory Notes of Accounting Standard (AS) 25 - Interim Financial Reporting


    15. 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 interimfinancial report to provide relatively insignificant updates to the information that was already reported in the notes in the most recent annual financial report. At an interim date, an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the enterprise since the last annual reporting date is more useful.


    16. An enterprise should include the following information, as a minimum, in the notes to its interim financial statements, if material and if not disclosed elsewhere in the interim financial report:

    (a) a statement that the same accounting policies are followed in the interim financial statements as those followed in the most recent annual financial statements or, if those policies have been changed, a description of the nature and effect of the change;


    (b) explanatory comments about the seasonality of interim operations;

    (c) the nature and amount of items affecting assets, liabilities, equity, net income, or cash flows that are unusual because of their nature, size, or incidence (see paragraphs 12 to 14 of Accounting Standard (AS) 5, Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting
    Policies);

    (d) the nature and amount of changes in estimates of amounts reported in prior interim periods of the current financial year or changes in estimates of amounts reported in prior financial years, if those changes have a material effect in the current interim period;

    (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) segment revenue, segment capital employed (segment assets minus segment liabilities) and segment result for business segments or geographical segments, whichever is the enterprise’s primary basis of segment reporting (disclosure of segment information is required in an enterprise’s interim financial report only if the enterprise is required, in terms of AS 17, Segment Reporting, to disclose segment information in its annual financial statements);

    (h) material events subsequent to the end of the interim period that have not been reflected in the financial statements for the interim period;

    (i) 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; and

    (j) material changes in contingent liabilities since the last annual balance sheet date.


    The above information should normally be reported on a financial yearto- date basis. However, the enterprise should also disclose any events or transactions that are material to an understanding of the current interim period.

    17. Other Accounting Standards specify disclosures that should be made in financial statements. In that context, financial statements mean complete set of financial statements normally included in an annual financial report and sometimes included in other reports. The disclosures required by those
    other Accounting Standards are not required if an enterprise's interim financial report includes only condensed financial statements and selected explanatory notes rather than a complete set of financial statements.

  9. #9
    Accounting Standards
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    Default Periods for which Interim Financial Statements are required to be presented of Accounting Standard (AS) 25 - Interim Financial Reporting

    Periods for which Interim Financial Statements are required to be presented of Accounting Standard (AS) 25 - Interim Financial Reporting


    18. Interim reports should include interim financial statements (condensed or complete) for periods as follows:

    (a) balance sheet as of the end of the current interim period and a comparative balance sheet as of the end of the immediately preceding financial year;


    (b) statements of profit and loss for the current interim period and cumulatively for the current financial year to date, with comparative statements of profit and loss for the comparable interim periods (current and year-to-date) of the immediately preceding financial year;

    (c) cash flow statement cumulatively for the current financial year to date, with a comparative statement for the comparable year-to-date period of the immediately preceding financial year.


    19. For an enterprise whose business is highly seasonal, financial information for the twelve months ending on the interim reporting date and comparative information for the prior twelve-month period may be useful. Accordingly, enterprises whose business is highly seasonal are encouraged to consider reporting such information in addition to the information called for in the preceding paragraph.

    20. Appendix 2 illustrates the periods required to be presented by an enterprise that reports half-yearly and an enterprise that reports quarterly.

  10. #10
    Accounting Standards
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    Default Materiality of Accounting Standard (AS) 25 - Interim Financial Reporting

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


    21. In deciding how to recognise, measure, classify, or disclose an item for interim financial reporting purposes, materiality should be assessed in relation to the interim period financial data. In
    making assessments of materiality, it should be recognised that interim measurements may rely on estimates to a greater extent than measurements of annual financial data.


    22. The Preface to the Statements of Accounting Standards states that “The Accounting Standards are intended to apply only to items which are material”. The Framework for the Preparation and Presentation of Financial Statements, issued by the Institute of Chartered Accountants of India, states that “information is material if its misstatement (i.e., omission or erroneous statement) could influence the economic decisions of users taken on the basis of the financial information”.

    23. Judgement is always required in assessing materiality for financial reporting purposes. For reasons of understandability of the interim figures, materiality for making recognition and disclosure decision is assessed in relation to the interim period financial data. Thus, for example, unusual or
    extraordinary items, changes in accounting policies or estimates, and prior period items are recognised and disclosed based on materiality in relation to interim period data. The overriding objective is to ensure that an interim financial report includes all information that is relevant to understanding an enterprise's financial position and performance during the interim period.

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