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Thread: 03 Accounting Standard 3 - Cash Flow Statements - AS 3

  1. #21
    Accounting Standards
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    Default Components of Cash and Cash Equivalents of Accounting Standard 3 - Cash Flow Statements - AS 3

    Components of Cash and Cash Equivalents of Accounting Standard 3 - Cash Flow Statements - AS 3


    42. An enterprise should disclose the components of cash and cash equivalents and should present a reconciliation of the amounts in its cash flow statement with the equivalent items reported in the balance sheet.

    43. In view of the variety of cash management practices, an enterprise discloses the policy which it adopts in determining the composition of cash and cash equivalents.


    44. The effect of any change in the policy for determining components of cash and cash equivalents is reported in accordance with Accounting Standard (AS) 5, Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies.

  2. #22
    Accounting Standards
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    Default Other Disclosures of Accounting Standard 3 - Cash Flow Statements - AS 3

    Other Disclosures of Accounting Standard 3 - Cash Flow Statements - AS 3


    45. An enterprise should disclose, together with a commentary by management, the amount of significant cash and cash equivalent balances held by the enterprise that are not available for use by it.


    46. There are various circumstances in which cash and cash equivalent balances held by an enterprise are not available for use by it. Examples include cash and cash equivalent balances held by a branch of the enterprise that operates in a countrywhere exchange controls or other legal restrictions apply as a result of which the balances are not available for use by the enterprise.


    47. Additional information may be relevant to users in understanding the financial position and liquidity of an enterprise. Disclosure of this information, together with a commentary by management, is encouraged and may include:

    (a) the amount of undrawn borrowing facilities thatmay be available for future operating activities and to settle capital commitments, indicating any restrictions on the use of these facilities; and

    (b) the aggregate amount of cash flows that represent increases in operating capacity separately from those cash flows that are required to maintain operating capacity.


    48. The separate disclosure of cash flows that represent increases in operating capacity and cash flows that are required to maintain operating capacity is useful in enabling the user to determine whether the enterprise is investing adequately in the maintenance of its operating capacity. An
    enterprise that does not invest adequately in themaintenance of its operating capacity may be prejudicing future profitability for the sake of current liquidity and distributions to owners.

  3. #23
    Accounting Standards
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    Default APPENDIX I of Accounting Standard 3 - Cash Flow Statements - AS 3

    APPENDIX I of Accounting Standard 3 - Cash Flow Statements - AS 3

    Cash Flow Statement for an Enterprise other than a Financial Enterprise


    The appendix is illustrative only and does not form part of the accounting standard. The purpose of this appendix is to illustrate the application of the accounting standard.


    1. The example shows only current period amounts.

    2. Information from the statement of profit and loss and balance sheet is provided to show how the statements of cash flows under the direct method and the indirect method have been derived. Neither the statement of profit and loss nor the balance sheet is presented in conformity with the disclosure and presentation requirements of applicable laws and accounting standards.

    The working notes given towards the end of this appendix are intended to assist in understanding the manner in which the various figures appearing in the cash flow statement have been derived. These working notes do not formpart of the cash flow statement and, accordingly, need not be published.

    3. The following additional information is also relevant for the preparation of the statement of cash flows (figures are in Rs.’000).

    (a) An amount of 250 was raised from the issue of share capital and a further 250 was raised from long term borrowings.

    (b) Interest expensewas 400 ofwhich 170 was paid during the period. 100 relating to interest expense of the prior period was also paid during the period.

    (c) Dividends paid were 1,200.

    (d) Tax deducted at source on dividends received (included in the tax expense of 300 for the year) amounted to 40.

    (e) During the period, the enterprise acquired fixed assets for 350.


    The payment was made in cash.

    (f) Plant with original cost of 80 and accumulated depreciation of 60 was sold for 20.

    (g) Foreign exchange loss of 40 represents the reduction in the carrying amount of a short-term investment in foreign-currency designated bonds arising out of a change in exchange rate
    between the date of acquisition of the investment and the balance sheet date.

    (h) Sundry debtors and sundry creditors include amounts relating to credit sales and credit purchases only.

  4. #24
    Accounting Standards
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    Default Appendix II of Accounting Standard 3 - cash flow statements - AS 3

    Appendix II of Accounting Standard 3 - Cash Flow Statements - AS 3

    Click here for Appendix II

    http://www.knowledgebible.com/forum/...low-Statements

  5. #25
    Accounting Standards
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    Default ANNOUNCEMENT Status of Accounting Standard (AS) 3, Cash Flow Statements, under Section 211 Of The Companies Act, 1956 of AS 3

    ANNOUNCEMENT
    Status of Accounting Standard (AS) 3, Cash Flow Statements, under Section 211 Of The Companies Act, 1956
    1.Section 211 of the Companies Act, 1956, as amended by the Companies (Amendment) Act, 1999, requires that every profit and loss account and balance sheet of the company shall comply with the accounting standards. For the purpose of Section 211, the expression "accounting standards" means the standards of accounting recommended by the Institute of Chartered Accountants of India as may be prescribed by the Central Government in consultation with the National Advisory Committee on Accounting Standards established under sub-section (1) of section 210A of the said Act. Provided that the standards of accounting specified by the Institute of Chartered Accountants of India shall be deemed to be the Accounting Standards until the accounting standards are prescribed by the Central Government under section 211(3C) of the Act.
    2.Accounting Standard (AS) 3, Cash Flow Statements, was made mandatory in respect of accounting periods commencing on or after 1.4.2001 for the following:
    1. Enterprises whose equity or debt securities are listed on a recognised stock exchange in India, and enterprises that are in the process of issuing equity or debt securities that will be listed on a recognised stock exchange in India as evidenced by the board of directors' resolution in this regard.
    2. All other commercial, industrial and business reporting enterprises, whose turnover for the accounting period exceeds Rs. 50 crores. (Announcement published in December 2000 issue of the Institute's Journal.)
    3.The Council, at its meeting held in September 2002, decided that AS 3 should also be treated as a 'specified' accounting standard for the purpose of section 211 of the Act. Accordingly, the companies in respect of which AS 3 is mandatory, are required to comply with AS 3 under section 211 of the Companies Act, 1956. In view of this, the statutory auditors of such companies are required to give an assertion in respect of compliance with AS 3 along with other 'specified' accounting standards while reporting under section 227 (3)(d) of the Act.

    The Council decided that the above position in respect of 'specified' status of AS 3 is applicable in respect of accounting periods commencing on or after 1-4-2002.
    4.Accordingly, in view of the announcements published in the Institute's Journal, from time to time, in respect of 'specified' status of Accounting Standards, read with this announcement, the extant position is that all the accounting standards, issued by the Institute which have been made mandatory by the Institute as indicated in the respective standards or made mandatory by way of a separate announcement are 'specified' for the purpose of the proviso to section 211 (3C) and section 227(3)(d) of the Act.

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