Accounting Standards and Their Importance

generally accepted accounting standards for private-sector entities, including businesses and not-for-profit organizations. A recognized expert in forensic accounting, Mr. Siegel has 17 years of experience in diverse and global industries that include technology, media, telecommunications, healthcare, retail, and insurance. Prior to his appointment to the FASB, he led the Accounting Research and Analysis team at the RiskMetrics Group in Rockville, Maryland (FASB.org, 2009f).

7. Whether the cash flows of foreign operation directly affect the cash flows of the reporting entity.

The FASB Codification database is easy to use when researching the accounting standards once the basics are fully understood. The FASB Codification database can be accessed by logging in at http://aaahq.org/ascLogin.cfm and using the following codes (case sensitive):

Distributions Received from Equity Method Investees – no guidance on determining how to classify a distributions received. Proposed solution is distributions received categorized as cash inflows from operating activities. If the distributions received less the distributions received in prior period exceed cumulative equity in earnings than the excess would be categorized as cash inflows from investing activities. Note that using fair value option does not applies to equity method investment measured.

However, this Statement maintains the scope of Interpretation 46(R) with the previous additional entities treated as special qualifying entities for purposes. The concept of these entities was eliminated in Statement No. 166. Therefore, the statement No. 167 also superseded the risks of quantitative-based and calculation of rewards to determine which enterprise, if any, provided a financial interest that controls an entity variable interest because the expectation of an access of the basic qualitative will be more efficient to identify which company has a financial interest of controlling in an entity variable interest. However, this is the way the FASB admitted to upgrade the financial reporting standards. Other additional necessity is an additional review event when deciding whether a company is a variable entity interest when there are any occurring circumstances and changes in facts. For instinct, the owner of the equity investment at risk, as a group, lose the power from voting rights to direct the activities of the entity that some characteristic impacts the economic entity’s performance. There will also be ongoing assessments of whether an enterprise is the key beneficiary of a variable interest entity.

Part I: Accounting Standard AASB138 Intangible Assets provides guidelines for accounting treatment of research and development costs for financial reporting purposes. Answer the following questions based on AASB138 and ‘Framework for the Preparation and Presentation of Financial

After a series of amendments and notifications, finally Ministry of Corporate Affairs (MCA) declared the adaptation of Indian Accounting Standards (IND-AS).The main purpose of adopting IND AS is to make Indian accounting practices global. But India did not adopt IFRS (International Financial Reporting System), instead of that India prepared its own Accounting Standards known as IND-AS which converges with IFRS. It means it is much similar to IFRS but with some modification in order to fulfill the requirements of Indian Laws. The basic purpose of this paper is to understand new IND-AS, difference with IFRS and what types of challenges India would face in adapting to IND-AS.

“Due to these and other complexities, surrounding the applicability of IAS 12, there is a need to examine in reality the requirements of the principle is hard to apply in financial accounting and reporting” (Gupta, 2005). First, there is a need to examine significant improvements that can be incorporated to allow flexibility in application due to incompatibility with the various jurisdictions. To understand issues surrounding IAS 12, there is a need to understand problems cited as a limitation to its application. It is important to note that users and preparers believe that the requirements in IAS12 are unsatisfactory in certain aspects. In addition, users of financial reports do not find information courtesy of IAS 12 useful. In fact, complexity of taxes within corporations makes it quite difficult to assess its impact and prescribes suitable management strategies. As a result, clear and transparent information that is not adequately provided by IAS 12 prepared financial statements. “The standard seems to concentrate on extensive

Inventories constitute a major portion of current assets of an entity. A primary issue in accounting for inventories is the amount of cost to be recognized as an asset and carried forward until the related revenues are recognized.

Some of the main provisions of ASU 2011-15 are that “An entity should measure inventory … at the lower of cost and net realizable value,” and “Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method”

The importance of inventory has also pointed out by Herrick (1950) who claimed that it is an important factor in the determination of net income, and the amount established by the inventory is conducted forward against the

Accounting standards has been around for thousands and thousands of years. Statements and loss and statements of balance emerged in about 1600. The reason behind the financial statements was to obtain information regarding capital. In the nineteenth century, it became necessary to develop accounting records and reports that reflected capital employed in various ways. When the industrial revolution emerged in the United States it brought a need for more standard accounting principles. In 1934, Securities and Exchange Commission was created to prescribe accounting principles and reporting practices. In 1936 AICPA American Institute of Certified Public Accountants was created to have a large influence on the development of accounting theory. In 1973 FASB Financial Accounting Standard Board was created to show how accounting principal should be established and issued accounting standards. FASB mission is to establish and improve accounting and reporting standards for the guidance and education of the public.

According to the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 230 (ASC 230), cash flows are classified in the Statement of Cash Flows (SCF) as cash flows from operating, investing, and financing activities. ASC 230 replaced FASB Statement No 95 (SFAS-95). This paper will discuss certain problems in SFAS-95 that continue to exist. Certain related cash flows are classified differently because of inconsistencies and ambiguities in classification. Further, the indirect method is widely executed while the direct method discloses more cash flow information. This paper alerts users to make more informed assessments of cash flow information with regards to the subtotals from operating, investing, and financing activities. This paper also suggests the FASB require the direct method for reporting purposes to improve investors’ and creditors’ judgment accuracy. At the same time, this paper provides users ratios to assess the quality of income to make more informed decisions.

and disclosure of accounting transactions and events. Every country has its own standards. Accounting Standards in India are issued by the Institute of Chartered Accountants of India (ICAI).

• Fixed asset is an asset held for producing or providing goods and/or services and is not held for sale in the normal course of the business.