7 Questions
What is considered the transaction date for a liability?
The date on which the liability is recognised in the books of accounts
How is a dispute defined under the Insolvency and Bankruptcy Code, 2016?
A disagreement between two parties demonstrated with positive evidence
How should loans payable on demand be treated?
As part of current borrowings
What should be disclosed in relation to current borrowings on the balance sheet?
Period and the amount of defaults existing at the date of the balance sheet
Why do companies provide the amount of non-current as well as current portion for each category of non-current borrowings?
To provide relevant information to financial statement users
What should be included in current borrowings?
All loans payable within 12 months from the date of the loan
Which term is referred to in relation to an agreement between two parties supported by evidence?
"Dispute"
Study Notes
Calculation of Net Worth
- Equity Share Capital, Securities Premium, General Reserve, Profit and Loss A/c, and Miscellaneous Expenditure not written off are considered in the calculation of Net Worth as per Section 2(57) of The Companies Act, 2013
- Revaluation Reserve is excluded from the calculation of Net Worth as per the definition in Section 2(57) of The Companies Act, 2013
- A company with a Net Worth of `500 Crores or more is considered a Phase I company and would be covered under Ind AS for accounting periods beginning on or after 1st April 2016
Application of Ind AS
- Ind AS would be applicable to a listed company with a Net Worth of `500 Crores or more for accounting periods beginning on or after 1st April 2016
- Ind AS would also be applicable to an unlisted company with a Net Worth of `500 Crores or more for accounting periods beginning on or after 1st April 2016
Challenges of National Accounting Standards
- National accounting standards led to different bases for amounts appearing in financial statements
- Small differences in requirements could have a major impact on a company's reported financial performance and position
- Emerging need to move towards comparable global standards and limitations of AS led to the need to revamp current AS
Transition from AS to Ind AS
- India committed to converge Indian accounting standards with IFRS at the G20 summit in 2009
- MCA issued a roadmap for implementation of Ind AS converged with IFRS beginning April 2011, but it was suspended due to unresolved tax and other issues
Equity Share Capital
- The accounting definition of 'Equity' is principle-based, and any contract that evidences residual interest in an entity's net assets is termed as 'Equity'
- Instruments that meet the definition of 'Equity' as per Ind AS 32, including convertible preference shares and convertible debentures, should be considered as having the nature of 'Equity'
Borrowings
- Term loans have a fixed or pre-determined maturity period or a repayment schedule
- Terms of repayment of term loans and other loans shall be disclosed
- The term 'other loans' includes all categories listed under the heading 'Non-Current borrowings' as per Ind AS Schedule III
Learn how to calculate net worth according to Indian Accounting Standards using given particulars. Understand the exclusion of certain reserves in the calculation. Practice your skills with this solution.
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