In: Accounting
1. What are the special additional disclosures for Full-Cost companies? Provide details.
2. Is there any difference for GAAP reporting vs IFRS? Provide details.
Answer: 1GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET AND STATEMENT OF PROFIT AND LOSS OF A COMPANY GENERAL INSTRUCTIONS
1. Where compliance with the requirements of the Act including Accounting Standards
as applicable to the companies require any change in treatment or disclosure including
addition, amendment, substitution or deletion in the head or sub-head or any changes,
inter se, in the financial statements or statements forming part thereof, the same shall be
made and the requirements of this Schedule shall stand modified accordingly.
2. The disclosure requirements specified in this Schedule are in addition to and not in
substitution of the disclosure requirements specified in the Accounting Standards prescribed
under the Companies Act, 2013. Additional disclosures specified in the Accounting Standards
shall be made in the notes to accounts or by way of additional statement unless required to
be disclosed on the face of the Financial Statements. Similarly, all other disclosures as
required by the Companies Act shall be made in the notes to accounts in addition to the
requirements set out in this Schedule.
3. (i) Notes to accounts shall contain information in addition to that presented in the
Financial Statements and shall provide where required (a) narrative descriptions or
disaggregation of items recognized in those statements; and (b) information about items
that do not qualify for recognition in those statements.
(ii) Each item on the face of the Balance Sheet and Statement of Profit and Loss shall
be cross-referenced to any related information in the notes to accounts. In preparing the
Financial Statements including the notes to accounts, a balance shall be maintained between
providing excessive detail that may not assist users of financial statements and not providing
important information as a result of too much aggregation.
4. (i) Depending upon the turnover of the company, the figures appearing in the
Financial Statements may be rounded off as given below:—
Turnover |
Rounding off |
(a) less than one hundred crore rupees |
To the nearest hundreds, thousands, lakhs or millions, or decimals thereof. |
(b) one hundred crore rupees or more |
To the nearest lakhs, millions or crores, or decimals thereof. |
(ii) Once a unit of measurement is used, it shall be used uniformly in the Financial
Statements.
5. Except in the case of the first Financial Statements laid before the Company (after its
incorporation) the corresponding amounts (comparatives) for the immediately preceding
reporting period for all items shown in the Financial Statements including notes shall also be
given.
6. For the purpose of this Schedule, the terms used herein shall be as per the applicable
Accounting Standards.
Note:—This part of Schedule sets out the minimum requirements for disclosure on the face
of the Balance Sheet, and the Statement of Profit and Loss (hereinafter referred to as
“Financial Statements” for the purpose of this Schedule) and Notes. Line items,
sub-line items and sub-totals shall be presented as an addition or substitution on
the face of the Financial Statements when such presentation is relevant to an
understanding of the company’s financial position or performance or to cater to
industry/sector-specific disclosure requirements or when required for compliance
with the amendments to the Companies Act or under the Accounting Standards.
Answer 2:The primary difference between the two systems is that GAAP is rules-based and IFRS is principles-based. This disconnect manifests itself in specific details and interpretations. Basically, IFRS guidelines provide much less overall detail than GAAP. Consequently, the theoretical framework and principles of the IFRS leave more room for interpretation and may often require lengthy disclosures on financial statements. On the other hand, the consistent and intuitive principles of IFRS are more logically sound and may possibly better represent the economics of business transactions.
Perhaps the most notable specific difference between GAAP and IFRS involves their treatment of inventory. IFRS rules ban the use of last-in, first-out (LIFO) inventory accounting methods. GAAP rules allow for LIFO. Both systems allow for the first-in, first-out method (FIFO) and the weighted average-cost method. GAAP does not allow for inventory reversals, while IFRS permits them under certain conditions.
Another key difference is that GAAP requires financial statements to include a statement of comprehensive income. IFRS does not consider comprehensive income to be a major element of performance and therefore does not require it. This difference leaves some room for mixing owner and non-owner activity within IFRS-based financial statements.
KEY TAKEAWAYS
GAAP is a common set of accepted accounting principles, standards, and procedures that companies and their accountants must follow when they compile their financial statements.
IFRS is a set of international accounting standards, which state how particular types of transactions and other events should be reported in financial statements.
Some accountants consider methodology to be the primary difference between the two systems; GAAP is rules-based and IFRS is principles-based.