Financial Reporting

Straight Line Method (SLM) and Written Down Value (WDV) methods are the most used methods for calculating depreciation. Although Companies Act doesn't require any specific method to be chosen, the income tax limits the choice for selecting options. SLM is allowed by the Companies Act, but the Income-tax Act requires calculation of depreciation by WDV Method only. However, certain exceptions are there where even income-tax act allows calculation of depreciation by SLM. But, that's part of another discussion. Schedule II of the Companies Act, 2013 contains the useful guide for calculation of depreciation. Although it doesn't contain the rates to

Accounting Standards describe the accounting principles. They provide for the valuation techniques and the methods of applying the accounting principles. Accounting Standards help in establishing comparability and reliability features for financial statements. This helps financial statements to represent the true and fair view. Benefits of Accounting Standards It reduces confusing variations in the accounting treatments used to prepare financial statements, to a reasonable extent. It allows for disclosure of certain information beyond what are statutorily required. By bringing in comparability features, it helps in assisting comparison of financial statements of different enterprises. It also helps in comparing financial statements of

Accounting is a language in itself. It communicates the financial statements of an enterprise. It speaks its financial status. But, as common with any other language, this language also suffers from ambiguity. Words and figures can be interpreted differently from what the author of such report intends to express. It is not different to errors that use of words such as "unreported loan" instead of "cash theft" can mean. Any financial statement is simply a report authored by an accountant. And as each accountant is a distinct person, so does his report. Accounting is full of estimates. And each estimate

Institute of Chartered Accountants of India, which is the apex body of accountants in India has issued a framework on manner of presentation and preparation of Financial Statements in India and is called as . This framework sets out the concepts that underlie the preparation and presentation of financial statements for external users. However, this Framework itself isn't an Accounting Standard and hence does not define standards for any particular measurement or disclosure issue. Hence, it also cannot override any specific Accounting Standard. Wherever, there is any conflict between the Accounting Standard and this Framework, Accounting Standard shall prevail. However,