AS 22

Accounting Standard 22 - Accounting for Tax of Income Accounting income is different from taxable income because way of calculating taxable income under income tax law does not include many expenses and income items for preparing statement of profit and loss . So, ICAI has made this standard - AS 22 with the name of Accounting for tax of Income . In this accounting standard 22 , accountant is also responsible to follow the rules of Income tax law for preparing statement of profit and loss . After this he will calculate income tax according to the corporate tax rates . In corporation , income tax is loss of business and it must be debited in statement of profit and loss . Taxable income must be calculated under the provisions of income tax law 1961 . 1. Some expenses which are not deducted for the purpose of calculating income tax will not be debited in profit and loss account . 2. Depreciation must be calculated on the basis of written down method of depreciation. If company calculates it on straight line method , then company accountant will calculate deferred tax and it will be addition charge on company . 3. There are also many incomes which will not show in statement of profit and loss for calculating taxable income . These income will not shown in profit and loss statement for calculating income tax purposes .

AS 21

Accounting standard 21 - Simplified - Consolidated financial statement – AS 21 Accounting standard 21 explains the way of making consolidated financial statement properly. Consolidated financial statement means combined profit and loss account and balance sheet of holding company and subsidiary company. AS 21 provides following steps for making consolidated balance sheet . 1. Investment in subsidiary company by holding company will not be shown in consolidated balance sheet’s asset side . 2. Share capital of subsidiary company in holding company will not be shown in consolidated balance sheet of holding company. 3. Calculation of minority interest Minority interest means all shareholders who invest in subsidiary company but they are not shareholder of holding company. In other words any stock in subsidiary company which is not owned by parent company (holding company) so, when holding company will make his consolidated balance sheet minority interest will be shown in liability side.

AS 20

Earning Per share AS 20 Earning per share (EPS)is a financial ratio that gives the information regarding earning available to each equiy share. It is very important financial ratio for assessing the state of market price of share. This accounting standard gives computational methodology for the determination and presentation of earning per share, which will improve the comparison of EPS. The statement is applicable to the enterprise whose equity shares or potential equity shares are listed in stock exchange.

AS 19

Accounting standard 19 - Leases and its Accounting Treatment ( AS 19 ) Accounting standard 19 states that transaction of leases should be recorded in the books of account and also should show in financial statement with proper way . If we see dictionary meaning of lease , then we find that it is simple contract in which one person allows another person to use of land and other person gives rent for using land . But AS 19 defines leases in wide sense . According to accounting standard 19 , “ Leases include all agreement for (I) use of natural resources like oil , gas , timber , metal , mineral rights and land ( II ) Licensing agreement for producing film , plays and video recording . It also divides leases into two major categories ( I ) financial lease It is the agreement to purchase any fixed asset on installment, so financial lease must be shown asset and liability equal to present value of minimum lease payment from standpoint of the lease. (II ) Operating lease It is just contract only use of fixed asset and payment will be shown as expenses in the books of lessor (Customer )

AS 18

Accounting Standard in India 18 – Simple explanation (AS 18 ) Related party disclosures Accounting standard 18 states that all related parties who are connected to your business with different financial transaction. Then it is the duty of accountant to disclose these financial transactions for public by making related parties report. I can explain it with simple example: suppose one company contracted with other company for control on the new investing business and they agreed to invest Rs. 1 crore as joint venture. Now it is the duty of board of directors to disclose it in their financial statement by making related parties reporting. The following matter must be written in the report :- I ) Nature of relationship II ) Current and future agreement with related parties relating to providing of goods , services or loan or investment .

AS 17

Accounting Standards in India – Simple Explanation – Segment reporting (AS 17) Indian accounting standards in India is very useful for Indian Accountants , chartered accountants , commerce professors , company secretaries and cost and work accountants , So , it is included in the syllabus of B.Com , ICAI , C.S. , M.Com. , MBA, and UGC tests. Deep understanding of accounting standards can help you taking good decisions in the field of accounting and finance. But problem is that way of explaining accounting standards in text books are so boring and some tough explanation which is not needed. I am trying to explain it in very interesting and simple way, so that main aim of making accounting standard will be fulfill because without understanding, there will no benefit to write it in detail. After getting some queries from students in which they have liked my way to explain Indian accounting standards, I have already written 1 to 16 standards, after increasing the curiosity to know rest accounting standards from 17 to 32 in accounting education, I am starting again to write simple explanation of accounting standards in India and today, you can study Segment reporting today. It is seventeenth accounting standard. Segment reporting is very important accounting standard which is made by ICAI. In this standard ICAI has made simple rules relating to showing financial statement of each segment. First of all you should understand segment. Segment is smallest part of cost center in which attribute the cost of product. Moreover we can define that when we made any product, it is processed from different parts so every division is also segment or when we divide whole enterprise geographically then every part of enterprise is also called segment. Now you can understand segment reporting. It is the duty of board of director to disclose segment revenue and financial report because interested parties like customers and investors can get more idea about the performance of company in each division or segment of whole business. It may possible that whole performance of company is good but most divisions or segment are performing bad , then customers and investors can make better planning for taking decisions .

AS 16

Simple definition of borrowing cost - Read and learn Accounting standard 16 explains deeply the definitions and accounting treatment of borrowing cost . Borrowing cost includes 1. Interest on loan taken by company 2. All financial charges for taking loan. 3. Bank charges for taken loan are also included in it. And these are the expenses for employer and will go to profit and loss account’s debit side. Cost for acquiring assets is capital cost and will be included in cost of fixed asset.