I have posted a file into the Share File Section for your ready reference containing comparison between Indian GAAP, US GAAP and International Accounting Standard.
I have posted a file into the Share File Section for your ready reference containing comparison between Indian GAAP, US GAAP and International Accounting Standard.
08 December 2007
FOR THE GENERAL BENEFIT OF OUR MEMBERS , A FEW AND MAIN DIFFERENCES BETWEEN INDIAN GAAP AND US GAAP ARE STATED BELOW. PL. DO VISIT SRI VINEET GROVER'S SHARED FILE ON THE SUBJECT.I THANK HIM FOR HIS HELP TO OUR FORUM MEMBERS.
INDIA: FINANCIAL STATEMENTS Prepared in accordance with the presentation requirements of Schedule VI to the companies Act , 1956
USA: FINANCIAL STATEMENTS Not required to be prepared under any specific format as long as they complyWith the disclosure requirements of US Accounting Standards.
INDIA: EARNINGS PER SHARE (EPS) DATA No disclosures requirements except those under Schedule VI ,Part IV to the companies act ,1956 USA: EARNINGS PER SHARE (EPS) DATA Disclosure is mandatory. This includes the EPS calculated using the weighted average shares outstanding (simple * complex capital structures method & the fully diluted EPS (considering the effect of warrants or options outstanding)
INDIA FIXED ASSETS & DEPRICIATION Revaluation of assets permitted. Depreciation is based (usually) on rates set out in Schedule XIV to the Companies Act, 1956
USA: FIXED ASSETS & DEPRICIATION Revaluation of assets not permitted. Depreciation is over the useful economic lives of assets. Depreciation & profit/loss on sale is based on historical cost.
INDIA: INVESTMENT IN OWN SHARES Expressly prohibited USA: INVESTMENT ON OWN SHARESPermitted, & is shown as a reduction from shareholder’s equity
INDIA:
R & D Costs can be capitalized subject to the conditions of AS-8, Research & Development, issued by the Institute of Chartered Accountants of India
USA: R & DCosts are expenses as incurred
INDIA: RELATED PARTY TRANSACTIONS No specific disclosures required. Auditors have a duty to report certain transactions entered into by related parties as defined under the Companies Act, 1956.
USA: RELATED PARTY TRANSACTIONSDisclosures are stringent and require descriptions of nature of relationships and control, transactions, amounts involved and amounts due.
INDIA: GOODWILL No standard except for brief references in AS-10, Fixed Assets, and AS-14, Accounting For Amalgamation. Goodwill arising from amalgamation can be written off over five years
USA: GOODWILLTreated as any other intangible asset, and is capitalized and amortized. The maximum carry forward period is 40 years
INDIA: PRE-OPERATIVE EXPENCESAllowed to be deferred and written off over a period of 3-5 years or 10 years
USA: PRE-OPERATIVE EXPENCESConcept does not exist
INDIA: ASSETS & LIABILITIES No mandatory disclosure of current and long-term components EXCEPT AS FIXED ASSETS AND CURRENT ASSETS--SECURED,UNSECURED LOANS AND CURRENT LIABILITIES
USA: ASSETS & LIABILITIES Mandatory disclosures about current and long-term components separately. Current component normally refers to one year of the period of operating cycle
INDIA: FOREIGN EXCHANGE TRANSACTIONS Exchange fluctuations on liabilities incurred for fixed assets can be capitalized
USA: FOREIGN EXCHANGE TRANSACTIONS Exchange gain/loss is taken to the income statement. the concept of capitalization of exchange fluctuations arising from foreign currency liabilities incurred for acquiring fixed assets does not exit
INDIA: SEGMENTAL REPORTING NOW INTRODUCED .othrerwise earlier Requirement exists for disclosure of quantitative particulars only as prescribed in Schedule VI to the Companies Act , 1956
USA: SEGMENTAL REPORTING Mandatory for SEC-registered companies to report revenues and net income by geographic regions and products/business lines; report sales to outstanding receivables from major unaffiliated customers; report identifiable assetsBy geographical regions and product/business-lines.
INDIA: IMPAIRMENT EVALUATION : NOW INTRODUCED EARLIER No standards.
USA: IMPAIRMENT EVALUATION Mandatory for all assets. Future undercounted cash flows from use & disposal of all the assets are first compared to its carrying value to determine the impairment situation. Impairment loss is then recognized on the basis of the fair value of the asset. Disclosure of the facts and circumstances that lad to impairment is mandatory.
INDIA: FAIR VALUE DISCLOSURES Schedule VI (Directors to state expressly if, in their opinion, the current assets are not expected to realized their cost if they are sold)
USA: FAIR VALUE DISCLOSURES Mandatory fair values are ascertained based on certain specific principles for items, such as loans, current assets, current liabilities, loans etc
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