Arka Bose (None) (313 Points)
02 August 2012
In AS 28,I have come across a phrase where it states "Recognise liability if warranted by another standard"
What does it necessarily means? Can anyone put me with an example?
Thanks in advance
CA K. PAPNEJA SFM and FR FAC'LTY
(NA)
(133 Points)
Replied 06 August 2012
Refer AS-30: appendix A : point A-85: it reads If value of any Financial istrument which was recognised as asset falls below '0' a financial liability is recognised . Here it refers to loss on derivatives - Call /Put etc. as well as options written for physical delivery on which there may be lossesat teh date of B/S.
Secondly, under AS : 23 : While preparing Consoldated B/S Investment in Associaets are initially measured at cost and then profits from from Associaes area dded in it and losses are subtracted, and if at any stage losses ecxcced the original cost value becomes negative , but is taken at '0' NIL.
PARA 18 AS-23 IF under the equity method, an investor’s share of losses of an associate equals or exceeds the carrying amount of the investment, the investor ordinarily discontinues recognizing its share of further losses and the investment is reported at nil value. Additional losses are provided for to the extent that the investor has incurred oligastions or made payments on behalf of the associate to satisfy obligations of the associate that the investor has guaranteed or to which the investor is otherwise committed.
here value of invesment will become negative and a liability will have to be recognised
It was tough one for u as student. But u folks are always welcome to put ur queries on SFM/FIN.REP./AS will try my best to spare time and answer.
CA K. PAPNEJA
SFM / FIN.REP./AS FACULTY
CA K. PAPNEJA SFM and FR FAC'LTY
(NA)
(133 Points)
Replied 08 August 2012
For the benefit of readers who cud not link the query, it refers to Para 92 of AS-28, Impairment of Assets which reads as below:
Para-92 "After the requirements in paragraphs 87 and 88 have been applied, (and value of all component assets of CGU becomes Zero) a liability should be recognised for any remaining amount of an impairment loss for a cash-generating unit if another Accounting Standard requires that".
Further for the benefit of students I wud like to add that such queries are very advanced and can be answered only when u have all the Paras of all AS on ur tip at the same time, therefore, you u should better seek help of experts on such issues.
CA K.PAPNEJA (SFM & FINANCIAL REPORTING FACULTY)
Dear CA K Papneja Sir
Excellent Reply, I have been always of the view that the provisions contained in the Accounting Standards should be studied in the same fashion in which we will study Income Tax Act i.e. we should study the entire text of the standard Para by Para and understand it with the related EAC Opinions and illustrations given in the explanatory material, and wherever possible we should link it with the related paras of other standards. This is how we study Income Tax Act or any other law for consideration by linking sections and interpreting the issues. And the same is required for AS also as ICAI requires you to possess expert knowledge at final level.
This was my view for longtime and I am happy that you have analysed the standards so much and interpreted it well. Great Sir. You inspired my thoughts.
Arka Bose
(None)
(313 Points)
Replied 30 August 2012
Thank you very much,yes it was a bit tough but now,I do have some picture.
You have linked my query wonderfully.
Thank you very much sir.
Arka Bose
(None)
(313 Points)
Replied 30 August 2012
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