Assignment Sample on Case Study on Accounting Principles

Introduction –

The country for this assessment is India. India is a country where there is a separate body for holding the accounting principles and it has adopted both IFRS and Indian GAAP. It adopted IFRS in financial year 2011-12. India adopted GAAP in 1977.

IFRS –

India adopted IFRS since the financial year 1st April 2011. Indian Accounting standards is a converged form of IFRS. These guidelines are issued by Institute of Chartered Accountant of India which ICAI.

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Objective of IFRS –

  • Objective of IFRS is to create an infrastructure for the financial statements which will be followed Globally.
  • Objectives of IFRS is to maintain business with the beneficiaries.
  • Objective of IFRS is to create a common rule for creating the financial statements of all the companies. This will help to get a fair presentation of financial statement and help us to compare the financial statements of different companies.

GAAP –

These are the rules of basic accounting principles which provide a more detailed information on how the financial statements are to be made and how the entries are going to be recorded in the financial statements. In India, the guideline of GAAP is associated by the Institute of Chartered Accountant of India which is ICAI. (Tawiah, V. and Benjamin, M., 2015.)

Difference between IFRS and Indian GAAP –

IFRS GAAP
IFRS are the international financial guidelines used to make the financial statements by the accountants. (Van Tendeloo, B. and Vanstraelen, A., 2005.) GAAP are the basic principles issued by Institute of Chartered Accountant of India which provides information on how the financial statements are to be made. (Van der Meulen, S., Gaeremynck, A. and Willekens, M., 2007.)
Indian Accounting Standards is a converged form of IFRS. GAAP are the guidelines issued by the accounting body of India.
This method is more principle based. This method is a rule based method.

 THE CHOSEN COMPANY –

The company I have chosen is RELIANCE INDUSTRIES.

ABOUT THE COMPANY –

RELIANCE INDUSTRIES is one the biggest Indian Company. Its CEO “Mukesh Ambani” is the 8th richest person around the globe. The company has total 158 subsidiaries from which Reliance Jio is the biggest one currently. Reliance Industries have invaded many sectors in India and is leading in these sectors. The markets in which Reliance Industries are dealing with are Natural gas, Petroleum, Telecommunications, Media, Entertainment, Music, Software, Television, textiles, and Retail.

FINANCIAL STATEMENT OF THE COMPANY USING GAAP AND IFRS-

BALANCE SHEET OF RELIANCE INDUSTRIES USING GAAP –

In the books of Reliance Industries
Balance Sheet as at 31st March 2020
PARTICULARS Note No Amount (In crores) Amount (In crores)
I) ASSETS
A) NON CURRENT ASSETS
FIXED ASSETS
Tangible Assets 91477
Intangible Assets 39933
Capital Work-in-progress 97296
Intangible Assets Under Development 9583
NON-CURRENT INVESTMENTS 112630
LONG-TERM LOANS AND ADVANCES 16237
TOTAL NON-CURRENT ASSETS 367156
B) CURRENT ASSETS
CURRENT INVESTMENTS 39429
INVENTORIES 28034
TRADE RECEIVABLES 3495
CASH AND CASH EQUIVALENT 6892
SHORT TERM LOANS AND ADVANCES 11938
OTHER CURRENT ASSETS 776
TOTAL CURRENT ASSETS 90564
TOTAL ASSETS 457720
II) EQUITIES AND LIABILITIES
A) SHAREHOLDERS FUND
SHARE CAPITAL 3240
RESERVE AND SURPLUS 236936
TOTAL SHAREHOLDERS FUND 240176
B) SHARE APPLICATION MONEY PENDING ALLOTMENT 8
C) NON-CURRENT LIABILITIES
LONG TERM BORROWINGS 77866
DEFERRED TAX LIABILITIES 13159
LONG TERM PROVISIONS 1489
TOTAL NON-CURRENT LIABILITIES 92514
D) CURRENT LIABILITIES
SHORT TERM BORROWINGS 14490
TRADE PAYABLES
MICRO AND SMALL MEDIUM EXPENSES 223
OTHERS 54298
OTHER CURRENT LIABILITIES 54841
SHORT TERM PROVISION 1170
TOTAL CURRENT LIABILITIES 125022
TOTAL EQUITIES AND LIABILITIES 457720

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BALANCE SHEET OF RELIANCE INDUSTRIES USING IFRS –

In the books of Reliance Industries
Balance Sheet as at 31st March 2020
PARTICULARS Note No Amount (In crores) Amount (In crores)
I) ASSETS
A) NON CURRENT ASSETS
FIXED ASSETS
Tangible Assets 93790
Intangible Assets 40943
Capital Work-in-progress 99756
Intangible Assets Under Development 9825
NON-CURRENT INVESTMENTS 115478
LONG-TERM LOANS AND ADVANCES 16647
TOTAL NON-CURRENT ASSETS 376439
B) CURRENT ASSETS
CURRENT INVESTMENTS 40426
INVENTORIES 28743
TRADE RECEIVABLES 3583
CASH AND CASH EQUIVALENT 7066
SHORT TERM LOANS AND ADVANCES 12240
OTHER CURRENT ASSETS 767
TOTAL CURRENT ASSETS 92825
TOTAL ASSETS 469264
II) EQUITIES AND LIABILITIES
A) SHAREHOLDERS FUND
SHARE CAPITAL 3321
RESERVE AND SURPLUS 242911
TOTAL SHAREHOLDERS FUND 246232
B) SHARE APPLICATION MONEY PENDING ALLOTMENT 8
C) NON-CURRENT LIABILITIES
LONG TERM BORROWINGS 79830
DEFERRED TAX LIABILITIES 13491
LONG TERM PROVISIONS 1527
TOTAL NON-CURRENT LIABILITIES 94848
D) CURRENT LIABILITIES
SHORT TERM BORROWINGS 14855
TRADE PAYABLES
MICRO AND SMALL MEDIUM EXPENSES 229
OTHERS 55667
OTHER CURRENT LIABILITIES 56225
SHORT TERM PROVISION 1200
TOTAL CURRENT LIABILITIES 128176
TOTAL EQUITIES AND LIABILITIES 469264

With the inclusion of IFRS there were severe changes in the amount of approximately all the items presented in the balance sheet. For a clear guideline for how much amount each item is changed, the following is the balance sheet

In the books of Reliance Industries
Balance Sheet as at 31st March 2020
PARTICULARS Note No Amount (In crores) Amount (In crores)
I) ASSETS
A) NON CURRENT ASSETS
FIXED ASSETS
Tangible Assets 2313
Intangible Assets 1010
Capital Work-in-progress 2460
Intangible Assets Under Development 242
NON-CURRENT INVESTMENTS 2848
LONG-TERM LOANS AND ADVANCES 410
TOTAL NON-CURRENT ASSETS 9283
B) CURRENT ASSETS
CURRENT INVESTMENTS 997
INVENTORIES 709
TRADE RECEIVABLES 88
CASH AND CASH EQUIVALENT 174
SHORT TERM LOANS AND ADVANCES 302
OTHER CURRENT ASSETS 9
TOTAL CURRENT ASSETS 2279
TOTAL ASSETS 11562
II) EQUITIES AND LIABILITIES
A) SHAREHOLDERS FUND
SHARE CAPITAL 81
RESERVE AND SURPLUS 5975
TOTAL SHAREHOLDERS FUND 6056
B) SHARE APPLICATION MONEY PENDING ALLOTMENT 0
C) NON-CURRENT LIABILITIES
LONG TERM BORROWINGS 1964
DEFERRED TAX LIABILITIES 332
LONG TERM PROVISIONS 38
TOTAL NON-CURRENT LIABILITIES 2334
D) CURRENT LIABILITIES
SHORT TERM BORROWINGS 383
TRADE PAYABLES
MICRO AND SMALL MEDIUM EXPENSES 6
OTHERS 1369
OTHER CURRENT LIABILITIES 1384
SHORT TERM PROVISION 30
TOTAL CURRENT LIABILITIES 3172
TOTAL EQUITIES AND LIABILITIES 11562

INCOME STATEMENT OF RELIANCE INDUSTRIES USING GAAP –

In the books of Reliance Industries Limited
Income Statement as on 31st March 2020
PARTICULARS NOTE NO AMOUNT AMOUNT
I) REVENUE 154960
II) OTHER REVENUE –
III) TOTAL REVENUE 154960
IV)COST OF REVENUE 1068580
V) GROSS PROFIT 480380
VI) TOTAL OPERATING EXPENSE 1377210
Selling/General/Administration Expenses 39760
Research and Development expenses –
Depreciation / Amortization 69730
Interest Expense –
Unusual Expense -7970
Other Operating Expenses 207110
VI) OPERATING INCOME 171750
VII) INTEREST INCOME -40300
VIII) GAIN ON SALE OF ASSETS –
IX) OTHER, NET 32370
X) NET INCOME BEFORE TAXES 163820
XI) PROVISION OF TAXES 13870
XI) NET INCOME AFTER TAXES 149950

INCOME STATEMENT OF “RELIANCE INDUSTRIES” USING IFRS –

In the books of Reliance Industries Limited
Income Statement as on 31st March 2020
PARTICULARS NOTE NO AMOUNT (In crores) AMOUNT (In crores)
I) REVENUE FROM OPERATIONS
SALE OF PRODUCTS 251000
ADD: OTHER INCOME FROM SERVICES 141
LESS: EXCISE DUTY 18083
NET REVENUE FROM OPERATIONS 233158
II) OTHER INCOME 7852
III) TOTAL REVENUE 240740
IV) EXPENSES
COST OF MATERIAL CONSUMED 152769
PURCHASE OF STOCK-IN-TRADE 4241
CHANGES IN INVENTORIES OF FINISHED GOODS, STOCK – IN – TRADE 4171
EMPLOYEE BENEFIT EXPENSES 4260
FINANCE COSTS 2454
DEPRECIATION / AMORTIZATION 9566
OTHER EXPENSES 27578
TOTAL EXPENSES 205039
V) PROFIT BEFORE TAX 35701
VI) LESS: TAXES
CURENT TAXES 7802
DEFERRED TAXES 482
VII) PROFIT AFTER TAX 27417
   

Translation Table for IFRS statement of financial position on 31st December 2020

X GAAP LEASES TRAINING PROVISION DEFERRED TAX IFRS
Fixed Assets
Lease Assets 2280 2280
Intangible Assets 5000 -5000 0
Prepaid Expenses 8000 -8000 0
Deferred Tax assets 88 88
Current Assets 0
Cash 336372 336372
Total Assets 349372 338740
0
Equity 0
Share Capital 200000 200000
Retained Earnings 35400 3586 -3000 2000 -2400 35586
Profit 22800 2100 2000 -2000 1500 26400
Non-Current Liabilities 0
Lease Liability 1198 1198
Deferred Tax Liabilities 0
Current Liabilities 0
Provision 0
Current tax liabilities 74200 74200
lease Liability 1356 1356
Total Equities and Liabilities 332400 338740

Translation Table for Income statement –

X GAAP LEASES TRAINING PROVISION DEFERRED TAX IFRS
Revenue 50000 50000
Administration -2000 5000 2000 5000
Distribution -2000 -2000
Other Operating expenses -5000 -5000
Interest expenses -597 -597
Tax expenses -10200 -1200 -11400
Profit 37800 36003

Indian Accounting Standards 1 –

Indian Accounting Standards are the Standards issued by the accounting body in India which is Institute of Chartered Accountant of India (ICAI). Indian Accounting Standards is all about how to present the financial statements to the shareholders, investor, board of directors and all other people contributing towards the operation of the company. (Perumpral, S.E., Evans, M., Agarwal, S. and Amenkhienan, F., 2009. ) Indian Accounting Standard 1 sets out the guidelines according to which structure of all the four financial Statements which is Balance sheet, Income statement, Cash flow statement and Ratio Analysis are prepared. These statements are prepared annually by all the companies with the notes to their accounts. This rule is not only followed by the Indian companies but by all the companies around the Globe. If all the companies balance sheet are set out in a particular format, the difference between the companies and its competitors can be made easily. According to Indian Accounting Standards, the structure of the financial statements consists of –

  • Firstly, the heading which should be

For the Balance Sheet –

In the Books of XYZ Ltd

Balance Sheet as at 31st March for the period ending

For Income Statement –

In the Books of XYZ Ltd

Income Statement for the year ended 31st March

For Cash Flow Statement –

In the books of XYZ Ltd

Cash Flow Statement for the year ended 31st March

For Ratio Analysis –

In the books of XYZ Ltd

Ratio Analysis for the year ended 31st March

  • Indian Accounting standards 1 allows the company to show the combination if all the statements and present only one statement or it can show separate financial statements in the given Structure.

All the explanations regarding how the numbers have been calculated and what all items are included under the headings which is Assets and Liabilities for the Balance Sheet and Revenue and expenditure for the Income Statement. If the company is making Balance sheet and Income statement according to IFRS, it must mention it in the footnotes that the calculations are on the basis of IFRS and not according to Indian Accounting Standards. The company cannot mention that their balance sheet and Income statements are made according to IFRS until it meets the requirements of Indian Accounting Standards I.

Indian Accounting standards generates a very simple and clear purpose. The purpose of this standard is to provide investors a clear picture of how the company is performing out in the real world and to tell the investors about the financial position of the company and how does it perform among its competitors. Each and every item which should come under the balance sheet are categorized in Assets and Liabilities and every item coming under income statement are categorized in Revenue and Expenditure A/c. Income Statement gives a clear understanding of the net profit after deducting the taxes paid to the government. (Almaqtari, F.A., Hashed, A.A., Shamim, M. and Al-ahdal, W.M., 2021.)

Financial Statements holds a lot of features if it is prepared with the structure of IAS 1. (Haribhakti, S., 2008.) The following are the features of IAS 1 –

  • Balance sheet and Income statement is prepared on accrual basis
  • Prepared on going concern basis
  • It is compulsory to be prepared annually
  • Comparison can be done within the organization means that the current year financial statements can be compared with the previous year financial statements of the same company.
  • A particular format is allocated to every financial statements.
  • It is time bounded.

PRESENTATION OF FINANCIAL STATEMENTS ACCORDING TO IAS 1 –

The following will be the format of how the financial Statements are to be prepared according to IAS 1 –

BALANCE SHEET –

Balance Sheet as at 31st March for the period
Particulars Note No. Amount
I) ASSETS
A) NON-CURRENT ASSETS
        Fixed Assets 10
              Tangible Assets –
              Intangible Assets –
              Capital Work in progress –
              Intangible assets under development –
         Non-current Investments 11 –
         Deferred tax assets 12 –
         Long term loans and advances 13 –
         Other non-current assets –
B) CURRENT ASSETS
         Current Investments 14 –
         Inventories 15 –
        Trade receivables 16 –
        Cash and Cash equivalent 17 –
        Short term loans and advances 18 –
        Other current assets 19 –
TOTAL ASSETS –
II) EQUITIES AND LIABILITIES
A) SHAREHOLDERS FUNDS
          Share Capital 1 –
          Reserves and Surplus 2 –
          Money received against share warrants –
B) SHARE APPLICATION MONEY PENDING ALLOTMENT –
C) NON-CURRENT LIABILITIES
          Long term borrowings 3 –
          Deferred tax liabilities 4 –
          Other long term liabilities –
          Long term provision 5 –
D) CURRENT LIABILITIES
           Short term borrowings 6 –
           Trade payables 7 –
           other current liabilities 8 –
           Short term provision 9 –
TOTAL LIABILITIES –

Working note also is to be prepared for the balance sheet. It also comprises of a format which is –

Working Note:
Note No Particulars Amount
1 Share Capital:
Authorized Capital
X Shares @ x each
Issued Capital
X shares @ x each
Subscribed capital
X shares @ x each
Subscribed but not fully paid –
X shares @ x each
Subscribed but fully paid –
X shares @ x each
2 Reserves and Surplus –
Retained earnings
General reserve
Securities premium reserve
3 Long term Borrowings – –
Debentures
Premium on redemption of Debentures
Term loan from Bank
Public deposits
4 Deferred tax liabilities –
5 Long term provisions –
Provision for employee benefit
Provision for Provident Fund
Provision for Warranties
6 Short term borrowings –
Bank Overdraft
Cash Credit
7 Trade Payables –
Creditors
Bills Payable
8 Other current Liabilities –
Current maturities of long term debts
Interest accrued and due on borrowings
Interest accrued but not due on borrowings
Unpaid or Unclaimed dividends
Income received in advance
Outstanding expenses
Provident fund payable
9 Short term provision –
Provision for tax
Provision for doubtful debts
10 Fixed Assets –
Tangible Assets –
           Land and Building
          Plant and Machinery
          Furniture
          Livestock
          vehicles
          Office equipment’s
Intangible Assets –
         Goodwill
         Patents
        Computer Software
11 Non-current Investments –
Investment in equity shares
Investment in preference share
Investment in bonds
Investment in mutual funds
12 Deferred tax assets –
13 Long term loans and advances –
Security Deposits
14 Current Investments –
Short term investments
15 Inventories –
Raw materials
Work in progress
Finished goods
Loose tools
Goods in transit
16 Trade receivables –
Sundry debtors
Bills Receivable
17 Cash and Cash equivalent –
Cash
Bank
18 Short term loans and advances –
Advances recoverable in cash
19 Other current Assets –
Prepaid expenses
dividend receivable
accrued income
advance tax

INCOME STATEMENT –

Income Statement for the year ended 31st March
S.NO PARTICULARS Note No Figure for the current year Figure for the previous year
I) Revenue – –
II) Other Income – –
III) Total Revenue (I+II) – –
IV) Expenses
Cost of material consumed – –
Purchase of stock in trade – –
Changes in inventories – –
Employee benefit expenses – –
Finance Costs – –
Depreciation and Amortization – –
Other Expenses – –
Total Expenses – –
V) Profit before tax (III – IV) – –
VI) Less: Tax – –
VII) Profit after tax (V – VI) – –

The above format for Balance sheet and Income Statement is the way how the companies need to prepare their financial statements.

Comparison of financial statements –

IAS 1 also gives information for companies and investors, how to compare financial statements within the company means comparing the balance sheet for the current financial year with the previous financial year to find out that how much the company grew in one financial year. There are two tools used to compare the growth which is comparative and Common Size. Comparative statements are the statements when the financial statements of the company of two years are put side by side to facilitate comparison. Common Size financial Statements are those financial statements whose difference amounts of two years are converted into percentages to a common base.  In Income statement revenue from operations are taken as the base and in balance sheet the total of balance sheet is taken as the base. (Norton, C.L. and Smith, R.E., 1979.)

The Following are the formats for how the comparative financial Statements are prepared for a company –

BALANCE SHEET –

Comparative Balance Sheet as at 31st March for the period
Particulars Note No. Amount for current year (A) Amount for previous year (B) Absolute Change(A-B) % increase/decrease (((A-B)/B)*100)
I) ASSETS
A) NON-CURRENT ASSETS
        Fixed Assets
              Tangible Assets – – – –
              Intangible Assets – – – –
              Capital Work in progress – – – –
              Intangible assets under development – – – –
         Non-current Investments – – – –
         Deferred tax assets – – – –
         Long term loans and advances – – – –
         Other non-current assets – – – –
B) CURRENT ASSETS
         Current Investments – – – –
         Inventories – – – –
        Trade receivables – – – –
        Cash and Cash equivalent – – – –
        Short term loans and advances – – – –
        Other current assets – – – –
TOTAL ASSETS – – – –
II) EQUITIES AND LIABILITIES
A) SHAREHOLDERS FUNDS
          Share Capital – – – –
          Reserves and Surplus – – – –
          Money received against share warrants – – – –
B) SHARE APPLICATION MONEY PENDING ALLOTMENT – – – –
C) NON-CURRENT LIABILITIES
          Long term borrowings – – – –
          Deferred tax liabilities – – – –
          Other long term liabilities – – – –
          Long term provision – – – –
D) CURRENT LIABILITIES
           Short term borrowings – – – –
           Trade payables – – – –
           other current liabilities – – – –
           Short term provision – – – –
TOTAL LIABILITIES – – – –

COMPARITIVE INCOME STATEMENTS –

Comparative Income statement for the year ended 31st March
S.NO PARTICULARS Note No Figure for the current year (A) Figure for the previous year (B) Absolute Change (A-B) %Increase/decrease (((A-B)/B)*100)
I) Revenue – – – –
II) Other Income – – – –
III) Total Revenue (I+II) – – – –
IV) Expenses
Cost of material consumed – – – –
Purchase of stock in trade – – – –
Changes in inventories – – – –
Employee benefit expenses – – – –
Finance Costs – – – –
Depreciation and Amortization – – – –
Other Expenses – – – –
Total Expenses – – – –
V) Profit before tax (III – IV) – – – –
VI) Less: Tax – – – –
VII) Profit after tax (V – VI) – – – –

The following are the common size Financial statements which is the common size balance sheet and common size Income statement –

BALANCE SHEET –

Common Size Balance Sheet for the year ended 31st March (current year) and 31st March (previous year
Particulars Note No. Absolute Amounts Percentage of Balance Sheet Total
Amount for current year (A) Amount for previous year (B) % for current year % for previous year
I) ASSETS
A) NON-CURRENT ASSETS
        Fixed Assets
              Tangible Assets – – – –
              Intangible Assets – – – –
              Capital Work in progress – – – –
              Intangible assets under development – – – –
         Non-current Investments – – – –
         Deferred tax assets – – – –
         Long term loans and advances – – – –
         Other non-current assets – – – –
B) CURRENT ASSETS
         Current Investments – – – –
         Inventories – – – –
        Trade receivables – – – –
        Cash and Cash equivalent – – – –
        Short term loans and advances – – – –
        Other current assets – – – –
TOTAL ASSETS – – – –
II) EQUITIES AND LIABILITIES
A) SHAREHOLDERS FUNDS
          Share Capital – – – –
          Reserves and Surplus – – – –
          Money received against share warrants – – – –
B) SHARE APPLICATION MONEY PENDING ALLOTMENT – – – –
C) NON-CURRENT LIABILITIES
          Long term borrowings – – – –
          Deferred tax liabilities – – – –
          Other long term liabilities – – – –
          Long term provision – – – –
D) CURRENT LIABILITIES
           Short term borrowings – – – –
           Trade payables – – – –
           other current liabilities – – – –
           Short term provision – – – –
TOTAL LIABILITIES – – – –

In this the company is going to take balance sheet total as their base.

INCOME STATEMENT –

Common Size Income statement for the year ended 31st March (current year) and for 31st March (previous year)
S.NO PARTICULARS Note No Absolute Amounts % of Revenue from operations
Figure for the current year (A) Figure for the previous year (B) % of current year % of previous year
I) Revenue from operations – – – –
II) Other Income – – – –
III) Total Revenue (I+II) – – – –
IV) Expenses
Cost of material consumed – – – –
Purchase of stock in trade – – – –
Changes in inventories – – – –
Employee benefit expenses – – – –
Finance Costs – – – –
Depreciation and Amortization – – – –
Other Expenses – – – –
Total Expenses – – – –
V) Profit before tax (III – IV) – – – –
VI) Less: Tax – – – –
VII) Profit after tax (V – VI) – – – –

In this the company is going tot take Revenue from operations as a base to calculate percentages.

Impact faced By India after Adopting IFRS –

Advantages –

  • Transparency – Universal students make financial statements more transparent. As the financial statements are more transparent, the financial statements are easy to compare and are more reliable.
  • Comparison – As maximum countries have adopted IFRS, it can be stated as a universal Standard for all the developing nations which enhances the level of comparison of Financial statements of the company at a global level.
  • Quality – Easy comparability and transparency increases the quality of the financial statements automatically. This will help stakeholders and investors to rely on the company.(Kamath, R. and Desai, R., 2014.)

On the basis of 3 nature, India got an impact after adopting IFRS and had adjusted in 3 ways according to the nature –

  • High impact adjustments – There was a huge loss on monetary items especially loss of foreign currency on a large scale.  Investments calculated on a fair value.
  • Medium Impact Adjustments – By adopting IFRS in India, there was an impact on deferred tax liabilities, goodwill of all the businesses, each and every person holding land and machinery, more tax imputed on foreign exchange rate.

IFRS impacted various businesses in all the different industries –

  • In the Real Estate business, Investment of people got impacted as there was a huge loss. There was not much revenue and people were gathered by the expenses on a huge amount.
  • In the Telecom sector, because of low in Income, the businesses were offering multiple bundled services. As they were low on revenue, they also fired their employees on a large scale.
  • In pharmaceutical Industry, the companies collaborated with the other companies and were able to survive the great impact. The companies have to amortize its big Intangible Assets like goodwill, licenses etc.
  • In the IT industry, IT companies used hedge accounting system to sustain themselves from the impact and burden of IFRS. They took multiple contracts and asked the clients to make payments on share basis.(Muniraju, M. and Ganesh, S.R., 2016.)

Problems India faced while adopting IFRS –

  • Change in Government policies – While adopting IFRS which was mainly for country’s benefit, Government has to change its policies with the help and means of Institute of Chartered Accountant of India which is the regulatory accounting body of India.
  • Education – Training and Education of each accountant is required for implementing IFRS. If the accountants do not know how to make financial statements with the help of IFRS, the companies would not be able to release financial statements on IFRS basis. This may pose as the biggest challenge for the companies. (Jain, P., 2011.)
  • Fair Value – With the help of IFRS, it is a lot of hard work to step out with the fair vale of the financial statements. It may disbalance the country and the businesses in a large scale.
  • Taxes – After adopting IFRS, Tax would also undergo with a change. Laws imposing tax should also include tax liabilities when India adopted IFRS.

CONCLUSION –

India imposed IFRS while starting of the financial Year 2011. India is a country where accounting systems needs to be like IFRS because this helps us to compare the companies very easily. People in India are always jealous of seeing anybody getting ahead of them in life. If IFRS would help companies and businesses growing, India would be a more difficult market to enter for the multinational companies. Each and Every country at sometime while adopting IFRS would face a difficulty and will occur a huge loss. Companies and the country’s economy has to bounce back and handle itself. Government will also have to change its country policies after changing the accounting methods. This will also affect the government and its accounts. Some businesses can grow to its highest like “The Big Four” and some business may also see its worst case scenario. Many countries adopt Indian Accounting Standards 1 as their primary method for preparing balance Sheet and Income Statement. This will help in the growth and increase competition in the market as everyone will be affected by this adoption.

REFERENCES –

Van der Meulen, S., Gaeremynck, A. and Willekens, M., 2007. Attribute differences between US GAAP and IFRS earnings: An exploratory study. The International Journal of Accounting, 42(2), pp.123-142.

Van Tendeloo, B. and Vanstraelen, A., 2005. Earnings management under German GAAP versus IFRS. European Accounting Review, 14(1), pp.155-180.

Tawiah, V. and Benjamin, M., 2015. Conservatism Analysis on Indian Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). International Journal of Multidisciplinary Research and Development, 2(5).

Perumpral, S.E., Evans, M., Agarwal, S. and Amenkhienan, F., 2009. The evolution of Indian accounting standards: Its history and current status with regard to International Financial Reporting Standards. Advances in Accounting, 25(1), pp.106-111.

Almaqtari, F.A., Hashed, A.A., Shamim, M. and Al-ahdal, W.M., 2021. Impact of corporate governance mechanisms on financial reporting quality: a study of Indian GAAP and Indian Accounting Standards. Problems and Perspectives in Management, 18(4), p.1.

Haribhakti, S., 2008. Financial accounting standards: Convergence of Indian standards with the global standards. International Journal of Disclosure and Governance, 5(3), pp.272-283.

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