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  1. Accounting Standard = 1 Disclosure of Accounting Policies Prepared By Prof. S. S. PETHE PETHE CLASSES, 707, Sadashiv Peth, Pune

  2. Preparation of FS = Responsibility of Management [as per DRS => 217(2AA)] Accounting Policy = Principles & Methods adopted for preparation of FS For Ex. AS-6 Depreciation/Depletion/Amortisation SLM / WDV AS-7 Exp in Construction Contracts Capital Exp / Deferred Revenue Exp AS-11 Conversion of FC Contracts Separate Reserve / P&L A/c AS-2 Valuation of Inventories FIFO / Weighted AVG Cost etc Basic Objective in Selecting AP (SAP) = Tue & Fair View Major Consideration in SAP = Prudence / Sub Over Form / Materiality Mere Disclosure of AP = Cannot Rectify adoption of wrong AP All AP followed = Disclosed at one place (preferably) Any Change in AP = With Material Effect in Current / Future Period = Disclosed with Amount [If not ascertainable = Fact be Disclosed] IF Any of Fundamental Accounting Assumption =/= Followed [should be = Disclosed] [IF Followed = No Disclosure Required] PETHE CLASSES, 707, Sadashiv Peth, Pune

  3. AS-1 AP = P + M = applied in PP of FS Choice of AP = call for Judgment of M Focus = True & Fair View + GCA + PSM IAS-1 Apart from Min = Structure & Content of FS. It defines Overall Consideration for FS Plus= Statement of Changes in Equity US-GAAP AP = P judged by M to be most appropriate to Present Fair View of FP & Results of Operations as per GAAP & adopted to Prepare FS Unusual / Innovative application of GAAP = be Disclosed PETHE CLASSES, 707, Sadashiv Peth, Pune

  4. Accounting Standard = 2 Valuation of Inventories Prepared By Prof. S. S. PETHE PETHE CLASSES, 707, Sadashiv Peth, Pune

  5. Inventory = Includes Goods = Purchased & H For = Resale FG = Produced & H For = Sale WIP = Being Produced Material, Maintenance Supplies, Consumable & Loose Tools = Held for = Use in Production Inventory = Valued at Lower of = COST or NRV COST = Includes Cost of Purchase Cost of Conversion Cost to Bring Inventory at = Present Location & Condition Cost of Purchase = Includes Taxes, Duties (Non – Recoverable) [Cenvat Credit on IP = Recoverable hence NOT included] Freight Inward [Trade Disc, Rebate, Duty Drawback etc will be Deducted] Cost of Conversion = Includes Labour Cost Fixed & Variable Production OH [Ex: Depreciation on FA] PETHE CLASSES, 707, Sadashiv Peth, Pune

  6. Fixed Production OH Be allocated on = NORMAL Capacity [on Actual Production if it approximates the Normal Capacity] In Low Production = Unabsorbed OH =/= be included in IC In Abnormal High Production = Over-absorbed OH reduced to Actual OH In Joint Product = JC allocated on some = Reasonable & Consistent Basis [Ex: Sales Value at = Separation Stage or Latter Stage] By Products, Scraps etc (if Insignificant = Valued at NRV) = Deducted from Cost of Main Product Exclusions from IC Interest & Other Borrowing Cost (usually) Storage Cost Administrative OH S&D Cost Abnormal Loss & Wastages Cost Formula FIFO / Weighted Avg. Method [WAM = After Every Lot / Periodic Basis] Specific Price Method = For Items Not interchangeable PETHE CLASSES, 707, Sadashiv Peth, Pune

  7. Cost Formula Continue…… Std Cost / Retail Price Method = For Convenience (if it approximates Actual Cost) Comparison of COST & NRV = On Item to Item Basis Similar/ Interchangeable Items = can be Grouped But not on classification Basis (Like All FG / ALL RM) NRV = at BS Date (based on most = Reliable Evidence on DOV) AS 2 =/= Applies to WIP in = Construction Contracts WIP in = Service Providers Shares, Debenture & Other FI = Held as = Stock in Trade Inventories of = Live Stock, Agri & Forest Products, Mineral Oil, Ores & Gases Machinery Spares = Used with Specific FA + Use is Irregular PETHE CLASSES, 707, Sadashiv Peth, Pune

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