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Framework for preparation of Finanancial Statements.

Framework: - Framework provides a road map and approach which will be

considered as a broadline within which all IND AS will be applied.

Note: - IND AS will be prevail over this framework.

A) Fundamental Qualitative Characteristics of Financial Statements:

1. Relevance: Financial Information is capable of making a difference in decisions made by users if it has:

a)Predictory Value or

b)Conformatory Value or

c)Both

2. Materiality: Information is material if it is entity specific and it ommission or misstament affects the decision making ability of the users.

3. Faithful representation: Financial Information should be complete, neutral & free from error.

B) Enhancing Qualitative Characteristics:

1. Comparability

2. Verifiability

3. Timeliness

4. Understandability

Elements of FS

Assets: An asset is a resource  controlled by the entity as a result of past events and

 From which future economic benefits are expected to flow to the

entity.

Liability: A liability is

 a present obligation of the entity arising from past events,

 The settlement of which is expected to result in an outflow from

the entity of resources embodying economic benefits.

Equity: Equity is the residual interest in the assets of the entity after

deducting all its liabilities.

Income: Income is

 increase in economic benefits during the accounting period

 in the form of

 inflows or enhancement of assets or

 decreases of liabilities

 that result in increases in equity

 Other than those relating to contributions from equity participants.

Expense: Expense is defined as

 decrease in economic benefits during the accounting period

 in the form of

 outflows or depletions of assets or

 incurrence of liabilities

 that result in decrease in equity

 Other than those relating to distributions to equity participants.

Concept of capital There are two ways of maintaining Capital (a) Financial capital maintenance

(b) Physical capital maintenance

Financial capital maintenance: - Financial profit will be calculated

as under

Closing capital Including Reserves & Surplus XXX

(Net asset as on the closing date)

Less: - Initial capital Contribution (Including Premium) XXX

Less: - Additional capital Contribution (Including Premium) XXX

Financial profit XXX

Physical capital maintenance –Physical profit will be calculated as

under

Closing capital Including Reserves & Surplus XXX

Less: Indexed Capital

(Initial + Additional Capital including premium) XXX

Physical profit XXX