CA BLASTERS

Let's Understand Statement of Cash Flows as per Ind AS 7 1.Cash and Cash Equivalents: This includes actual cash on hand and in bank accounts, as well as short-term, highly liquid investments easily convertible to cash with minimal risk. 2.Operating Activities: These are the day-to-day revenue-generating activities of a business. Examples: •Cash received from sales of goods/services •Cash received from royalties, fees, etc. •Cash paid to suppliers for goods/services •Cash paid to employees •Cash related to insurance premiums and claims 3.Investing Activities: This involves the acquisition and disposal of long-term assets and investments. Examples: •Cash spent on acquiring property, equipment, etc. •Cash received from selling assets •Cash spent on acquiring equity or debt in other entities •Cash received from selling such investments •Cash advances and loans made to others •Cash received from repayment of such loans Read more at https://whatsapp.com/channel/0029VaJtnLlGehEQhSNtrY0B

*Difference between ‘bank overdraft’ and ‘cash credit'?* An overdraft is a loan arrangement between the borrower and the bank whereby the bank extends the credit to a maximum amount up to which the customer can write cheques or make withdrawals. Bank overdraft facility is granted by bank usually for a short period to accommodate short-term fund requirement. Cash credit is a fund based facility granted by a bank to its customer to finance working capital requirements on a continuing basis. Cash credit is usually secured by hypothecation of inventory and debtors or pledge of goods. *With regard to presentation of these items in the statement of cash flows, paragraph 8 of Ind AS 7, provides that bank borrowings are usually considered to be part of financing activities. However, where bank overdrafts which are repayable on demand form an integral part of an entity’s cash management, bank overdrafts are included as a component of cash and cash equivalents* . Follow the "Unlocking Secrets of Financial Reporting with Varsha" channel on WhatsApp: https://whatsapp.com/channel/0029VaJtnLlGehEQhSNtrY0B

Indian Accounting Standards, were introduced to align Indian accounting practices with global standards, specifically the International Financial Reporting Standards (IFRS). The Companies Act 2013 mandated the adoption of these standards as per sec 133, with the Central Government prescribing them in consultation with the Institute of Chartered Accountants of India (ICAI) and recommendations from the National Financial Reporting Authority (NFRA). Consequently, the Companies (Indian Accounting Standards) Rules, 2015 were notified on 16th February 2015, marking a significant shift towards harmonizing Indian accounting practices with international norms. Ind ASs is basically converged version of IFRS and some modification have been made in Some IFRS as per indian economy and that difference is call Carva Outs. Follow the "Unlocking Secrets of Financial Reporting with Varsha" channel on WhatsApp: https://whatsapp.com/channel/0029VaJtnLlGehEQhSNtrY0B

Follow the "Unlocking Secrets of Financial Reporting with Varsha" channel on WhatsApp: https://whatsapp.com/channel/0029VaJtnLlGehEQhSNtrY0B

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Follow the "Unlocking Secrets of Financial Reporting with Varsha" channel on WhatsApp: https://whatsapp.com/channel/0029VaJtnLlGehEQhSNtrY0B

How to classify long term borrowing in financial statements in breach of any material covenant? 1. If a loan condition is breached on or before the reporting period, the initial classification of such a loan is typically ""Current" in the financial statements. When a material provision of a long-term loan agreement is breached, and this breach triggers a demand for immediate repayment, the liability is initially considered "current" because the lender could demand payment within the upcoming year. However, there are scenarios where this classification can change: 1. When It Can Be Reclassified as "Non-Current If after the end of the reporting period, but before approval of financial statement the lender agrees not to demand payment due to subsequent rectification or any reason reclassified as reporting "non- current." But In this before case company is not obligated to the immediately repay the loan as lender has waived their right to demand the payment ! 2. If the breach of the loan condition i is not rectified by the end of the reporting period but the lender agrees provide grace period of aleast 12 months to rectify the breach. If the lender agrees by the end of the reporting period to grace period of at least 12 months to rectify the breach without facing immediate repayment demands, the liablity also classified as non current. As a result. the loan is no longer considered short-Term or 'current" liability because the lender has granted additional time for compliance. Note: If Post approval of financials statements if breach is rectified it will have no implications on classification i.e it cannot be rectified as Non-current. 3. If an entity expects, and has the discretion, to refinance or ro ll over an existing loan obligation for at least 12 months after the reporting period, the debt can still be classified as non-current, even if it would otherwise be due within 12 months. This means that if he company has a loan due within a year but has a formal or informal agreement to extend the loan term for at least another year, it can classify that debt as non-current because it doesn't expect to pay it off in the next 12 months. (Para 73) Source for FAQs: https://resource.cdn.icai.org/42083indas31749as1.pdf @varshanayyar

What is Other Comprehensive income? Other Comprehensive Income refers to items of income and expenses that are not recognized as a part of the profit and loss account This Income appears as a line item below the income statement. In simple words it is gain or loss that has not been realized. The components of other comprehensive income include: (a) changes in revaluation surplus (see Ind AS 16, Property, Plant and Equipment and Ind AS 38, Intangible Assets); (b) reameasurements of defined benefit plans (see Ind AS 19, Employee Benefits); (c) gains and losses arising from translating the financial statements of a foreign operation (see Ind AS 21, The Effects of Changes in Foreign Exchange Rates); (d) gains and losses from investments in equity instruments designated at fair value through other comprehensive income in accordance with paragraph 5.7.5 of Ind AS 109, Financial Instruments; (da) gains and losseson financial assets measured at fair value through other comprehensive income in accordance with paragraph 4.1.2A of Ind AS 109. (e) the effective portion of gains and losses on hedging instruments in a cash flow hedge and the gains and losses on hedging instruments that hedge investments in equity instruments measured at fair value through other comprehensive income in accordance with paragraph 5.7.5 of Ind AS 109 (see Chapter 6 of Ind AS 109) (f) for particular liabilities designated as at fair value through profit or loss, the amount of the change in fair value that is attributable to changes in the liability’s credit risk (see paragraph 5.7.7 of Ind AS 109); (g) changes in the value of the time value of options when separating the intrinsic value and time value of an option contract and designating as the hedging instrument only the changes in the intrinsic value (see Chapter 6 of Ind AS 109) (h) changes in the value of the forward elements of forward contracts when separating the forward element and spot element of a forward contract and designating as the hedging instrument only the changes in the spot element, and changes in the value of the foreign currency basis spread of a financial instrument when excluding it from the designation of that financial instrument as the hedging instrument. @varshanayyar

Have started daily targets for FR (Financial Reporting) and IDT (Indirect Taxation) from tomorrow https://t.me/CBtargets

I've deliberately chosen to focus on specifying the number of illustrations per topic rather than providing a total count for each subject. This approach aims to encourage a focused study strategy by breaking down subjects into manageable topics. By doing so, the emphasis shifts from feeling overwhelmed by the volume of material to mastering each topic step by step. With this method, the goal is to instill confidence and a sense of control over the learning process, ultimately paving the way for excellence

Audit Study Mat Summary Part 2

Audit Study Mat Summary Part 1

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FR Study Mat Summary Part 2