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As 25

Accounting Standard 25 provides guidance on interim financial reporting. It defines interim periods as periods less than a full financial year. An interim financial report contains either a complete or condensed set of financial statements for the interim period. It requires certain minimum line items and explanatory notes. Recognition and measurement of income tax in an interim period is based on a estimated weighted average tax rate for the full financial year. Revenue and expenses in interim reports should follow the same principles as annual financial statements, except items that fluctuate unevenly during a year. Changes in accounting policies and estimates should be applied in the interim period they occur.

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69 views6 pages

As 25

Accounting Standard 25 provides guidance on interim financial reporting. It defines interim periods as periods less than a full financial year. An interim financial report contains either a complete or condensed set of financial statements for the interim period. It requires certain minimum line items and explanatory notes. Recognition and measurement of income tax in an interim period is based on a estimated weighted average tax rate for the full financial year. Revenue and expenses in interim reports should follow the same principles as annual financial statements, except items that fluctuate unevenly during a year. Changes in accounting policies and estimates should be applied in the interim period they occur.

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Accounting Standard 25

ACCOUNTING STANDARD 25
INTERIM FINANCIAL REPORTING
1. Scope:
This Statement does not mandate which enterprises should be required to
present interim financial reports.
If an enterprise is required or elects to prepare and present an interim
financial report, it should comply with this Statement.

2. Meaning:
Interim Financial Report is a Financial Report (FR) containing:
• A complete set of Financial Statement (or)
• A condensed set of Financial Statement
For an Interim Period.
Interim period is a Financial Reporting Period less than full financial year
(12 months).
Note: 1st Annual Financial Report may be for less than 12 months.

3. Interim Financial Report:

Complete set of Financial Statement Condensed Financial Statement


A Balance sheet Condensed balance sheet
B SOCE Condensed SOCE
C SOPL Condensed SOPL
D SOCF Condensed SOCF
E Notes to Accounts Selected Explanatory Notes

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Accounting Standard 25

4. Form and Content of Interim financial report

Form and content

If an entity published
If entity publishes a complete
condensed financial
set of financial statements
statements

AS 25 do not encourage Statements shall included headings


complete set of FS. and subtotals included in most
recent annual financial statements

It should be prepared and


Additional line items should be
presented in same format &
included if their ommission would
as per same content and
make condensed interim financial
requirement of Annual
statements misleading.
Financial Report

It should apply the same Present Basic and diluted earnings per
accounting policies in the share for that period
interim financial statement
as are applied in the annual
financial statement.

5. Minimum Information for selected Explanatory Notes for


condensed Interim Financial Report:
• A statement that same accounting policies are followed.
If there are changes in accounting policies, Nature and Effect of the
change should be disclosed.
• Seasonal and cyclic Nature of Business.
• Nature and amounts of items affecting asset, liability, Equity, Income,
Expense that are unusual (exceptional)

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Accounting Standard 25

• Nature and amounts of changes in Accounting Estimate.


• Changes in debt and equity through issuances, buy-backs, repayments
and repurchase.
• Details of dividend payment
• Segment revenue, segment capital employed (segment assets minus
segment liabilities) and segment result for business segments or
geographical segments, whichever is the primary segment reporting
• Material Events after Interim period that have not been reflected in
Interim FS – Non-Adjusting Event
• Effect of changes in the composition of entity due to amalgamations,
acquisition or disposal of subsidiaries, restructurings, and discontinuing
operations;
• Material changes in contingent liabilities since the last annual balance
sheet date.

6. Periods for which interim financial statements are required to be


presented
For Non-Seasonal Business: An enterprise whose financial year ends on 31
March, presents financial statements (condensed or complete) for following
periods in its interim financial report for the second quarter ending 30
September 2001:
Balance Sheet:
As at 30 September 2001 31 March 2001
Statement of Profit and
Loss:
6 months ending 30 September 2001 30 September 2000
3 months ending 30 September 2001 30 September 2000
Cash Flow Statement:
6 months ending 30 September 2001 30 September 2000

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Accounting Standard 25

Seasonal Business: An enterprise whose financial year ends on 31 March, may


present financial statements (condensed or complete) for the following
periods in its interim financial report for the second quarter ending 30
September 2001:
Balance Sheet:
As at 30 September 2001 31 March 2001
30 September 2000
Statement of Profit and Loss:
6 months ending 30 September 2001 30 September 2000
3 months ending 30 September 2001 30 September 2000
12 months ending 30 September 2001 30 September 2000
Cash Flow Statement:
6 months ending 30 September 2001 30 September 2000
12 months ending 30 September 2001 30 September 2000

7. Recognition and Measurement of Income-Tax:


A) Calculate Estimated weighted Average Tax Rate for current Interim
Period.
Estimated Weighted Average Tax Rate (Effective Tax Rate)
𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒𝑑 𝑇𝑜𝑡𝑎𝑙 𝑇𝑎𝑥 𝐸𝑥𝑝𝑒𝑛𝑠𝑒 𝑓𝑜𝑟 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝐹𝑌
=
𝑇𝑜𝑡𝑎𝑙 𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒𝑑 𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑖𝑛𝑔 𝐼𝑛𝑐𝑜𝑚𝑒 (𝑃𝐵𝑇)𝑓𝑜𝑟 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝐹𝑌
Where Tax Expense = Current Tax ± Deferred Tax

B) Calculate Tax Expense for current Interim Period:


Actual Accounting Income X Weighted Average Tax Rate

8. Recognition of Revenue and Expense:


Revenue: Revenue that are received seasonally or occasionally within a
Financial Year should not be anticipated and deferred if anticipation and
deferral would not be appropriate at the end of Entity’s Financial Year.
Examples: Dividend Income, Royalty Income, Uneven sales etc. cannot be
anticipated or deferred.

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Accounting Standard 25

However, Government grant received can be deferred if treated as deferred


income as per AS 12.
Expense: Expense or cost that are incurred unevenly during the Financial
year should be anticipated or deferred if and only if it is appropriate to
anticipate or defer that type of cost at the end of FY.
Example: Advertisement Expense, Commission Exp; Bad debt should not be
anticipated or deferred
However, provision for gratuity, Deferred loss in case of sale and lease back
can be anticipated or deferred.
Note: Cost that does not meet the definition of asset at the end of (IP)
should not be deferred.
Example: Development Exp which does not meet recognition criteria.

9. Changes in accounting Policy:


The effect changes in accounting policy related to current Interim period
should be recognized in the PL of current Interim Period.
A change in accounting policy should be reflected by restating the financial
statements of prior interim periods of the current financial year.

10. Changes in accounting Estimates:


The entire effect changes in accounting estimates should be recognized in
the PL of Interim Period in which changes is made.

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Accounting Standard 25

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