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48 Corporate Finance BRILLIANT’S

AS-1: Disclosure of Accounting Policies AS-1: AH$mC§qQ>J nm°{bgrO H$m {S>ñŠbmoOa
The main features of standard AS-1 AH$mC§qQ>J nm°{bgrO Ho$ {S>ñŠbmoOa Ho$ g§~§Y _| ASB
announced by the ASB, regarding Disclosure Ûmam Kmo{fV ñQ>¢S>S>© AS-1 Ho$ _w»` JwU {ZåZ h¢…
of Accounting Policies are as follows:
1. Fundamental Accounting Assumptions: 1. àmW{_H$ AH$mC§qQ>J YmaUmE±… Hw$N> àmW{_H$
Certain fundamental accounting assumptions AH$mC§qQ>J YmaUmE± \$m`Z|{e`b ñQ>oQ>_|Q²>g H$mo V¡`ma H$aZo
underlie the preparation and presentation of
financial statements. They are usually not VWm àñVwV H$aZo _| nm`r OmVr h¢& BÝh| àm`… {d{eï> ê$n
specifically stated because their acceptance and go Zht ~Vm`m J`m h¡ Š`m|{H$ CZH$s ñdrH¥${V VWm Cn`moJ
use are assumed. Fundamental accounting _mZo J`o h¢& àmW{_H$ AH$mC§qQ>J YmaUmE± h¢…
Assumptions are:
(a) Going concern (a) JmoB§J H§$gZ©
(b) Consistency (b) H§${gñQ>|gr
(c) Accrual (c) EH«y$Ab
Note: In case, if any of the above ZmoQ>… `{X CnamoŠV _| go {H$gr YmaUm H$m nmbZ Zht
assumptions is not followed, the fact should be {H$`m OmVm h¡ Vmo VÏ` H$mo ~§X H$a XoZm Mm{hE&
disclosed.
2. Accounting Policies: It refers to the 2. AH$mC§qQ>J nm°{bgrO… `h CZ {gÕm§Vm| H$mo bmJy
specific accounting principles and methods of H$aZo Ho$ {d{eï> AH$mC§qQ>J {gÕm§Vm| VWm {d{Y`m| H$m g§X^©
applying those principles adopted by XoVm h¡ Omo \$m`Z|{e`b ñQ>oQ>_|Q> H$mo V¡`ma VWm àñVwV
enterprises in the preparation and presentation
of financial statement. The following are the H$aZo _| à{Vð>mZ Ûmam AnZm`o J`o h¢& ZrMo CZ joÌm| Ho$
example of the areas in which different CXmhaU {X`o J`o h¢ {OZ_| {d{^ÝZ AH$mC§qQ>J Zr{V`m±
accounting policies may be adopted by different {d{^ÝZ à{Vð>mZm| Ûmam AnZm`r Om gH$Vr h¢…
enterprises:
(a) Methods of depreciation (a) S>o{à{gEeZ H$s {d{Y`m±
(b) Valuation of inventory (b) B§d|Q>ar H$m _yë`m§H$Z
(c) Valuation of fixed assets etc. (c) {\$ŠñS> AgoQ²>g H$m _yë`m§H$Z Am{X&
AS-2: Valuation of Inventories AS-2: B§doÝQ>arO H$m _yë`m§H$Z

The standard specifies the methods of `h ñQ>¢S>S>© B§d|Q>arO H$s bmJV H$s JUZm H$s {d{Y`m§o
computation of cost of inventories and the VWm \$m`Z|{e`b ñQ>oQ>_|Q²>g _| Xem©`o OmZo dmbr B§doÝQ>ar
method of determination of the value of inven-
tory to be shown in the financial statements. Ho$ _mZ H$m {ZYm©aU H$aZo H$s {d{Y H$m {ZYm©aU H$aVr h¡&
The objective and scope of the standard ñQ>¢S>S>© Ho$ CÔoí` VWm joÌ ZrMo ~Vm`o J`o h¢…
are as under:
Objective: The objective of this standard CÔoí`… Bg ñQ>¢S>S²>©g H$m CÔoí` B§doÝQ>arO/ñQ>m°H$ H$s
is to formulate the method of computation of bmJV H$s JUZm H$s {d{Y ~ZmZm, ŠbmoqOJ ñQ>m°H$/B§d|Q>arO
cost of inventories/stock, determine the value
Ho$ _yë` H$m {ZYm©aU H$aZm h¡ {Og na B§doÝQ>arO H$mo ~¡b|g
of closing stock / inventories at which the erQ> _| Xem©`m OmZm h¡ O~ VH$ {H$ Bgo ~oM Zht {X`m OmVm
inventory is to be shown in balance sheet till it
h¡ VWm amOñd Ho$ ê$n _| _mÝ`Vm Zht Xo Xr OmVr h¡&
is not sold and recognized as revenue.