Question 1

Discuss the role of the NACAS in converging Indian Accounting

Standards to International Financial Reporting Standards.

Answer- The central government prescribes accounting standards in

consultation with the National Advisory Commitee on Accounting
standards(NACAS) established under the Companies Act ,1956.They
are the bodies for the purpose of advisory and regulation of compliances
with the standards notified in relation to accounting and auditing.The
main objectives of NACAS is to advise the central government on the
formulation and lying down of accounting policies and standards for
adoption by companies or class of companies under this Act.It has
adapted the international norms established by the international
accounting standards board.

The initiative for harmonization of Indian Accounting standards with

IFRS ,taken up by NACAS in 2001 and implemented through notification
of accounting standards by the Central Government in 2006 was
continued by the government with the intention of achieving
convergence with IFRS by 2011 but due to certain issues ,Ministry of
corporate affairs postponed it's implementation date.

Ministry of corporate affairs notified phase wise adoption of the indian

AS .From 1st April 2016, Indian AS became mandatorily applicable to all
companies provided it is a listed company with net-worth ≥500crores .

From 1st April 2017 it became mandatory for companies which are listed
or in the process with net-worth≥250 crores but ≤500crores.

From 1st April 2018,Indian AS became mandatorily applicable to all

banks,NBFCs and insurance companies provided their net-worth is
≥500crores,and from 1st April 2019 indian AS will be mandatorily
applicable to all NBFCs with net-worth≥250 crores but ≤500crores.
Question 2
Explain the guidelines of IASB to recognise revenue as earned

Answer-
On May 28, 2014, the Financial Accounting Standards Board
(FASB) and International Accounting Standards Board (IASB) jointly
issued Accounting Standards Codification (ASC) 606, regarding revenue
from contracts with customers. ASC 606 provides a uniform framework
for recognizing revenue from contracts with customers. The old
guidance was industry-specific, which created a system of fragmented
policies. The new guidance is industry-neutral and, therefore, more
transparent. The core principle of ASC 606 is that revenue is recognized
when the delivery of promised goods and/or services matches the
amount of consideration expected in exchange for the goods and/or
services. There are five steps that allow the recognition of revenue
under that core principle:

• Identify the contract

• Identify the contractual performance obligations
• Determine the amount of consideration/price for the transaction
• Allocate the determined amount of consideration/price to the
contractual obligations
• Recognize revenue when or as the performing party satisfies
performance obligations