INTERNATIONAL FINANCIAL REPORTING STANDARDS(IFRS)

INTERNATIONAL FINANCIAL REPORTING STANDARDS(IFRS)

Globalization integrates the national economies into the international economies through trade, foreign direct investments, capital flow etc. in this age of globalization and technology, enterprises are carrying on businesses worldwide. We also understand that accounting is the language of business. Thus business enterprises around the world should not speak different languages while sharing financial information.


Therefore there is need for single set of accounting standards that can unify the accounting practices worldwide. It is difficult to understand and compare worldwide financial information without a common set of accounting and financial reporting standards.

The use of single set of high quality accounting standards would facilitate investment and other economic decisions across borders, increase market efficiency and reduce cost of capital.

Thus international accounting standards (IAS) were developed, which are being withdrawn and superseded by International Financial Reporting Standards(IFRS).IFRS are a set of accounting standards developed by the international Accounting standards board(IASB)

ASSUMPTIONS IN IFRS:-

1.       Accrual Assumption

2.       Going concern assumption

3.       Measuring unit assumption: measuring unit for valuation of capital is the current purchasing power. It means asset should be reflected at current(fair) price.

4.       Constant purchasing power assumption:- it means value of capital be adjusted to inflation in the economy at the end of financial year.


APPLICATION OF IFRS IN INDIA:

India had two options, i.e. either to accept  IFRS as they are or converge the Indian accounting standards in line with IFRS.

It decided to converge its existing accounting standards with IFRS. The converged accounting standards titled Ind-AS have been issued and notified. It should be noted that the existing Indian accounting standards shall not cease to be applicable standards. They will continue to apply on entities that are not required to migrate to IND-AS.

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