AS - 05 - Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies - Companies (Accounting Standards) Rules, 2021

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..... e over time and with the financial statements of other enterprises. Accordingly, this Standard requires the classification and disclosure of extraordinary and prior period items, and the disclosure of certain items within profit or loss from ordinary activities. It also specifies the accounting treatment for changes in accounting estimates and the disclosures to be made in the financial statements regarding changes in accounting policies. Scope 1. This Standard should be applied by an enterprise in presenting profit or loss from ordinary activities, extraordinary items and prior period items in the statement of profit and loss, in accounting for changes in accounting estimates, and in disclosure of changes in accounting policies. 2. This St .....

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AS - 05 - Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies - Companies (Accounting Standards) Rules, 2021

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..... period should be included in the determination of net profit or loss for the period unless an Accounting Standard requires or permits otherwise. 6. Normally, all items of income and expense which are recognised in a period are included in the determination of the net profit or loss for the period. This includes extraordinary items and the effects of changes in accounting estimates. 7. The net profit or loss for the period comprises the following components, each of which should be disclosed on the face of the statement of profit and loss: (a) profit or loss from ordinary activities; and (b) extraordinary items. Extraordinary Items 8. Extraordinary items should be disclosed in the statement of profit and loss as a part of net profit or loss .....

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AS - 05 - Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies - Companies (Accounting Standards) Rules, 2021

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..... ense within profit or loss from ordinary activities are of such size, nature or incidence that their disclosure is relevant to explain the performance of the enterprise for the period, the nature and amount of such items should be disclosed separately. 13. Although the items of income and expense described in paragraph 12 are not extraordinary items, the nature and amount of such items may be relevant to users of financial statements in understanding the financial position and performance of an enterprise and in making projections about financial position and performance. Disclosure of such information is sometimes made in the notes to the financial statements. 14. Circumstances which may give rise to the separate disclosure of items of inc .....

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AS - 05 - Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies - Companies (Accounting Standards) Rules, 2021

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..... or period items are generally infrequent in nature and can be distinguished from changes in accounting estimates. Accounting estimates by their nature are approximations that may need revision as additional information becomes known. For example, income or expense recognised on the outcome of a contingency which previously could not be estimated reliably does not constitute a prior period item. 19. Prior period items are normally included in the determination of net profit or loss for the current period. An alternative approach is to show such items in the statement of profit and loss after determination of current net profit or loss. In either case, the objective is to indicate the effect of such items on the current profit or loss. Change .....

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AS - 05 - Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies - Companies (Accounting Standards) Rules, 2021

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..... xample, a change in the estimate of the amount of bad debts is recognised immediately and therefore affects only the current period. However, a change in the estimated useful life of a depreciable asset affects the depreciation in the current period and in each period during the remaining useful life of the asset. In both cases, the effect of the change relating to the current period is recognised as income or expense in the current period. The effect, if any, on future periods, is recognised in future periods. 25. The effect of a change in an accounting estimate should be classified using the same classification in the statement of profit and loss as was used previously for the estimate. 26. To ensure the comparability of financial stateme .....

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AS - 05 - Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies - Companies (Accounting Standards) Rules, 2021

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..... f the enterprise. 31. The following are not changes in accounting policies: (a) the adoption of an accounting policy for events or transactions that differ in substance from previously occurring events or transactions, e.g., introduction of a formal retirement gratuity scheme by an employer in place of adhoc ex-gratia payments to employees on retirement; and (b) the adoption of a new accounting policy for events or transactions which did not occur previously or that were immaterial. 32. Any change in an accounting policy which has a material effect should be disclosed. The impact of, and the adjustments resulting from, such change, if material, should be shown in the financial statements of the period in which such change is made, to reflec .....

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AS - 05 - Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies - Companies (Accounting Standards) Rules, 2021

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