Section 17(5) of the Central Goods and Services Tax (CGST) Act, 2017 outlines the scenarios under which Input Tax Credit (ITC) is blocked and not available to a taxpayer. This provision restricts the claim of ITC on certain inputs, goods, and services. The exhaustive list of cases where ITC is blocked under Section 17(5) includes: …
The Insolvency and Bankruptcy Code (IBC) was introduced in India to address the pressing need for a comprehensive and efficient framework for dealing with insolvency and bankruptcy matters. It aimed to streamline and expedite the resolution process of distressed companies and individuals, promote a culture of entrepreneurship, enhance credit availability, and protect the interests of …
Section 234C of the Income Tax Act imposes interest on taxpayers who fail to pay their taxes on time during the fiscal year. The interest is calculated on the amount of tax that should have been paid as advance tax. The following are the key points related to interest under Section 234C: Interest under Section …
The purpose of Section 80M is to provide relief from double taxation of dividends, which can occur when profits are taxed both at the company level (dividend-paying company) and at the shareholder level (dividend-receiving company). Under the provisions of Section 80M, when a domestic company receives dividends from another domestic company in which it holds …
CASE NAME: VODAFONE INTERNATIONAL HOLDING V/S UNION OF INDIA The “Vodafone case” refers to a landmark legal and tax dispute involving Vodafone Group Plc, a multinational telecommunications company, and the Indian government. The case centered around the acquisition of Hutchison Essar, an Indian telecom company, by Vodafone in 2007. The dispute revolved around the interpretation …
A grandfathering clause is a provision in which an old rule continues to apply to some existing situations while a new rule will apply to all future cases. In the context of taxation, a grandfathering clause ensures that the tax levied on gains is prospective and is levied from the date of levy of such …
No, Long Term Capital Gains (LTCG) cannot be deducted with the amount invested in PPF under Section 80C of the Income Tax Act, 1961. Section 80C provides a deduction for specified investments and expenses up to a maximum of Rs. 1.5 lakhs in a financial year. LTCG is a separate tax calculation based on the …
If you have LTCG, can you deduct it with amount invested in PPF u/s 80C? Read More »
Certainly! One interesting and important concept in the realm of income tax is the provision of “Clubbing of Income,” often found in various sections of income tax laws across different countries. It aims to prevent the transfer of income from one individual to another, typically between family members, to reduce overall tax liability. This concept …
Tell me about a particular concept or section of Income Tax which you appreciate. Read More »
EBITDA removes the differences in profit arising on account of “newness” of assets or differences in Depreciation Method. 2 companies can be compared even if 1 follows SLM and the other WDV. If we used EBIT to compare an old airline company and a new airline company, the old one would appear more profitable (assuming …
Controls are mechanisms put in place within an organization to ensure that business processes, activities, and transactions operate effectively, efficiently, and in line with desired objectives. They encompass a range of policies, procedures, practices, and technologies aimed at preventing errors, reducing risks, and ensuring compliance. Procedures, on the other hand, are specific step-by-step instructions or …
What are controls? How are they different from Procedures? Read More »
Internal Audit, as defined by the Companies Act 2013 (Section 138), is an independent and objective assurance activity designed to add value and improve an organization’s operations. It helps accomplish organizational objectives by evaluating and improving the effectiveness of risk management, control, and governance processes. Internal auditors provide insights, recommendations, and assurance to management and …
Mr. Sashidhar Jagdishan is the Managing Director & Chief Executive Officer of the Bank. He succeeds Mr Aditya Puri, the iconic Managing Director who led the bank since inception and retired on October 26, 2020. Sashi as he’s known to his friends and colleagues, joined HDFC Bank in 1996 and has played a critical role …
Mr. Sandeep Bakhshi is the Managing Director and CEO of ICICI Bank since October 15, 2018. Prior to his appointment as MD & CEO, he was a Wholetime Director and the Chief Operating Officer (COO) of the Bank. Mr. Bakhshi has been with the ICICI Group since 1986 and has handled various assignments across the …
Tax Evasion: Tax Evasion is an illegal way to minimize tax liability through fraudulent techniques like deliberate under-statement of taxable income or inflating expenses. It is an unlawful attempt to reduce one’s tax burden. Tax Evasion is done with a motive of showing fewer profits in order to avoid tax burden. It involves illegal practices …
Differentiate between Tax planning & Tax evasion? Read More »
Basic examples of financial instruments are cheques, bonds, securities. There are typically three types of financial instruments: cash instruments, derivative instruments, and foreign exchange instruments. Favorite
IAS 16 Property, Plant and Equipment is the IFRS accounting standard that deals with fixed assets and depreciation.Component depreciation refers to a method of allocating the cost of an asset over its useful life by separately identifying and depreciating its individual components or parts. Instead of treating the entire asset as a single unit for …
The ITC rules for zero-rated supplies are as follows: Claiming ITC: Registered taxpayers making zero-rated supplies can claim a refund of the GST paid on inputs, input services, and capital goods used in the course of making such supplies. The ITC can be claimed through the electronic refund application. Export of goods or services: If …
Diminishing marginal utility is a concept in economics that states that the satisfaction or benefit derived from consuming an additional unit of a good or service decreases as the quantity consumed increases. In simpler terms, it means that the more of something we have or consume, the less satisfaction we get from each additional unit. …
The breakeven point (break-even price) for a trade or investment is determined by comparing the market price of an asset to the original cost; the breakeven point is reached when the two prices are equal. In corporate accounting, the breakeven point formula is determined by dividing the total fixed costs associated with production by the …
Form 3CD is a statement of particulars that must be filed with Form 3CA/3B, as appropriate, in compliance with Rule 6G and Section 44AB. In total, there are 41 clauses in Form 3CD (split into Part A and Part B) that contain disclosures on deductions, loans, and TDS (Tax Deducted at Source) paid, among other …
Financial Analyst Financial analysts tend to work with the overall picture. They review financial decisions based on current market trends, stated business objectives, and possible investment options. These professionals’ evaluations help determine whether a project or venture is worthy enough for investment. There are two main types of financial analysis—fundamental analysis and technical analysis. Financial …
Difference between financial controller and financial analyst? Read More »
DEFINITION OF ASSERTION: It refers to the representations by management, explicit or otherwise, that are embodied in the financial statements, as used by the auditor to consider the different types of potential misstatements that may occur. In preparing financial statements, Company’s management makes implicit or explicit claims (i.e. assertions) regarding: A. Completeness; B. Existence/ occurrence; …
The current ratio is a liquidity ratio that measures whether a firm has enough resources to meet its short-term obligations. It compares a firm’s current assets to its current liabilities, and is expressed as follows:- Current ratio = Current Assets/Current Liabilities Favorite
HDFC is India’s largest private sector bank in terms of assets and market capitalization. It employs around 120,000 staff and operates a distribution network of 5,416 branches and 13,640 ATMs across 2,803 cities. ICICI Bank is India’s second-largest bank with total assets of about Rs 112,024 crore and a network of about 450 branches and …
Bringing a company like Adani to partner with HDFC would require a strategic and proactive approach. While I don’t have direct control over such decisions, I can provide a hypothetical strategy that could be considered in an interview scenario: Understanding Adani’s Needs: Thoroughly research Adani’s business operations, financial position, and strategic goals. Identify areas where …
Adani is with ICICI how will you bring them with us (HDFC)? Read More »
Tangible net worth is a financial measure that represents the net worth of a company, excluding intangible assets such as intellectual property, goodwill, and brand value. It focuses on the tangible assets and liabilities of a company, which are the physical assets and liabilities that can be measured and valued. To calculate tangible net worth, …
When the degree of operating leverage is higher than the degree of financial leverage, when the operations are very risky and there are fluctuating cash flows then this type of company should keep more equity. When the degree of financial leverage is higher than the degree of operating leverage, when the operations are less risky …
The cost of equity is generally higher compared to other sources of funding due to several factors: Higher Risk: Equity represents ownership in a company, which means equity investors bear the highest level of risk. Unlike debt holders who have a fixed claim on the company’s assets and income, equity investors have residual claims and …
In this condition, we have to capitalize it along with the project, we cannot separately classify it, the reason for this is any expenditure that is necessary to bring your asset to the location and condition necessary for the intended use by the management that we should capitalize , and it is directly attributable expenditure …
In the given scenario, where you are eligible for a 200% deduction under income tax on the purchase of machinery, it will impact the treatment of deferred tax assets and liabilities over the useful life of the machinery (5 years). Deferred tax assets and liabilities arise due to temporary differences between taxable income and accounting …
PPE should be derecognised (removed from PPE) either on disposal or when no future economic benefits are expected from its use or disposal. A gain or loss on disposal is recognised as the difference between the disposal proceeds and the carrying amount of the asset at the date of disposal. Favorite
Inflation rate refers to the percentage change in the general level of prices for goods and services over a specific period, typically a year. It measures the rate at which the purchasing power of a currency is eroded over time. Inflation is often expressed as an annual percentage increase in the Consumer Price Index (CPI) …
A trust is a fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary. Trusts are established to provide legal protection for the trustor’s assets, to make sure those assets are distributed …
The most common capital investment evaluation tools are the Payback Period (PP), Return on Investment (ROI), Net Present Value (NPR), and Internal Rate of Return (IRR). Each method can provide insight into investment options, but each also has limitations. If net present value is positive, the project should be accepted. If internal rate of return …
How to evaluate investment in the concept of capital budgeting? Read More »
Terminal value is an estimate of the value of a project or investment at the end of its projected life or a specific period in the future. It represents the cash flow or value that is expected to continue beyond the forecast period. Terminal value is commonly used in financial valuation models, such as discounted …
What is terminal value and how you calculate the same? Read More »
We do not use a DCF if the company has unstable or unpredictable cash flows (tech or bio-tech start-up) or when debt and working capital serve a fundamentally different role. For example, banks and financial institutions do not re-invest debt and working capital is a huge part of their Balance Sheets – so you wouldn’t …
Consistency Principle Incremental Principle Separation Principle Post Tax Principle Favorite
The economic factors that influence corporate bond yields are interest rates, inflation, and economic growth. All these factors affect corporate bond yields and exert influence on each other. The pricing of corporate bond yields is a multivariable, dynamic process in which there are always competing pressures. For example, economic growth is bullish for corporations as …
What major factors affect the yield on a corporate bond? Read More »
The cost of equity is typically higher than the cost of debt, primarily due to the difference in the inherent risks associated with each source of financing. Cost of Debt: When a company raises funds through debt, it involves borrowing money from creditors (lenders) and agreeing to pay interest and principal over a specified period. …
What is typically higher – the cost of debt or the cost of equity? Read More »
Negative IRR indicates that the sum total of the post-investment cash flows is less than the initial investment, i.e. the non-discounted cash flows add up to a value which is less than the investment. Yes, both in theory and practice negative IRR exists, and it means that an investment loses money at the rate of …
Can the IRR be negative? Can IRR be positive and NPV be negative? Read More »
Minority Interest also referred to as non-controlling interest (NCI), is the share of ownership in a subsidiary’s equity that is not owned or controlled by the parent corporation. The parent company has a controlling interest of 50 to less than 100 percent in the subsidiary and reports financial results of the subsidiary consolidated with its …
Hedging is a risk management strategy used to minimize or offset potential losses or risks arising from price fluctuations or uncertain events in financial markets. It involves taking an opposing position or entering into a financial contract that is designed to mitigate the impact of adverse movements in the value of an asset, liability, or …
1.Map out the risks Whatever you do, it is important to properly map the risks inherent in your business so that your employees are aware of the best way that they can handle them. There must be absolutely no doubt in your employees mind what they must not do. Even with the best of intentions …
How to balance between compliances and growth of the organization? Read More »
Amitabh Chaudhry is the Managing Director & Chief Executive Officer (MD & CEO) of Axis Bank Limited. Amitabh Chaudhry, is an Engineer from Birla Institute of Technology and Science, Pilani and has done his Post Graduate in Business Management from IIM, Ahmedabad. He joined the Bank as its MD & CEO on 1st January 2019, …
The end goal of financial restructuring is to improve the financial health, stability, and sustainability of a company. It involves making strategic changes to the company’s financial structure, operations, and obligations in order to achieve specific objectives. The ultimate goals of financial restructuring can vary depending on the circumstances and challenges faced by the company, …
What is the end goal of a given financial restructuring? Read More »
▪ A company cannot meet its debt obligations / interest payments. ▪ Creditors can accelerate debt payments and force the company into bankruptcy. ▪ An acquisition has gone poorly, or a company has just written down the value of its assets steeply and needs extra capital to stay afloat (see investment banking industry). ▪ There …
Why would company go bankrupt in the first place? Read More »
Restructuring bankers advised distressed companies – businesses going bankrupt, in the midst of bankruptcy, or getting out of bankruptcy – and help them change their capital structure to get out of bankruptcy, avoid it in the first place, or assist with a sale of the company depending on the scenario. Favorite
Swap ratio refers to the ratio at which shares of one company are exchanged for shares of another company in a merger or acquisition. It determines the relative valuation or exchange rate of the shares involved in the transaction. When two companies decide to merge or when one company acquires another, they may agree to …
Divestiture refers to the process of selling or disposing of assets, business units, or subsidiaries by a company. It involves the deliberate decision to divest or exit certain operations or investments in order to streamline the business, focus on core activities, reduce costs, or improve financial performance. Divestiture can take various forms, including selling off …
Accounts payable (AP) and accounts receivable (AR) are two types of financial transactions that businesses engage in. Accounts payable (AP) represents the amount of money a company owes to its suppliers or vendors for the goods or services they have provided. In other words, it is the amount of money that a business owes to …
What is the difference between accounts payable and accounts receivable? Read More »
Accruals refer to expenses or revenues that have been recognized in the accounting records before they have been paid or received, respectively. They are recorded to reflect the economic activity of a business accurately, even if the cash transactions have not yet taken place. There are two types of accruals: Accrued expenses (Accrued liabilities): These …
Prepaid expenses are future expenses that have been paid in advance. You can think of prepaid expenses as costs that have been paid but have not yet been used up or have not yet expired. The amount of prepaid expenses that have not yet expired are reported on a company’s balance sheet as an asset. …
Dividend should be declared based on future needs of the organisation. If the company has positive NPV projects available do not declare dividend, else do. Alternatives to distribution of dividend: Buy back of shares: This comes out with advantages such as a. When the growth potential is limited they use unused cash to buy back …
How much dividend should we declare? Is there an alternative? Read More »
Section 80JJAA of the Income Tax Act, 1961 is a provision that allows eligible businesses to claim a deduction for additional employee cost incurred for the purpose of promoting employment. Here are the key details of this provision: Eligible Businesses: Section 80JJAA applies to Indian companies and partnership firms engaged in the manufacturing sector. Deduction …
Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life. It is NOT to reduce the value of the asset due to wear and tear. It is an allocation of Historical Cost ONLY. Similarly it is not bringing down an asset to its market value. Similarly, obsolescence is …
Difference between depreciation, amortisation and impairment? Read More »
A cash flow hedge is a risk management strategy used by businesses to mitigate the potential impact of future cash flow fluctuations. It involves entering into a financial derivative contract, such as a forward contract, futures contract, or swap, to offset the variability in cash flows arising from specific risks. The objective of a cash …
MARGINAL COSTING Marginal costing is generally a decision making, you have to use marginal costing when you want to decide whether you want to fulfil the next order or what my actual profit on the additional order. It is generally not used for accounting purpose but a decision making process. And it includes only variable …
Difference between marginal costing, absorption costing and standard costing? Read More »
The answer is, if you are not paying any dividend then there is opportunity cost for my investor and that opportunity cost is reflected in CAPM, so even if dividend is not being paid there is always a cost. It is measured using CAPM model which does not depend on whether the company is paying …
To evaluate whether to start the factory or not, a comprehensive financial analysis should be conducted. Here are some key steps to consider: Cost-Benefit Analysis: Assess the potential benefits and costs associated with the factory. Identify the expected revenue streams, market demand for the products, and potential profitability. Consider factors such as production costs, operational …
The main difference between EBITDA and cash flow from operation is working capital changes and taxes. In EBITDA, it is before tax and in cash flow from operations, it is after tax. The second difference is that EBITDA is on an accrual basis and cash flow from operations is on cash basis. Favorite
The following items are added to the cost of inventory: 1.Purchase price of goods 2.Direct labor costs incurred to bring the goods to their present location and condition 3.Direct overhead costs, such as rent, utilities, insurance, and depreciation of plant and equipment used in the production process 4.Freight-in or transportation costs incurred to acquire the …
There can be various reasons why one loss-making company may choose to take debt while the other may not. Some possible reasons could be: Risk tolerance: The company that has taken debt may have a higher risk tolerance and may be willing to take on more debt to finance its operations or expansion plans, whereas …
An operating segment is a component of an entity: (a) that engages in business activities from which it may earn revenues and incur expenses (b) whose operating results are regularly reviewed by the entity’s chief operating decision maker (CODM) to make decisions about resources to be allocated to the segment and assess its performance; and …
Ind AS 36 “Impairment of Assets” deals with the testing of assets for impairment. It requires companies to evaluate their assets, including goodwill, to assess if there is any impairment in their value. If there is a significant decline in the recoverable amount of an asset, then it needs to be written down to its …
Actuarial goodwill arises when the purchase price of an entity exceeds the fair value of its net identifiable assets, and the excess cannot be attributed to any specific asset or liability. This excess represents the value of intangible assets, such as brand recognition, customer relationships, and intellectual property. In such a situation, an actuary can …
What is actuary goodwill, when it arise and what to do in that situation? Read More »
Expenses or payments not deductible in certain circumstances (1) The provisions of this section shall have effect notwithstanding anything to the contrary contained in any other provision of this Act relating to the computation of income under the head” Profits and gains of business or profession”. (2) (a) Where the assesse incurs any expenditure in …
Section 234B: Interest for defaults in payment of advance tax: This penalty provision activates in two cases: 1. If the assesse was liable to pay advance tax, but failed to deposit that. 2. If the amount deposited was less than 90% of the tax to be deposited. In both the above cases, assesse will be …
Section 234A of the Income Tax Act, 1961 provides for the payment of interest on the amount of tax that is not paid by the due date. This interest is commonly referred to as “Interest under Section 234A”. The purpose of this provision is to encourage taxpayers to pay their taxes on time and to …
Internal Audit and Internal Control over Financial Reporting (ICFR) are two distinct concepts under the Companies Act. Let’s explore the differences between them and refer to the relevant sections of the Companies Act. Internal Audit: Internal audit is a process conducted within an organization to assess and improve the effectiveness of risk management, control, and …
The Finance Act of 2021 brought about significant changes to the provisions governing the reopening of assessments for previous assessment years. Erstwhile Sections 147 to 151 were substituted with amended Sections 147, 148, 148A, 149, 150, and 151, effective from April 1, 2021. Consequently, any notice for reopening assessments issued after April 1, 2021, is …
What are most recent changes in assessment procedure Read More »
Section 234C of the Income Tax Act, 1961 deals with the provisions related to the interest for default in payment of advance tax. It states that if an individual or a company fails to pay the advance tax or pays less than 90% of the assessed tax liability before the end of the financial year, …
Section 43A and 43AA are provisions under the Income Tax Act that deal with the method of accounting for certain specified transactions. Section 43A relates to the method of accounting for certain specified transactions in respect of which the taxpayer has opted for the mercantile system of accounting. The transactions covered under this section include …
Professional Services vs. Technical Services: Section 194C vs. Section 194J: Section 194C: This section covers payments made for contracts, including sub-contracts, for work such as advertising, broadcasting, carriage of goods, etc. Tax needs to be deducted at source (TDS) at the specified rates when making such payments. Section 194J: This section pertains to fees for …
Different b/w professional service and technical services Read More »
1.What happens to the unabsorbed depreciation of the previous owner when there is a change in ownership? A:When there is a change in ownership of a business, the unabsorbed depreciation of the previous owner can be carried forward and set off against the profits of the new owner. This provision is covered under Section 32(2) …
Questions on Set off and Carry Forward in which there is change in ownership Read More »
As per Section 115BBE of the Income Tax Act, any unexplained income, which is deemed to be the income of the assessee under Section 68 to Section 69D, is taxed at a flat rate of 60%. This is applicable for the financial year 2021-22 and onwards. Favorite
Section 270A of the Income Tax Act, 1961 provides for penalty for misreporting of income. The penalty amount is equal to 200% of the amount of tax payable on under-reported income. Under-reported income means the difference between the income assessed by the Assessing Officer and the income returned by the taxpayer. Favorite
Unabsorbed depreciation can be carried forward for an indefinite period until it is fully absorbed. However, it can only be set off against income from the head “Profits and gains of business or profession.” Business losses can be carried forward for up to 8 assessment years immediately following the assessment year for which the loss …
For how many years’ unabsorbed depreciation and business losses be carried forward? Read More »
Liquidity Ratios: 1.Current Ratio: Current Assets / Current Liabilities 2.Quick Ratio: (Current Assets – Inventory) / Current Liabilities 3.Cash Ratio: Cash and Cash Equivalents / Current Liabilities Coverage Ratios: 4. Debt-to-Equity Ratio: Total Debt / Total Equity 5.Debt-to-Asset Ratio: Total Debt / Total Assets 6.Interest Coverage Ratio: Earnings Before Interest and Taxes (EBIT) / Interest …
Because Market value is attributable to equity holders and EBITDA is attributable to both equity and debt holders. When we calculate any multiple, we should take numerator and denominator for either equity holders only or both equity and debt holders like below ratios: Equity multiples – P/E, P/BV, P/TBV Firm wide multiples: EV/ EBITDA, EV …
Why is Market Cap/EBITDA not a good comparable multiple? Read More »
A stock split is a corporate action in which a company increases the number of its outstanding shares by issuing additional shares to current shareholders, while maintaining the same overall value of the company. For example, in a 2-for-1 stock split, shareholders would receive two shares for every one share they currently own, effectively halving …
A rights issue, also known as a rights offering, is a type of corporate fundraising method in which a company offers its existing shareholders the right to purchase additional shares in proportion to their current shareholding. The new shares are typically offered at a discounted price compared to the market price. The purpose of a …
A bonus issue, also known as a bonus share issue or scrip issue, is a corporate action in which a company issues additional shares to its existing shareholders at no cost. These bonus shares are distributed to shareholders in proportion to their current shareholding. The purpose of a bonus issue is to reward existing shareholders …
Enterprise Value, or EV for short, is a measure of a company’s total value, often used as a more comprehensive alternative to equity market capitalization. The market capitalization of a company is simply its share price multiplied by the number of shares a company has outstanding. Enterprise value is calculated as the market capitalization plus …
How do we calculate Market Cap and Enterprise value (EV) ? Read More »
Accumulated depreciation is the total amount of the depreciation expenditure allocated to a particular asset since the asset was used. It is a contra asset account, i.e. a negative asset account that offsets the balance in the asset account with which it is usually linked. The accumulated balance of depreciation increases over time, adding the …
Provision Provision liability reduces an asset’s value because of a present obligation arising out of a past event The event which can result in a provisional liability may or may not occur. The estimated amount of the provisional liability is not certain Any increase or decrease in provision liability gets recorded in the Profit and …
Definition, Difference and Journal entry of: i. Provision & Contingent Liability Read More »
In auditing, the “Nature, Timing, and Extent of Audit” refer to critical factors that auditors consider when planning and conducting an audit engagement. These factors are addressed in the Standard on Auditing (SA) 200 – “Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Standards on Auditing.” Reference: SA …
What do you mean by Nature, Timing and Extent of Audit? Read More »
Sampling is a technique used in various fields, including auditing, to select a representative subset of items from a larger population. It is employed when it is not feasible or practical to examine every single item within the population. Sampling helps draw conclusions about the entire population based on the analysis of the selected sample. …
Shares and bonds are both financial instruments used to raise capital, but they differ in several ways: 1.Ownership: Shares represent ownership in a company, while bonds represent a loan to a company. 2.Return: Shareholders are entitled to a share of the company’s profits in the form of dividends and capital gains, while bondholders receive a …
The entry to record a prepaid expense involves the following steps: 1.Debit the Prepaid Expense account for the amount paid. 2.Credit the Cash or Bank account for the amount paid. When the expense is incurred, the prepaid asset is recognized as an expense in the income statement, and the entry to record this is: 1.Debit …
The Indian Accounting Standard (Ind AS) 19 aims to prescribe accounting and disclosure for employee benefits. It requires recognition of the liability by an entity when an employee provides services for employee benefits to be paid in the future, and recognition of expenses when the entity utilises the economic benefit arising from service given by …
As per IFRS 10 in the process of preparing consolidated financial statements, certain transactions and balances between the parent company and its subsidiaries may need to be eliminated. This is done to ensure that the financial statements of the group do not reflect transactions and balances that occur between entities within the group, as this …
Financial risk management is the process of identifying, assessing, and managing various types of financial risks that a company may face in its operations. Financial risks can arise from a variety of sources such as market fluctuations, credit risks, liquidity risks, interest rate risks, currency risks, and commodity price risks. Effective financial risk management involves …
A swap is an agreement between two parties to exchange sequences of cash flows for a set period. Usually, at the time the contract is initiated, at least one of these series of cash flows is determined by a random or uncertain variable, such as an interest rate, foreign exchange rate, equity price or commodity …
Future and forward contracts are both types of derivatives that allow parties to enter into an agreement to buy or sell an asset at a predetermined price on a future date. However, there are some key differences between the two: Future Contracts: A future contract is a standardized agreement traded on an exchange, where the …
The main difference between call and put options lies in the rights and obligations they grant to the holder. Here are the key distinctions: Call Options: A call option gives the holder the right, but not the obligation, to buy an underlying asset at a specified price (strike price) within a predetermined period. The holder …
Option trading refers to a financial derivative strategy that involves the buying or selling of options contracts. Options are financial instruments that give the holder the right, but not the obligation, to buy or sell an underlying asset at a predetermined price (strike price) within a specified period. Option trading allows investors to speculate on …
A derivative is a security with a price that is dependent upon or derived from one or more underlying assets. The derivative itself is a contract between two or more parties based upon the asset or assets. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, …
Ind AS 109, Financial Instruments, establishes principles for the recognition, measurement, presentation, and disclosure of financial instruments. It applies to various types of financial instruments, including financial assets, financial liabilities, and some contracts to buy or sell non-financial items. The standard introduces a classification and measurement framework for financial assets based on their contractual cash …
Ind AS 105, Non-current Assets Held for Sale and Discontinued Operations, provides guidance on the accounting treatment for non-current assets that are classified as held for sale and the presentation of discontinued operations in the financial statements. The standard defines non-current assets held for sale as assets that are available for immediate sale in their …
Ind AS 105 Non-current Assets Held for Sale and Discontinued Operations: Read More »
Ind AS 103, Business Combinations, provides guidance on the accounting treatment for the acquisition of businesses or entities. It outlines the principles and requirements for recognizing and measuring the assets, liabilities, and goodwill arising from a business combination. Under Ind AS 103, a business combination occurs when an entity obtains control over one or more …
