CA Inter Accounting Standards — Quick Reference
All 11 Accounting Standards covered in CA Inter Advanced Accounting (Paper 1) under the new syllabus. Key provisions, exam focus areas, and practice MCQs for each standard.
AS carry 55-65% weightage in Advanced Accounting. Source: ICAI Study Material.
All 11 Standards at a Glance
| Standard | Topic | Core Rule |
|---|---|---|
| AS 2 | Inventories | Lower of cost and NRV |
| AS 3 | Cash Flow | Operating / Investing / Financing |
| AS 10 | PPE | Cost model, component depreciation |
| AS 13 | Investments | Current at lower of cost/FV, LT at cost |
| AS 16 | Borrowing Costs | Capitalise if qualifying asset |
| AS 17 | Segment Reporting | 10% and 75% thresholds |
| AS 18 | Related Party | Disclose relationships & transactions |
| AS 19 | Leases | Finance vs Operating classification |
| AS 20 | EPS | Basic and Diluted EPS |
| AS 24 | Discontinuing Ops | Disclosure from initial event |
| AS 25 | Interim Reporting | Same policies as annual, condensed format |
Valuation of Inventories
Prescribes the treatment for valuation of inventories in financial statements.
Key Provisions
- Inventories valued at lower of cost and net realisable value (NRV)
- Cost includes purchase cost, conversion costs, and other costs to bring inventory to present location/condition
- Cost formulas: FIFO or Weighted Average (LIFO not permitted)
- Exclusions from cost: abnormal waste, storage costs (unless necessary), selling costs
- NRV = estimated selling price minus estimated costs of completion and costs to make the sale
Exam Focus: NRV calculation, cost inclusion/exclusion, FIFO vs weighted average comparison
Cash Flow Statements
Requires provision of information about historical changes in cash and cash equivalents through a cash flow statement.
Key Provisions
- Cash flows classified into: Operating, Investing, and Financing activities
- Operating activities: direct method or indirect method allowed
- Cash equivalents: short-term, highly liquid investments readily convertible to known amounts of cash (maturity ≤ 3 months from acquisition)
- Interest paid: operating or financing. Interest received: operating or investing
- Dividends paid: financing. Dividends received: operating or investing
- Tax cash flows classified as operating unless specifically identifiable with financing/investing
Exam Focus: Indirect method adjustments, classification of items between operating/investing/financing
Property, Plant and Equipment
Prescribes the accounting treatment for property, plant and equipment (PPE) including recognition, measurement, and depreciation.
Key Provisions
- Cost = purchase price + directly attributable costs + initial estimate of dismantling/restoration costs
- Subsequent costs capitalised only if future economic benefits will flow and cost can be measured reliably
- Depreciation: systematic allocation of depreciable amount over useful life
- Depreciable amount = cost minus residual value
- Depreciation methods: straight-line, diminishing balance, units of production
- Component accounting: each significant part depreciated separately
- Derecognition: on disposal or when no future economic benefits expected
Exam Focus: Cost determination, component depreciation, exchange of assets, government grants impact on PPE
Accounting for Investments
Prescribes accounting treatment for investments and disclosure requirements.
Key Provisions
- Investments classified as current or long-term at acquisition
- Current investments: carried at lower of cost and fair value (determined on individual or category basis)
- Long-term investments: carried at cost, less provision for diminution (other than temporary)
- Reclassification from current to long-term: at lower of cost and fair value on date of transfer
- Reclassification from long-term to current: at lower of cost and carrying amount on date of transfer
- Cost includes acquisition charges (brokerage, fees, duties)
Exam Focus: Current vs long-term classification, reclassification rules, diminution in value
Borrowing Costs
Prescribes accounting treatment for borrowing costs and whether they should be capitalised or expensed.
Key Provisions
- Borrowing costs directly attributable to a qualifying asset are capitalised
- Qualifying asset: asset that takes substantial period to get ready for intended use/sale
- Specific borrowings: actual cost incurred minus income earned on temporary investment
- General borrowings: capitalisation rate = weighted average of borrowing costs applicable to general borrowings outstanding during the period
- Capitalisation begins when expenditure is incurred, borrowing costs incurred, and activities to prepare asset have commenced
- Capitalisation suspended during extended periods of inactivity
- Capitalisation ceases when substantially all activities to prepare the asset are complete
Exam Focus: Capitalisation rate calculation for general borrowings, when to start/stop capitalising
Segment Reporting
Establishes principles for reporting financial information by business and geographical segments.
Key Provisions
- Applicable to enterprises with listed securities or turnover exceeding Rs. 50 crore
- Business segment: distinguishable component engaged in providing products/services with different risks and returns
- Geographical segment: distinguishable component engaged in providing products/services within a particular economic environment
- Reportable segment: revenue ≥ 10% of total revenue, OR result ≥ 10% of combined result, OR assets ≥ 10% of total assets
- Total external revenue of reportable segments must be ≥ 75% of total enterprise revenue
- Primary and secondary segment formats based on dominant source of risks and returns
Exam Focus: Identifying reportable segments using 10% and 75% thresholds, primary vs secondary reporting
Related Party Disclosures
Requires disclosure of related party relationships and transactions between them.
Key Provisions
- Related parties: parties that control, are controlled by, or are under common control with the reporting enterprise
- Includes: holding/subsidiary companies, associates, joint ventures, key management personnel (KMP), relatives of KMP
- Disclosure required: name of related party, nature of relationship, nature and volume of transactions
- No disclosure needed for: intra-group transactions eliminated in consolidated FS, state-controlled enterprises (for transactions with other state enterprises)
- Transactions: purchases/sales, rendering/receiving services, leases, transfers of assets, guarantees, management contracts
Exam Focus: Identifying related parties, what must be disclosed vs exemptions
Leases
Prescribes accounting policies and disclosures for finance and operating leases in the books of lessees and lessors.
Key Provisions
- Finance lease: transfers substantially all risks and rewards of ownership to lessee
- Operating lease: does not transfer substantially all risks and rewards
- Finance lease indicators: ownership transfer, bargain purchase option, lease term ≥ 75% of asset life, PV of minimum lease payments ≥ 90% of fair value
- Lessee (finance lease): recognise asset and liability at lower of fair value and PV of minimum lease payments
- Lessee (operating lease): recognise lease payments as expense on straight-line basis
- Lessor (finance lease): recognise receivable equal to net investment in lease
- Lessor (operating lease): present asset on balance sheet, recognise income on straight-line basis
Exam Focus: Finance vs operating classification, lessee accounting entries, minimum lease payment calculations
Earnings Per Share
Prescribes principles for determination and presentation of earnings per share (EPS).
Key Provisions
- Basic EPS = Net profit attributable to equity shareholders / Weighted average number of equity shares
- Diluted EPS considers potential equity shares (convertible debentures, options, warrants)
- Weighted average: shares weighted by time proportion during the period
- Bonus shares: treated as if they always existed (restate prior periods)
- Rights issue: adjustment factor = fair value per share before rights / theoretical ex-rights price
- Anti-dilutive potential shares excluded from diluted EPS calculation
- Both basic and diluted EPS must be presented on face of statement of profit and loss
Exam Focus: Weighted average shares calculation with bonus/rights issues, diluted EPS with convertible debentures
Discontinuing Operations
Establishes principles for reporting information about discontinuing operations.
Key Provisions
- Discontinuing operation: a relatively large component being disposed of substantially in its entirety, or terminated through piecemeal sale/closure
- Initial disclosure event: binding sale agreement, or board approval and announcement
- Disclose: description of operation, business/geographical segment, date of initial disclosure event
- Disclose: revenue, expenses, and pre-tax profit/loss from ordinary activities attributable to the discontinuing operation
- Disclose: carrying amounts of total assets and total liabilities
- Disclose: net cash flows attributable to operating, investing, and financing activities
Exam Focus: Identifying when initial disclosure event occurs, what financial information to disclose
Interim Financial Reporting
Prescribes minimum content of an interim financial report and recognition and measurement principles.
Key Provisions
- Minimum components: condensed balance sheet, condensed P&L, condensed cash flow statement, selected explanatory notes
- Same accounting policies as annual financial statements
- Revenue recognised when earned, not deferred or anticipated
- Costs that benefit more than one interim period allocated on a reasonable basis
- Year-end bonuses: anticipated if it is a legal or constructive obligation and a reliable estimate can be made
- Tax expense: based on estimated average annual effective tax rate applied to interim pre-tax income
- Materiality based on interim period data, not projected annual amounts
Exam Focus: Minimum content requirements, cost allocation across periods, tax expense calculation
Frequently Asked Questions
How many Accounting Standards are in CA Inter?
The CA Inter Advanced Accounting paper covers 11 Accounting Standards: AS 2, 3, 10, 13, 16, 17, 18, 19, 20, 24, and 25. These carry 55-65% weightage in the exam.
Which AS are most important for the exam?
AS 10 (PPE), AS 19 (Leases), AS 3 (Cash Flow), and AS 20 (EPS) are most frequently tested. Together they account for roughly 30-40% of the paper. AS 10 and AS 19 often appear as practical problems worth 12-16 marks.
Are Ind AS also covered in CA Inter?
Yes, the syllabus covers select Ind AS standards in addition to the 11 Accounting Standards. However, AS carry the majority of the weightage (55-65%). Ind AS is covered more extensively at the CA Final level.
How should I prepare Accounting Standards for the exam?
Focus on understanding the core principle of each standard rather than memorizing. Practice numerical problems from ICAI Study Material, RTPs, and past papers. For each standard, know: when to recognise, how to measure, and what to disclose.