AS 25 Interim Financial Reporting Format Notes | ICAI. In the previous articles, we have given AS 22 Accounting For Taxes on Income and AS 28 Impairment of Assets. Today we are providing the complete details of accounting standard 25 interim financial reporting I;e objective, scope, definitions, content of an interim financial report, form and content of interim financial statements, explanatory notes and disclosure etc. You can also download AS 25 notes by ICAI at the end of this article.
AS 25 Interim Financial Reporting
The objective of this Standard is to prescribe the minimum content of an interim financial report and to prescribe the principles for recognition and measurement in a complete or condensed financial statements for an interim period.
1. This Statement does not mandate which enterprises should be required to present interim financial reports, how frequently, or how soon after the end of an interim period. If an enterprise is required or elects to prepare and present an interim financial report, it should comply with this Statement.
2. A statute governing an enterprise or a regulator may require an enterprise to prepare and present certain information at an interim date which may be different in formand/or content as required by this Statement. In such a case, the recognition and measurement principles as laid down in
this Statement are applied in respect of such information, unless otherwise specified in the statute or by the regulator.
3. The requirements related to cash flow statement, complete or condensed, contained in this Statement are applicable where an enterprise prepares and presents a cash flow statement for the purpose of its annual financial report.
The following terms are used in this Standard with the meanings specified:
1) Interim period is a financial reporting period shorter than a full financial year.
2) Interim financial report means a financial report containing either a complete set of financial statements or a set of condensed financial statements (as described in this Standard) for an interim period.
Content of an Interim Financial Report
A complete set of financial statements normally includes:
- balance sheet;
- statement of profit and loss;
- cash flow statement; and
- notes including those relating to accounting policies and other statements and explanatory material that are an integral part of the financial statements.
Form and Content of Interim Financial Statements
1) If an enterprise prepares and presents a complete set of financial statements in its interim financial report, the form and content of those statements should conform to the requirements as applicable to annual complete set of financial statements.
2) If an enterprise prepares and presents a set of condensed financial statements in its interim financial report, those condensed statements should include, at a minimum, each of the headings and
sub-headings that were included in its most recent annual financial statements and the selected explanatory notes as required by this Statement. Additional line items or notes should be included if their omission would make the condensed interim financial statements misleading.
3) If an enterprise presents basic and diluted earnings per share in its annual financial statements in accordance with Accounting Standard (AS) 20, Earnings Per Share, basic and diluted earnings per
share should be presented in accordance with AS 20 on the face of the statement of profit and loss, complete or condensed, for an interim period.
4) If an enterprise’s annual financial report included the consolidated financial statements in addition to the parent’s separate financial statements, the interim financial report includes both the consolidated financial statements and separate financial statements, complete or condensed.
An enterprise should include the following information, as a minimum, in the notes to its interim financial statements, if material and if not disclosed elsewhere in the interim financial report:
(a) a statement that the same accounting policies are followed in the interim financial statements as those followed in the most recent annual financial statements or, if those policies have been changed, a description of the nature and effect of the change;
(b) explanatory comments about the seasonality of interim operations;
(c) the nature and amount of items affecting assets, liabilities, equity, net income, or cash flows that are unusual because of their nature, size, or incidence.
(d) the nature and amount of changes in estimates of amounts reported in prior interim periods of the current financial year or changes in estimates of amounts reported in prior financial years, if those changes have a material effect in the current interim period;
(e) issuances, buy-backs, repayments and restructuring of debt, equity and potential equity shares;
(f) dividends, aggregate or per share (in absolute or percentage terms), separately for equity shares and other shares;
(g) segment revenue, segment capital employed (segment assets minus segment liabilities) and segment result for business segments or geographical segments, whichever is the enterprise’s primary basis of segment reporting (disclosure of segment information is required in an enterprise’s interim financial report only if the enterprise is required, in terms of AS 17, Segment Reporting, to disclose segment information in its annual financial statements);
(h) material events subsequent to the end of the interim period that have not been reflected in the financial statements for the interim period;
(i) the effect of changes in the composition of the enterprise during the interim period, such as amalgamations, acquisition or disposal of subsidiaries and long-term investments, restructurings, and discontinuing operations; and
(j) material changes in contingent liabilities since the last annual balance sheet date.
Periods for which Interim Financial Statements are required to be presented:
1) Interim reports should include interim financial statements (condensed or complete) for periods as follows:
- balance sheet as of the end of the current interim period and a comparative balance sheet as of the end of the immediately preceding financial year;
- statements of profit and loss for the current interim period and cumulatively for the current financial year to date, with comparative statements of profit and loss for the comparable interim periods (current and year-to-date) of the immediately preceding financial year;
- cash flow statement cumulatively for the current financial year to date, with a comparative statement for the comparable year-to-date period of the immediately preceding financial year.
2)For an enterprise whose business is highly seasonal, financial information for the twelve months ending on the interim reporting date and comparative information for the prior twelve-month period may be useful.
In deciding how to recognize, measure, classify, or disclose an item for interim financial reporting purposes, materiality should be assessed in relation to the interim period financial data. In making assessments of materiality, it should be recognized that interim measurements may rely on estimates to a greater extent than measurements of annual financial.
An enterprise may not prepare and present a separate financial report for the final interim period because the annual financial statements are presented.
If an estimate of an amount reported in an interim period is changed significantly during the final interim period of the financial year but a separate financial report is not prepared and presented for that final interim period, the nature and amount of that change in estimate should be disclosed in a note to the annual financial statements for that financial year.
Click Here to download AS 25 notes by ICAI.
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