Amendments in Accounting Standards: What CA Intermediate Students Should Focus On

Find essential changes in accounting rules that CA Intermediate students should concentrate on for practical use and test success.

Introduction

Chartered accounting (CA) is a dynamic profession that is ever-changing with rules, legislation, and accounting standards. It is important for CA inter students to have current knowledge of changes in accounting standards. These changes reflect shifting business landscapes, global conformance to IFRS, and financial reporting regulations. The main changes that CA Intermediate students should be given top priority to in their study are the topics of this article.

Understanding Accounting Standards and Their Importance

Accounting standards are ideas and rules that guide financial accounting and reporting. They provide consistency, openness, and comparability in financial statements; therefore, they offer a standardized method of financial reporting for several sectors. In accounting standards, amendments close gaps, fit new corporate practices and conform to international standards.

Understanding these criteria and their revisions is crucial for CA students preparing for exams and future careers as professional accountants. These modifications typically reflect changes in regulations, economic growth, and corporate practices that directly influence financial reporting; they also reflect political events.

Important Amendments in Accounting Standards (as of 2024)

Periodically changing accounting rules, the Institute of Chartered Accountants of India (ICAI) removes out-of-date methods and adds fresh ideas. The ICAI has implemented some significant changes for CA Intermediate students in 2024.

1. Ind AS 16: Property, Plant, and Equipment

Significant changes have occurred in the classification and valuation of property, plant, and equipment (PPE). The primary focus is as follows:

• Component accounting:  Students must be capable of disassembling significant components of an item and determining the individual value of each portion.
• Valuation after revaluation:  Revaluation techniques affect the calculation of depreciation after changes in them.
• Disclosure requirements:  More attention is paid to correct PPE disclosure in financial statements, including useful lifetimes and depreciation techniques.

2. Ind AS 115: Revenue from Contracts with Customers

A fundamental issue in accounting is always revenue recognition. Within the scope of Ind AS 115:

 A five-step approach for determining revenue is as follows: 

A model that demonstrates how to locate contracts, performance requirements, and the appropriate timing to recognize revenue is shown here.

Alterations to contract modifications: These alterations have an impact on how firms manage contract modifications, particularly in industries such as construction, where long-term arrangements are often reached. One of the disclosure needs is to give clear instructions on how to communicate about assets, revenue sources, and contract duties.

3. Financial Instruments, as outlined in Indian Standard 109

One of the most complicated topics in accounting is the usage of financial instruments like swaps. The processes of measurement and classification are at the heart of major changes. It is now abundantly evident that when it comes to profit or loss, the amortized cost is not the same as the fair value. The most recent modifications make this clear.

• Models of impairment: The Expected Credit Loss (ECL) model offers a technique of impairment that allows for a forward-looking perspective, and it ought to be the primary focus of instruction for CA students.
• Hedge accounting: Companies now have more options for aligning their financial reporting with risk management procedures according to updated hedge accounting guidelines. 
• Examining Specific Amendments for CA Intermediate Students: Not only should CA Intermediate students study the modifications, but also their pragmatic relevance.

The following is a list of amendments that students should prioritize in their studies:

1. AS 10: Accounting for Fixed Assets

This changes the emphasis on revaluation and component accounting. Students should fully grasp the differences between many parts of an asset and how to individually account for them. Moreover, disclosures are becoming most important, which calls for a thorough understanding of how appraised assets are presented.

2. AS 29: Provisions, Contingent Liabilities, and Contingent Assets

CA exam frequently looks at contingent liabilities and provisions. Tougher guidelines for recognizing clauses and distinguishing between provisions and contingent liabilities are added by the modification. Students should be able to use the recognition criteria in many situations and distinguish between these words.

3. AS 22: Accounting for Taxes on Income

For years, students have struggled with income tax accounting. The revised AS 22 emphasizes the assessment and recognition of postponed tax assets and liabilities. Students need to know the latest rules on how to figure out delayed taxes, especially when tax rates or tax bases change.

4. AS 21: Statements of Consolidated Financial

For people who study group accounting, changes to AS 21 have made putting together combined financial records very different. Among these changes are guidelines on the treatment of minority interests and the reporting of non-controlling interests on the financial statement. For CA Intermediate students, knowing how these advances affect the consolidation process is very vital.

Advice for CA students

Following our discussion of the major changes, here are some useful pointers for students on how to include them in their exam preparation:

1. Give modifications in ICAI study material priority

Give the modifications stressed in the official study materials and practice guides top priority. Tests will probably evaluate these changes; knowledge of them will enable you to pass the practical and theoretical parts.

2. Know the intellectual structure

Though recalling revisions is helpful, understanding the underlying conceptual framework is essential. This will allow students to face actual scenarios in assessments and case-study-based questions.

3. Frequently update your information

To keep updated on further changes, subscribe to ICAIs newsletters, go to revision courses, and join internet forums. Ongoing learning can help you to prevent exam surprises.

4. Work on past papers

Go over past test questions, including recent modifications. This will enable you to improve your answer style and provide you with ideas on how ICAI arranges questions about changes.

Conclusion

Although accounting standards include many amendments that might be intimidating, CA Intermediate students can learn these changes and shine on their tests with the correct technique. Prioritizing revisions in Ind AS 16, Ind AS 115, Ind AS 109, and AS 10 will equip students with a robust foundation in financial reporting. AS 29 and AS 22 Regular study, practice, and keeping current will enable you to pass both tests and your future profession as a chartered accountant.