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This Study Material has been prepared by the faculty of the Board of Studies
(Academic). The objective of the Study Material is to provide teaching material to
the students to enable them to obtain knowledge in the subject. In case students
need any clarification or have any suggestion for further improvement of the
material contained herein, they may write to the Director of Studies.
All care has been taken to provide interpretations and discussions in a manner
useful for the students. However, the Study Material has not been specifically
discussed by the Council of the Institute or any of its committees and the views
expressed herein may not be taken to necessarily represent the views of the
Council or any of its Committees.
Permission of the Institute is essential for reproduction of any portion of this
material.

© THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

All rights reserved. No part of this book may be reproduced, stored in a retrieval
system, or transmitted, in any form, or by any means, electronic, mechanical,
photocopying, recording, or otherwise, without prior permission, in writing, from the
publisher.

Basic draft of this publication was prepared by CA. Vandana D Nagpal

Edition : April, 2023

Committee/Department : Board of Studies (Academic)

E-mail : [email protected]

Website : www.icai.org

Price : ` /- (For All Modules)

ISBN No. : 978-81-962488-8-8

Published by : The Publication & CDS Directorate on behalf of

The Institute of Chartered Accountants of India,
ICAI Bhawan, Post Box No. 7100,
Indraprastha Marg, New Delhi 110 002 (India)
Printed by :

© The Institute of Chartered Accountants of India

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CONTENTS

MODULE I

CHAPTER 1: Introduction to Accounting Standards

CHAPTER 2: Framework for Preparation and Presentation of Financial

Statements
CHAPTER 3: Applicability of Accounting Standards

CHAPTER 4: Presentation & Disclosures Based Accounting Standards

MODULE II

CHAPTER 5: Assets Based Accounting Standards

CHAPTER 6: Liabilities based Accounting Standards

CHAPTER 7: Accounting Standards based on items impacting Financial
Statements

CHAPTER 8: Revenue based Accounting Standards

CHAPTER 9: Other Accounting Standards

CHAPTER 10: Accounting Standards for Consolidated Financial
Statements

MODULE III

CHAPTER 11: Financial Statements of Companies

CHAPTER 12: Buy back of Securities

CHAPTER 13: Amalgamation of Companies

CHAPTER 14: Accounting for Reconstruction of companies

CHAPTER 15: Accounting for Branches including foreign branches.

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DETAILED CONTENTS: MODULE – 3

CHAPTER 11: FINANCIAL STATEMENTS OF COMPANIES .............. 11.1 – 11.175

UNIT-1: PREPARATION OF FINANCIAL STATEMENTS ....................... 11.1-11.71

Learning Outcomes ............................................................................................................... 11.1
Unit Overview.......................................................................................................................... 11.2
1.1. Meaning of Company ............................................................................................. 11.2
1.2. Maintenance of Books of Account ...................................................................... 11.6
1.3. Statutory Books ........................................................................................................ 11.9
1.4. Annual Return ........................................................................................................ 11.10
1.5. Final Accounts ........................................................................................................ 11.10
1.6. Distributable Profit ............................................................................................... 11.18
Summary .............................................................................................................................. 11.50
Test Your Knowledge ......................................................................................................... 11.51

UNIT-2: CASH FLOW STATEMENT .................................................. 11.72-11.175

Learning Outcomes ............................................................................................................ 11.72
Unit Overview....................................................................................................................... 11.72
2.1. Introduction ............................................................................................................ 11.72
2.2. Elements of Cash ................................................................................................... 11.74
2.3. Classification of Cash Flow Activities ............................................................... 11.75
2.4. Calculation of Cash Flows from Operating Activities .................................. 11.79
2.5. Calculation of Cash Flows from Investing Activities .................................... 11.82
2.6. Calculation of Cash Flows from Financing Activities ................................... 11.82
2.7. Illustrations ............................................................................................................. 11.83
Summary ............................................................................................................................. 11.112
Test Your Knowledge ....................................................................................................... 11.114
ANNEXURE: Schedule III to the Companies Act ....................................................... 11.138

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CHAPTER-12: BUYBACK OF SECURITIES.............................................. 12.1 – 12.48
Learning Outcomes ......................................................................................................... 12.1
Chapter Overview ............................................................................................................ 12.1
1. Introduction ......................................................................................................... 12.2
2. Provisions of Section 70 of the Companies Act, 2013 .............................. 12.6
Summary ......................................................................................................................... 12.30
Test your knowledge .................................................................................................. 12.32

CHAPTER-13: AMALGAMATION OF COMPANIES .............................. 13.1 – 13.91

Learning Outcomes ......................................................................................................... 13.1

Chapter Overview ............................................................................................................ 13.2

1. Introduction ..................................................................................................... 13.2
2. Meaning of Amalgamation .............................................................................. 13.3

3. Types of Amalgamation .................................................................................... 13.5

4. Purchase Consideration .................................................................................... 13.7
5. Methods of Accounting for Amalgamations ............................................ 13.18
6. Journal Entries to close the books of Vendor Company....................... 13.21
7. Entries in the books of Purchasing Company .......................................... 13.29
Summary ......................................................................................................................... 13.68
Test your knowledge ................................................................................................... 13.70

CHAPTER-14: ACCOUNTING FOR RECONSTRUCTION OF

COMPANIES .................................................................. 14.1 – 14.69

Learning Outcomes ......................................................................................................... 14.1

Chapter Overview ............................................................................................................ 14.2
1. Meaning of reconstruction .............................................................................. 14.2
2. Methods of internal reconstruction .............................................................. 14.4
2.1 Alteration of Share Capital .............................................................................. 14.4

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2.2 Variation of Shareholders Rights ................................................................... 14.9

2.3 Reduction of Share Capital .............................................................................. 14.9
2.4 Compromise/Arrangements ......................................................................... 14.11

2.5 Surrender of Shares ........................................................................................ 14.12

3. Entries in case of internal reconstruction ................................................. 14.12
Summary ......................................................................................................................... 14.46

Test Your Knowledge .................................................................................................. 14.48

CHAPTER 15: ACCOUNTING FOR BRANCHES INCLUDING FOREIGN

BRANCHES ................................................................. 15.1 – 15.106
Learning Outcomes .............................................................................................................. 15.1
Chapter Overview ................................................................................................................. 15.2
1. Introduction .............................................................................................................. 15.2
2. Distinction between Branch Accounts and Departmental Accounts ......... 15.3
3. Dependent Branches .............................................................................................. 15.4
4. Methods of Charging Goods to Branches ........................................................ 15.5
5. Accounting for Dependent Branches ................................................................ 15.6
6. Accounting for Independent Branches .......................................................... 15.41
7. Adjustment and Reconciliation of Branch& Head Office Accounts ........ 15.44
8. Incorporation of Branch Balance in Head Office Books ............................ 15.53
9. Incomplete Information in Branch Books ...................................................... 15.64
10. Foreign Branches .................................................................................................. 15.67
11. Accounting for Foreign Branches .................................................................... 15.68
12. Techniques for Foreign Currency Translation .............................................. 15.69
13. Change in Classification ..................................................................................... 15.71
Summary ............................................................................................................................... 15.80
Test Your Knowledge ........................................................................................................ 15.82

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