Financial Accounting and Management Accounting

Study of Indian Accounting Standards on 3 Indian Companies

Company Overview:

Maruti Suzuki: The company is the largest passenger vehicle producer in the Indian Automobile
market. It is considered a market leader with over 50 % of the market, domestically. The main
business of the company involves, manufacturing plus purchase and sale of vehicles and
generation and sales of auto parts as well. The company reported an operating profit of Rs. 7,118
crore and a revenue of Rs. 75,660 for FY 2019-20.

Infosys: This is a multi-national company that operates globally across various countries. Infosys
provides IT based services and solutions to its various clients. It acts as India’s second largest
company to export software services. The company witnessed an operating profit of Rs. 22,177
crore and we also see a revenue of Rs. 90791 for FY 2019-20.

Interglobe Aviation: The company has emerged as the market leader in the aviation sector and as
per December 2019, it accounted for a 47.5% market share and a market share of 60.4% as per
July, 2020. The main business of the company is to provide both domestic and international
transport services. Its operating profit was at Rs. 1620 crore and sales of Rs. 35,756 crores for FY
2019-20.

Ind-AS 1: Presentation of Financial Statements

Maruti Suzuki:

 The presentation of the three financial statements was in line with the accounting standards.
 They were presented end of the period for an operating cycle of 12 months, meaning that it
follows the going concern concept
 The statements are prepared on an accrual basis and the assets and liabilities are classified as
either current or non-current.
Infosys:

 The presentation of the three financial statements was in line with the accounting standards.
 They were presented end of the period for an operating cycle of 12 months and are prepared
on an accrual basis and on a going concern basis.
 The assets and liabilities are classified as either current or non-current.

Interglobe Aviation:
 The presentation of the three financial statements was in line with the accounting standards.
 They were presented end of the period for an operating cycle of 12 months.
 The statements are prepared on an accrual basis and on a going concern basis.
Ind-AS 2: Inventories Accounting

Maruti Suzuki:
 Inventories are valued at cost, determined on the weighted average basis, or the net
realisable value, whichever is lower.
 Cost of inventories also includes all costs associated with bringing the inventories to their
present location and condition.
 Cost of purchased inventories is determined after deducting rebates as per Ind-AS 2.

Infosys:
 The company doesn’t have inventory as such as it is primarily a software company.

Interglobe Aviation:
 Inventories are valued at cost or net realisable value, whichever is lower.
 Inventories primarily include spares, loose tools and inventories.
 Cost of inventory includes the cost incurred in bringing the inventory to its present location
after all the discounts are deducted.
 Weighted average cost method is used to assign cost to individual items.

Ind-As 115: Revenue from Contracts with Customers

Maruti Suzuki:
 Revenue is recognized when the amount of revenue and its related cost can be reliably
measured and it is probable that future economic benefits will be realised.
 The Company estimates its historical results, after taking into consideration the type of
customer, the type of transactions and the specifics of each arrangement.

Infosys:
 Revenue from customers is recognized only when the contract has been approved in writing.
When the services are performed through repetitive tasks, revenue is recognized on a
straight-line basis. For fixed price contracts it uses percentage of completion method.
 For uncompleted contracts, provision for estimated losses is recognized when such losses
become due.

Interglobe Aviation:
 Revenue is recognised on transfer of control of promised goods or services to its customers.
It is measured at the fair value of the consideration received or receivable, excluding
discounts, incentives, performance bonuses, price concessions, amounts collected on behalf
of third parties.

Ind-As 7: Statement of Cash Flows

Maruti Suzuki:
 The cash flow statement is prepared in the “Indirect Method” in accordance with Ind- AS 7.
 All highly liquid investments that are readily convertible to known amounts of cash are
considered to be cash equivalents.
Infosys:
 The cash flow statement is prepared in the “Indirect Method” in accordance with Ind- AS 7.
 The cash and cash equivalents include restricted bank balances and cash.

Interglobe Aviation:
 The cash flow statement is prepared in the” Indirect Method” in accordance with Ind- AS 7.
 All highly liquid investments that are readily convertible to known amounts of cash are
considered to be cash equivalents.

Ind AS 16: Property, Plant and Equipment

Maruti Suzuki:
 Property, Plant and Equipment are stated at cost of acquisition or construction less
accumulated depreciation or impairment, if any as per Ind-AS 16.
 Depreciation for the company is calculated as per the straight-line method.

Infosys:
 Property, Plant and Equipment are stated at cost, less any accumulated depreciation and
impairment costs (except for Freehold Land which is stated at cost and is not
depreciated).
 Costs of acquisition are capitalized until the property, plant and equipment is ready for use.
Depreciation is calculated as per the straight-line method.

Interglobe Aviation:
 Property, Plant and Equipment are stated at cost, less accumulated depreciation as per Ind-
AS 16.
 Depreciation is calculated on cost of items of property, plant, and equipment less their
estimated residual values and on a straight-line basis.