Shri Vile Parle Kelavani Mandal’s

Narsee Monjee College of Commerce and

Economics (Autonomous)

A.Y 2023-24

Name of the Course: Fundamentals

of Financial Accounting -I
Semester I

Title of the Project/Assignment :

Submitted by:

Sr Full Names of the SAP ID Division/ Contact Number Content

No Learners Number Roll No Contributed
1. Navya Sameer Nair 45611230426 C-077 9606335403 Introduction,
plagiarism report,
summary and
compilation report
2. Vedant Prasad Mhapne 45611230326 C-078 7020125431 Study of notes to
accounts of Tata
3. Shaill Kumar Mishra 45611230665 C-081 9026430041 Study of notes to
accounts of Infosys
4. Jinay Sheth 45611230166 C-082 9819601335 Applicability of
standards
5. Shrey Shah 45611230215 C-083 8097610852 Introduction of
companies and AS

Teacher In Charge
Prof. Shezad Lalani
 Table of content

S. No. Contents Page number

1. Plagiarism Report 3

2. Introduction to the companies – Tata 4

consultancies and Infosys
3. Introduction AS 1, AS 2 & AS 9 5,6
4. Applicability of IND AS1, AS2, AS9 in 7
service sector
5. Study of the Notes to Accounts of Tata 8
Consultancies
6. Study of the Notes to Accounts of Infosys 9
7. Summary and Bibliography 10
Plagiarism Report
 Tata Consultancy Services
Tata Consultancy Services was formed in 1968 as one of the first IT companies in
India. It is headquartered in Mumbai but has offices worldwide.TCS is well
known in the e-governance, banking and financial services, telecommunications,
education and healthcare markets. Many of its early customers were national
banks. Its history with the large enterprise financial sector from the early days of
computers provided much experience in the financial services market.TCS is a
major player in the IT space. It currently has over 600,000 employees and a
market cap of over $200 billion.

In 2004, TCS became a publicly traded company. It has since become one of the
largest and most profitable companies in India. TCS is a subsidiary of Tata Sons,
a major Indian holding company. Tata Sons owns shares in many large Indian
companies. Some of the industries of these other companies include airlines,
automotive, consumer goods, hotels and steel manufacturing.

Infosys
Infosys Limited is an Indian multinational information technology company that
provides business consulting, information technology and outsourcing services.
The company was founded in Pune and is headquartered in Bangalore.Infosys is
the second-largest Indian IT company, after Tata Consultancy Services, by 2020
revenue figures. Established in 1981, Infosys is a NYSE listed global consulting
and IT services company with more than 328k employees.

The company was established in Pune, Maharashtra, in 1981 by N. R. Narayan

Murthi with the original name 'Infosys Technologies Limited.' Mr. Murthi and his
team of six engineers made an initial investment of US $250 to set up the
company. Infosys has the world's largest corporate university located in Mysore,
Karnataka.

In 1983, the company shifted its main office from Pune to Bangalore. In 1993,
Infosys turned into a public organization, and it introduced an employee stock
options program. In February 1993, the company issued Initial Public Offer
(IPO). These IPOs had an offer price of INR 95 per share and a book value of
INR 20 per share. In 1999, shares of Infosys had the highest value in the market at
that time. Infosys got the title of the first IT Company listed in NASDAQ and
became part of the top 20 IT companies as per their market value.
 Introduction to AS 1

IND AS 1 is Presentation of financial statements. This Standard prescribes the basis for
presentation of general-purpose financial statements to ensure comparability both with the
entity’s financial statements of previous periods and with the financial statements of other
entities. It sets out overall requirements for the presentation of financial statements, guidelines
for their structure and minimum requirements for their content.
General purpose financial statements referred to as ‘financial statements’ are those intended to
meet the needs of users who are not in a position to require an entity to prepare reports tailored to
their particular information needs. Financial statements are a structured representation of the
financial position and financial performance of an entity.

Financial statements also show the results of the management’s stewardship of the resources
entrusted to it. To meet this objective, financial statements provide information about an entity’s;
Assets, liabilities, equity, income and expenses, including gains and losses.

Notes to accounts contain information in addition to that presented in the balance sheet ,
statement of profit and loss, statement of changes in equity and statement of cash flows. Notes
provide narrative descriptions or disaggregation of items presented in those statements and
information about items that do not qualify for recognition in those statements.

Introduction to AS 2
IND AS 2 is Inventories. The objective of this Standard is to prescribe the accounting treatment
for inventories. A primary issue in accounting for inventories is the amount of cost to be
recognised as an asset and carried forward until the related revenues are recognised. This
Standard deals with the determination of cost and its subsequent recognition as an expense,
including any write-down to net realizable value. It also provides guidance on the cost formulas
that are used to assign costs to inventories.
Inventories are assets:
(i) held for sale in the ordinary course of business;
(ii) in the process of production for such sale; or
(iii) in the form of materials or supplies to be consumed in the production process or in the
rendering of services.

Net realisable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date.
 Introduction to AS 9

IND AS 9 is Revenue recognition. This Standard deals with the bases for recognition of revenue
in the statement of profit and loss of an enterprise. The Standard is concerned with the
recognition of revenue arising in course of the ordinary activities of the enterprise from- the sale
of goods, the rendering of services, the use by others of enterprise resources yielding interest,
royalties, and dividends.
This Standard does not deal with the following aspects of revenue recognition to which special
considerations apply: - Revenue arising from construction contracts, Revenue arising from hire-
purchase; lease agreements; Revenue arising from government grants and other similar
subsidies; Revenue of insurance companies arising from insurance contracts.

Revenue is the gross inflow of cash, receivables or other consideration arising in course of the
ordinary activities of an enterprise from the sale of goods, from the rendering of services, and
from the use by others of enterprise resources yielding interest, royalties, and dividends. Revenue
is measured by the charges made to customers or clients for goods supplied and services
rendered to them and by the charges and rewards arising from the use of resources by them. In an
agency relationship, the revenue is the amount of commission and not the gross inflow of cash,
receivables or other considerations.
 Applicability of INDAS 1 in service sector
IND AS 1 – presentation of financial statements is applicable to all the sectors like private,
public, service, finance etc. There are no requirements or conditions for IND AS 1 to be
applicable for any business entity. The standard applies equally to all entities including those
presenting a consolidated financial statement in accordance with IND AS 110 and those
presenting a separate financial statement in accordance to IND AS 27. So, if any service sector
company wants to add additional information to their financial statements, then they can give
disclosure in their notes to accounts. They can give disclosure like eg:- change in some policies
of the services they provide or increase in number of services they provide by providing new
services etc.

Applicability of IND AS 2 to service sector

IND AS 2 – inventories is not applicable to service sector, as this standard deals with the
determination of cost of the goods and help determining net realizable value of goods which
helps in determining closing stock of the company but in service sector there are no goods there
is services and there is no net realizable value and closing or opening stock of inventories.

Applicability of IND AS 9 to service sector

IND AS 9 – revenue recognition is applicable to all sectors as this standard deals with the bases
for the recognition of revenue in the statement of profit or loss in all business entity and also with
recognition of revenue arising from ordinary course of revenue .so any income earned by
providing services is recognized as revenue by service providing business entities.
Revenue from service transactions is usually recognized as the service is performed, either by
the proportionate completion method or by the
completed service contract method.

1. Proportionate completion method :-

Performance consists of the execution of more than one act. Revenue is recognised
proportionately, by reference to the performance of each act. The revenue recognised under this
method would be determined on the basis of contract value, associated costs, number of acts or
other suitable basis.

2. Completed service contract method:-

Performance consists of the execution of a single act. Alternatively, services are performed in
more than a single act, and the services yet to be performed are so significant in relation to the
transaction taken as a whole, that performance cannot be deemed to have been completed until
the execution of those acts. The completed service contract method is relevant to these patterns
of performance and accordingly revenue is recognised when the sole or final act takes place, and
the service becomes chargeable.
 Study of the Notes to accounts of Tata Consultancy Services

IAS 1 – Non-current Liabilities with Covenants

• In October 2022, IASB issued 'Non-current Liabilities with Covenants (Amendments to

IAS 1)' to clarify how conditions with which an entity must comply within twelve months
after the reporting period affect the classification of a liability.
• The Group does not expect the amendments to have any significant impact on its
classification of non-current liabilities in its statement of financial position
IAS 1 – Classification of Liabilities

• In January 2020, IASB issued the final amendments in Classification of Liabilities as

Current or Non-Current, which affect only the presentation of liabilities in the statement
of financial position.
• They clarify that classification of liabilities as current or non-current should be based on
rights that are in existence at the end of the reporting period and align the wording in all
affected paragraphs to refer to the "right" to defer settlement by at least twelve months.
• The classification is unaffected by expectations about whether an entity will exercise its
right to defer settlement of a liability. They make clear that settlement refers to the
transfer to the counterparty of cash, equity instruments, other assets or services.
• The Group does not expect the amendments to have any significant impact on its
presentation of liabilities in its statement of financial position.
IAS 9

The company generates revenue primarily from providing IT services, consulting, and
business solutions. It offers a consulting-led, cognitive-powered, integrated portfolio of
IT, business, and engineering services and solutions. Revenue is recognized upon the
transfer of control of promised products or services to customers, reflecting the
consideration expected in exchange for those products or services. Revenue from time
and material and job contracts is measured by units delivered, efforts expended, and
number of transactions processed. Fixed price maintenance and support services contracts
are recognized based on time elapsed mode, while revenue from other fixed-price
contracts is recognized using the percentage-of-completion method (POC method).
Revenue from the sale of distinct internally developed software and manufactured
systems and third-party software is recognized upfront at the point in time when the
system/software is delivered to the customer. Revenue from the sale of distinct third-
party hardware is recognized at the point in time when control is transferred to the
customer. The company may also provide third-party equipment or software, recording
revenue at gross or net basis depending on whether it is acting as a principal or an agent.
 Study of the Notes to accounts of Infosys
IAS1
Follows historical cost convention and accrual basis. Certain financial instruments are
measured at fair values. Complies with the Companies Act, 2013, and SEBI guidelines.
Ind AS are prescribed under Section 133 of the Companies Act, 2013. Accounting
policies are consistent, except for newly adopted standards or revisions. Use of Estimates
and Judgments: Management uses estimates, judgments, and assumptions. Affects assets,
liabilities, revenues, and expenses. Changes in estimates are reflected when material.
IAS9

• Primary revenue sources:

IT services (software development, cloud services, maintenance, consulting, licensing,
business process management). Recognize revenue when control of "performance
obligations" is transferred. Uncertainty in collectability leads to postponed recognition.

• Revenue Recognition Methods:

Time-and-material and unit of work: Recognize revenue as services are delivered. Fixed-
price maintenance: Recognize systematically (straight-line or % completion). Other fixed-
price, fixed-timeframe: Use % completion. Record provisions for estimated losses on
incomplete contracts when probable.

• Billing and Contract Liabilities:

Include periodic performance-based and milestone-based billings. Excess revenues are
unbilled revenue. Excess billings are contract liabilities (unearned revenues).

• Specific Services: Software development:

Distinct performance obligations. Cloud and infrastructure services: May have specific
accounting guidance. License revenue depends on "right to use" or "right to access."
Subcontractor Services and Third-Party Vendors: Record net revenue from third-party
vendors when acting as an intermediary. Gross revenue recognition when the company is the
primary entity.
• Contract Costs:
Recognize incremental costs to obtain contracts as assets if recoverable. Recognize eligible
nonrecurring costs related to contracts as assets if they enhance resources and are
recoverable. Amortize capitalized contract costs systematically. Evaluate capitalized costs for
impairment and record losses if future cash flows don't cover carrying amount.
 Summary

This project was aimed at understanding the meaning and scope of AS1, AS2 and AS9 in the
service sector. Each member of the team was given a particular topic to work on, after which
they had to recapitulate the same. The project aimed at enhancing our comprehension of AS1,
AS2, and AS9, while also equipping us with the skills to effectively interpret and apply these
standards when presented within a company's notes to accounts. This project was a cumulations
of both intensive reading and research as well as interpretation and analysis.

Bibliography

https://www.infosys.com/investors/reports-filings/quarterly-results/2022-
2023/q4/documents/consolidated/consol-fy23-annual-finstatement.pdf

https://www.icai.org/

https://www.tcs.com/

https://www.infosys.com/

https://www.mca.gov.in/content/mca/global/en/home.html

https://www.tcs.com/content/dam/tcs/investor-relations/financial-statements/2022-
23/q4/IFRS/Consolidated,%20Audited%20%E2%80%93%20USD.pdf