{"id":17309,"date":"2023-03-20T15:35:57","date_gmt":"2023-03-20T10:05:57","guid":{"rendered":"https:\/\/gstguntur.com\/?p=17309"},"modified":"2023-03-20T15:35:57","modified_gmt":"2023-03-20T10:05:57","slug":"conceptual-framework-for-financial-reporting-under-ind-as-ca-final-fr-study-material","status":"publish","type":"post","link":"https:\/\/gstguntur.com\/conceptual-framework-for-financial-reporting-under-ind-as-ca-final-fr-study-material\/","title":{"rendered":"Conceptual Framework for Financial Reporting under Ind AS \u2013 CA Final FR Study Material"},"content":{"rendered":"

Conceptual Framework for Financial Reporting under Ind AS \u2013\u00a0CA Final FR Study Material<\/a>\u00a0is designed strictly as per the latest syllabus and exam pattern.<\/p>\n

Conceptual Framework for Financial Reporting under Ind AS \u2013 CA Final FR Study Material<\/h2>\n

Question 1.
\nExplain financial capital maintenance and Physical capital maintenance as per the Framework and differentiate it.
\nAnswer:
\nA. Financial Capital maintenance
\nUnder this concept, a profit is earned only if the financial amount of the net assets at the end of the period exceeds the financial amount of net assets at the beginning of the period, after excluding any distribution to, and contribution from, owners during the period.<\/p>\n

B. Physical Capital maintenance
\nUnder this concept, a profit is earned only if the physical productive or operating capability of the entity at the end of the period exceeds the physical productive capacity at the beginning of the period, after excluding any distributions to, and contributions from, owners during the period.<\/p>\n

Major differences between Physical Capital & Financial Capital<\/p>\n

The physical capital maintenance concept requires the adoption of the current cost basis as measurement whereas financial capital maintenance concept does not require the use of a particular basis of measurement.<\/p>\n

Financial capital maintenance where capital is defined in terms of nominal monetary units, profit represents the increase in nominal money capital over the period. When the concept of financial capital maintenance is defined in terms of constant purchasing power units, profit represents the increase in invested purchasing power over the period. Thus, only that part of the increase in the prices of assets that exceeds the increase in the general level of prices is regarded as profit.<\/p>\n

Under the concept of physical capital maintenance when capital is de-fined in terms of the physical productive capacity, profit represents the increase in that capital over the period. All price changes affecting the assets and liabilities of the entity are viewed as changes in the measurement of the physical productive capacity of the entity; hence, they are treated as capital maintenance adjustments that are part of equity and not as profit.<\/p>\n

\"Conceptual<\/p>\n

Question 2.
\nMr. Unique commenced business on 01.04.2017 with \u20b9 20,000 represented by 5,000 units of the product @ \u20b9 4 per unit. During the year 2017-18, he sold 5,000 units @ \u20b9 5 per unit. During 2017-18, he withdraw \u20b9 4,000.<\/p>\n