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    DIfference Between Indian and US GAAP

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    Mark Dela Cruz
    Accounting standards and financial reporting differ between countries to comply with local regulations. While the basic principles of accounting are the same globally, Indian GAAP and US GAAP have some key differences in their rules and guidelines. Indian GAAP financial statements must follow standards set by the Institute of Chartered Accountants of India, whereas US GAAP financial statements adhere to rules from the Financial Accounting Standards Board. Some differences between the two standards include different formats for financial statements, mandatory cash flow statements only for listed Indian companies, and different methods for calculating depreciation expense. Harmonizing Indian GAAP with international standards like IFRS remains an ongoing challenge.

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    DIfference Between Indian and US GAAP

    Uploaded by

    Mark Dela Cruz
    623 views2 pages
    Accounting standards and financial reporting differ between countries to comply with local regulations. While the basic principles of accounting are the same globally, Indian GAAP and US GAAP have some key differences in their rules and guidelines. Indian GAAP financial statements must follow standards set by the Institute of Chartered Accountants of India, whereas US GAAP financial statements adhere to rules from the Financial Accounting Standards Board. Some differences between the two standards include different formats for financial statements, mandatory cash flow statements only for listed Indian companies, and different methods for calculating depreciation expense. Harmonizing Indian GAAP with international standards like IFRS remains an ongoing challenge.

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    DIfference between Indian and US GAAP

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    Accounting standards and financial reporting differ between countries to comply with local regulations. While the basic principles of accounting are the same globally, Indian GAAP and US GAAP have some key differences in their rules and guidelines. Indian GAAP financial statements must follow standards set by the Institute of Chartered Accountants of India, whereas US GAAP financial statements adhere to rules from the Financial Accounting Standards Board. Some differences between the two standards include different formats for financial statements, mandatory cash flow statements only for listed Indian companies, and different methods for calculating depreciation expense. Harmonizing Indian GAAP with international standards like IFRS remains an ongoing challenge.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    623 views2 pages

    DIfference Between Indian and US GAAP

    Uploaded by

    Mark Dela Cruz
    Accounting standards and financial reporting differ between countries to comply with local regulations. While the basic principles of accounting are the same globally, Indian GAAP and US GAAP have some key differences in their rules and guidelines. Indian GAAP financial statements must follow standards set by the Institute of Chartered Accountants of India, whereas US GAAP financial statements adhere to rules from the Financial Accounting Standards Board. Some differences between the two standards include different formats for financial statements, mandatory cash flow statements only for listed Indian companies, and different methods for calculating depreciation expense. Harmonizing Indian GAAP with international standards like IFRS remains an ongoing challenge.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Indian GAAP vs US GAAP

    Accounting is an important part of every enterprise, be it small or big. Where ever in the
    world one trades accounting has to be proper and according to the guidelines set by the
    government of that place. Basic principles of accounting are same everywhere but there are
    some differences in it depending on the requirements of the local governing body. GAAP is
    the term that is universally given to the financial accounting. GAAP is an acronym for
    Generally Accepted Accounting Principles. GAAP is the terminology used for the
    preparation of financial statements that are to be submitted, giving details of all the
    transactions made during a financial year. These financial statements are prepared keeping
    in mind the accounting laws of the country in which business is being carried out. The
    basics of Indian and US GAAP are same but there are some differences that should be
    known to a person having business interests in these two countries.

    Indian GAAP

    In India, it is the statements issued by Institute of Chartered Accountants of India (ICAI) that
    form the standards when it comes to Indian GAAP. These standards have to be followed by
    companies when they come out with their financial statements. Since 1973, the
    International Accounting Standards Committee (IASC) has suggested 32 accounting
    standards and it has been observed that India is lagging behind in accepting these
    standards as norms in accounting. To bring about a harmony in Indian GAAP and the
    accounting standards in the rest of the world is a challenging task and there has been
    significant progress in the last few years in this regard.

    ‘Provide for all losses and anticipate no profits’ is the basic underlying assumption in Indian
    accounting.

    US GAAP

    The generally accepted accounting principles or the US GAAP are set of rules that are
    made use of when preparing financial statements of companies and individuals in United
    States. In US, government does not set any standards of accounting at it believes that
    those working in the field have a better understanding of the subject and will come up with
    corrections wherever required. Currently, it is the statements issued by FASB (Financial
    Accounting Standards Board) that are accepted as norms by the accounting firms in the
    country. The provisions in US GAAP are somewhat different from the International Financial
    Reporting Standards (IFRS).

    Difference between Indian and US GAAP

    Though Indian accounting has undergone a sea of changes in the last few decades, there
    are still big differences in Indian GAPP and US GAPP which have often been reported by
    the US media. With many MNC operating in India and adopting Indian GAPP, they are able
    to escape by showing fewer profits. Let us see the major differences in the two accounting
    systems.
    • The manner of presenting financial statements in both is different. In Indian GAPP, these
    are prepared in accordance with schedule VI of the companies Act, 1956, whereas in US
    GAPP, these are not prepared under any specific format.

    • In Indian GAAP, Cash Flow statement is mandatory only for companies whose shares are
    listed in stock exchanges. Thus companies that are not listed escape this provision. In US
    GAAP, it is mandatory for every company to present its Cash Flow statement whether it is
    listed in the stock exchange or not.

    • Depreciation in Indian GAPP is calculated according to rates prescribed in the Companies


    Act of 1956. But in US, depreciation depends on the useful life of the asset.

    • In US, the current portion of any long term debt is taken as current liability, while in Indian
    GAPP, there is no such requirement and hence the interest accrued on this long term debt
    is not taken as current liability.

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