DIFFERENCES BETWEEN INDIAN GAAP AND US GAAP

A FEW AND MAIN DIFFERENCES BETWEEN INDIAN GAAP AND US GAAP ARE STATED BELOW.

INDIA
FINANCIAL STATEMENTS Prepared in accordance with the presentation requirements of Schedule VI to the companies Act , 1956
USA
FINANCIAL STATEMENTS Not required to be prepared under any specific format as long as they complyWith the disclosure requirements of US Accounting Standards.

INDIA
EARNINGS PER SHARE (EPS) DATA
No disclosures requirements except those under Schedule VI ,Part IV to the companies act ,1956
USA
EARNINGS PER SHARE (EPS) DATA Disclosure is mandatory. This includes the EPS calculated using the weighted average shares outstanding (simple * complex capital structures method & the fully diluted EPS (considering the effect of warrants or options outstanding)

INDIA
FIXED ASSETS & DEPRICIATION Revaluation of assets permitted. Depreciation is based (usually) on rates set out in Schedule XIV to the Companies Act, 1956

USA
FIXED ASSETS & DEPRICIATION Revaluation of assets not permitted. Depreciation is over the useful economic lives of assets. Depreciation & profit/loss on sale is based on historical cost.

INDIA
INVESTMENT IN OWN SHARES Expressly prohibited
USA
INVESTMENT ON OWN SHARES Permitted, & is shown as a reduction from shareholder’s equity


INDIA

R & D Costs can be capitalized subject to the conditions of AS-8, Research & Development, issued by the Institute of Chartered Accountants of India

USA
R & D Costs are expenses as incurred

INDIA
RELATED PARTY TRANSACTIONS No specific disclosures required. Auditors have a duty to report certain transactions entered into by related parties as defined under the Companies Act, 1956.

USA
RELATED PARTY TRANSACTIONS Disclosures are stringent and require descriptions of nature of relationships and control, transactions, amounts involved and amounts due.

INDIA
GOODWILL No standard except for brief references in AS-10, Fixed Assets, and AS-14, Accounting For Amalgamation. Goodwill arising from amalgamation can be written off over five years

USA
GOODWILL Treated as any other intangible asset, and is capitalized and amortized. The maximum carry forward period is 40 years

INDIA
PRE-OPERATIVE EXPENCES Allowed to be deferred and written off over a period of 3-5 years or 10 years

USA
PRE-OPERATIVE EXPENCES Concept does not exist


INDIA
ASSETS & LIABILITIES No mandatory disclosure of current and long-term components EXCEPT AS FIXED ASSETS AND CURRENT ASSETS--SECURED,UNSECURED LOANS AND CURRENT LIABILITIES

USA
ASSETS & LIABILITIES Mandatory disclosures about current and long-term components separately. Current component normally refers to one year of the period of operating cycle

INDIA
FOREIGN EXCHANGE TRANSACTIONS Exchange fluctuations on liabilities incurred for fixed assets cant be capitalized

USA
FOREIGN EXCHANGE TRANSACTIONS Exchange gain/loss is taken to the income statement. the concept of capitalization of exchange fluctuations arising from foreign currency liabilities incurred for acquiring fixed assets does not exit

INDIA
SEGMENTAL REPORTING Requirement exists for disclosure of quantitative particulars only as prescribed in Schedule VI to the Companies Act , 1956

USA
SEGMENTAL REPORTING Mandatory for SEC-registered companies to report revenues and net income by geographic regions and products/business lines; report sales to outstanding receivables from major unaffiliated customers; report identifiable assetsBy geographical regions and product/business-lines.


INDIA
IMPAIRMENT EVALUATION : NOW INTRODUCED EARLIER No standards.

USA
IMPAIRMENT EVALUATION Mandatory for all assets. Future undercounted cash flows from use & disposal of all the assets are first compared to its carrying value to determine the impairment situation. Impairment loss is then recognized on the basis of the fair value of the asset. Disclosure of the facts and circumstances that lad to impairment is mandatory.

INDIA
FAIR VALUE DISCLOSURES Schedule VI (Directors to state expressly if, in their opinion, the current assets are not expected to realized their cost if they are sold)

USA
FAIR VALUE DISCLOSURES Mandatory fair values are ascertained based on certain specific principles for items, such as loans, current assets, current liabilities, loans etc