What are the differences between Indian GAAP and US GAAP?

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The major differences between Indian GAAP (Generally Accepted Accounting Principles) and US GAAP (United States Generally Accepted Accounting Principles) are as follows −

Indian GAAP (Generally Accepted Accounting Principles)

  • Financial statements are prepared in accordance with the principle of conservatism.

  • Financial statements are prepared with presentation requirements of schedule VI of companies ACT, 1956.

  • Only listed companies are mandated for cash flow statements.

  • Provides prescribed depreciation rates (schedule XVI of companies Act, 1956).

  • No requirement is provided for a portion of long term debt.

  • Preparation of financial statements for subsidiary companies is not mandatory.

  • Investments are classified as current investments, long term investments and investment property.

  • For integral and non-integral operations, separate treatment is prescribed.

  • During the project stage, all incidental expenditures of assets are accumulated and allocated to cost of assets.

  • Development and research expenditure are charged to the profit and loss account (excludes equipment and machinery).

  • Allows revaluation of assets.

  • Over a period of time capital issue expenses are amortised.

US GAAP (United States Generally Accepted Accounting Principles)

  • Conservatism is recognised as and when it is realised/realizable/earned.

  • No specific format is required.

  • Both listed and unlisted companies are required to prepare cash flow statements.

  • No particular depreciation rates are provided.

  • Current portion of long term debts is categorised as current liability.

  • Preparation of consolidated financial statements are mandatory.

  • Investments are classified as held to maturity, trading security and available for sale.

  • Comprehensive income is nothing but transaction difference.

  • Expenditure is divided into direct and indirect heads.

  • Research and development costs are expenses (excludes purchased intangible assets).

  • Revaluation of assets is not allowed.

  • Adjustments for tax rates are required, while reporting prior period items.

  • Capital issue expenses are written off as when incurred against proceeds of capital.

Updated on 17-May-2022 15:04:32