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SRI KRISHNA ARTS AND SCIENCE COLLEGE

Principles of Accountancy Assignment 2


Topic: The accounting notes on Income tax of Infosys based upon Corporate Governance. Submitted by,

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Introduction
Infosys is an information technology Services Company headquartered in Bangalore, India. Today, we are a global leader in the "next generation" of IT and consulting with revenues of over US$ 4.8 billion. . Infosys is one of the largest IT companies in India with 114,822 employees (including subsidiaries) as of 2010. It has offices in 30 countries and development centres in India, China, Australia, UK, Canada and Japan. Infosys defines, designs and delivers technology-enabled business solutions that help Global 2000 companies win in a Flat Wseven people with US$ 250orld. Infosys also provides a complete range of services by leveraging our domain and business expertise and with leading technology providers.

Corporate governance
Corporate governance is about maximizing shareholder value legally, ethically and on a sustainable ensuring basis, to while every

fairness

stakeholder - our customers, employees, investors, vendorpartners, the governments of the countries in which we operate, and the community. Thus, corporate governance is a reflection of our culture, policies, our relationship with stakeholders and our commitment to values. We believe that sound corporate governance is critical to enhance and retain investor trust. Accordingly, we always seek to ensure that we attain our performance rules with integrity. We have complied with the recommendations of the Narayana

Murthy Committee on Corporate Governance constituted by the Securities and Exchange Board of India (SEBI).

Corporate governance philosophy


Our corporate governance philosophy is based on the following principles: 1. Satisfy the spirit of the law and not just the letter of the law. 2. Corporate governance standards should go beyond the law. 3. Be transparent and maintain a high degree of disclosure levels. 4. When in doubt, disclose 5. Make a clear distinction between personal conveniences and corporate resources 6. Communicate externally, in a truthful manner, about how the Company is run internally 7. Comply with the laws in all the countries in which the Company operates 8. Have a simple and transparent corporate structure driven solely by business needs 9. Management is the trustee of the shareholders' capital and not the owner.

Basis for preparation of financial statements


The financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values. GAAP comprises mandatory accounting standards as prescribed by the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

Income tax
Income taxes are accrued in the same period that the related revenue and expenses arise. A provision is made for income tax annually, based on the tax liability computed, after considering tax allowances and exemptions. Provisions are recorded when it is estimated that a liability due to

disallowances or other matters is probable. Minimum alternate tax (MAT) paid in accordance with tax laws, which gives rise to future economic benefits in the form of tax credit against future income tax liability. This is recognized as an asset in the Balance Sheet if there is convincing evidence that the Company will pay normal tax after the tax holiday period and the resultant asset can be measured reliably. The Company offsets, on a year-on-year basis, the current tax assets and liabilities where it has a legally enforceable right and where it intends to settle such assets and liabilities on a net basis. The differences that result between the profit considered for income taxes and the profit as per the financial statements are identified, and thereafter a deferred tax asset or deferred tax liability is recorded for timing differences, namely the differences that originate in one accounting period and reverse in another, based on the tax effect of the aggregate amount of timing difference. The tax effect is calculated on the accumulated timing differences at the end of an accounting period based on enacted or substantively enacted regulations.

Balance sheet of Infosys

Schedules of Balance Sheet for Income tax

Profit and loss account of Infosys