Applicability of Accounting Standards - An overview

CA Devanshi Gandhi (Ajani) (FCA DISA Mcom CIFRS & LLB)   (9060 Points)

18 November 2009  

 

Accounting Standards

To all Corporate Entities [As per Companies (Accounting Standards) Rules]

To all Non-Corporate entities [As per ICAI Accounting Standards]

AS 1

Disclosure of Accounting Policies

Y

Y

AS 2

Valuation of Inventories

Y

Y

AS 4

Contingencies and Events Occurring After the Balance Sheet Date

Y

Y

AS 5

Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies

Y

Y

AS 6

Depreciation Accounting

Y

Y

AS 7

Construction Contracts (Revised 2002)

Y

Y

AS 9

Revenue Recognition

Y

Y

AS 10

Accounting for Fixed Assets

Y

Y

AS 11

The Effects of Changes in Foreign Exchange Rates (Revised 2003)

Y

Y

AS 12

 Accounting for Government Grants

Y

Y

AS 13

Accounting for Investments

Y

Y

AS 14

Accounting for Amalgamations

Y

Y

AS 15

 Employee Benefits (Refer Note 1)

Y

Y

AS 16

Borrowing Costs

Y

Y

AS 18

Related Party Disclosures

Y

Not applicable to

Level III      

AS 19

Leases (Refer Note 2)

Y

Y

AS 20

Earnings Per Share (Refer Note 3)

Y

Y

AS 22

Accounting for Taxes on Income

Y

Y

AS 24

Discontinuing Operations

 Y

Not applicable

to Level III

AS 25

Interim Financial Reporting (Refer Note 6)

Y

Y

AS 26

Intangible Assets

Y

Y

AS 28

Impairment of Assets (Refer Note 4)

Y

Y

AS 29

Provisions, Contingent Liabilities and Contingent Assets (Refer Note 5)

Y

Y

Note: The Notes referred to in the previous table are given in the table titled "Relaxations of certain requirements for SMCs/Level II & Level III enterprises" below.

The Exemptions available to both, SMCs (i.e., governed by the Rules) and also available to Level II and Level III Enterprises (i.e., governed by the ICAI Accounting Standards) in entirety are given in the following table:

AS 3

Cash Flow Statements

AS 17

Segment Reporting

AS 21*

Consolidated Financial Statements

AS 23*

Accounting for Investments in Associates in Consolidated Financial Statements

AS 27*

Financial Reporting of Interests in Joint Ventures (to the extent of requirement relating to Consolidated Financial Statements)

Note: * AS 21, 23 and 27 are applicable only when relevant regulator requires compliance of these standards

Relaxations of certain requirements for SMCs / Level II & Level III enterprises :

Note No.

Accounting Standards

Relaxations available to Small and Medium Companies, Level II Enterprises and Level III Enterprises

1

AS 15, Employee Benefits

 • Paragraphs 11-16 dealing with recognition and measurement of short term accumulating compensated absences which are non-vesting

• Paragraphs 46 and 139 dealing with discounting of amounts that fall

due more than 12 months after the balance sheet date

• Paragraphs 50–116 dealing with Defined Benefit plans

• Paragraphs 117–123 dealing with actuarial valuations

• Paragraphs 129-131 in respect of other long-term benefits

Note: AS 15 (Revised 2005) issued by ICAI exempts Level II enterprises having less than 50 employees from the application of PUC method, i.e., these enterprises can use other rational method for accrual of liabilities.

However, the Companies (Accounting Standards) Rules, 2006 do not contain such exemption.

2

AS 19, Leases 22(c),

 • Requirements relating to disclosures as given in paragraphs  (e) and (f); 25(a), (b) and (e); 37(a) and (f); and 46(b) and (d) are not applicable to SMCs and level II/III enterprises.

• Further to these relaxations, Level III enterprises are also not required to give Paragraphs 37(g) and 46(e) disclosures.

3

AS 20, Earnings Per Share

 • Diluted earnings per share (both including and excluding extraordinary items) is not required to be disclosed for SMCs and level II/III non corporate enterprises.

• Further, Information required by paragraph 48(ii) of AS 20 regarding

disclosures for parameters used in calculation of EPS, are also not required to be disclosed by Level III entities.

4

AS 28, Impairment of Assets

 • Value in use can be based on reasonable estimate instead of computing it by present value technique. Further, information required by paragraph 121(g) relating to discount rate used, need not be disclosed.

 5

AS 29, Provisions, Contingent Liabilities and Contingent Assets

• Paragraphs 66 and 67 relating to disclosures for amount and descripttion for each class of provision are not required to be disclosed.

6

 AS 25, Interim Financial Reporting • AS 25 is applicable only if a company/non-corporate entity elects to prepare and present an interim financial report. Only certain Non-SMCs/Level I entities are required by the concerned regulatory to present interim financial results, eg, quarterly financial results required by the SEBI.