Updated on: Oct 11th, 2023
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7 min read
Accounting Standards are written policy documents issued by expert accounting body or by the government or other regulatory body covering the aspects of recognition, measurement, treatment, presentation, and disclosure of accounting transactions in financial statements.
The enterprises are classified and labeled as Level I, Level II and Level III companies. Based on this classification and the category in which they fall the Accounting standards are applicable to the enterprises
Enterprises which fall under any one or more category below mentioned are termed as Level I Companies
Enterprises which fall under any one or more category below mentioned are termed as Level II Companies
Enterprises which do not fall under Level I and Level II, are considered as Level III enterprises
Paragraphs 22(c), (e) and (f); 25(a), (b) and (e); 37(a), (f) and (g); and 46(b), (d) and (e), of AS 19 does not apply to Level II and Level III enterprises
The provisions of Part IV of Schedule VI to the Companies Act, 1956 require all companies to disclose earning per share in their financial statements. AS 2o does not mandate disclosure of diluted earning per share and information required by paragraph 48 for Level II and Level III enterprises. Hence only Level I enterprises are required to apply AS 20 entirely without any relaxations.
Accounting Standards are regulations concerning recognition, measurement, treatment, presentation, and disclosure of financial transactions. Enterprises are classified into Level I, Level II, and Level III based on specific criteria. The applicability of accounting standards varies depending on the enterprise's level. For instance, Level I enterprises must comply with all standards, while Level II and Level III have some exemptions.