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Meaning of Accounting Standards

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

Classification of Enterprises

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

Level I Enterprises

Enterprises which fall under any one or more category below mentioned are termed as Level I Companies

  1. Enterprises whose equity or debt securities are listed whether in India or outside India
  2. Enterprises which are in the process of listing their equity or debt securities. Board of directors’ resolution must be available as an evidence
  3. Banks including co-operative banks
  4. Financial institutions
  5. Enterprises carrying on insurance business
  6. All commercial, industrial and business reporting enterprises, whose turnover not including ‘other income’ for the immediately preceding accounting period on the basis of audited financial statements exceeds Rs. 50 crore
  7. All commercial, industrial and business reporting enterprises having borrowings, including public deposits, in excess of Rs. 10 crores at any time during the accounting period
  8. Holding and subsidiary enterprises of any one of the above at any time during the accounting period

Level II Enterprises

Enterprises which fall under any one or more category below mentioned are termed as Level II Companies

  1. All commercial, industrial and business reporting enterprises, whose turnover (excluding ‘other income’) for the immediately preceding accounting period on the basis of audited financial statements is greater than Rs. 40 lakhs but less than Rs. 50 crore
  2. All commercial, industrial and business reporting enterprises having borrowings, including public deposits, is greater Rs. 1 crore but less than  Rs. 10 crores at any time during the accounting period
  3. Holding and subsidiary enterprises of any one of the above at any time during the accounting period

Level III Enterprises:

Enterprises which do not fall under Level I and Level II, are considered as Level III enterprises

Applicability of Accounting standards

Accounting Standard Level I Level II Level III
AS 1 Disclosure of Accounting Principles Yes Yes Yes
AS 2 Valuation of Inventories Yes Yes Yes
AS 3 Cash Flow Statements Yes No No
AS 4 Contingencies and Events Occurring After the Balance Sheet Date Yes Yes Yes
AS 5 Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies Yes Yes Yes
AS 6 Depreciation Accounting Yes Yes Yes
AS 7 Construction Contracts (Revised 2002) Yes Yes Yes
AS 9 Revenue Recognition Yes Yes Yes
AS 10 Accounting for Fixed Assets Yes Yes Yes
AS 11 The Effects Of Changes In Foreign Exchange Rates (Revised 2003) Yes Yes Yes
AS 12 Accounting for Government Grants Yes Yes Yes
AS 13 Accounting for Investments Yes Yes Yes
AS 14 Accounting for Amalgamations Yes Yes Yes
AS 15 Employee Benefits (Revised 2005) Yes Yes Yes
AS 16 Borrowing Costs Yes Yes Yes
AS 17 Segment Reporting Yes No No
AS 18 Related Party Disclosures Yes No No
AS 19 Leases Yes Partial Partial
AS 20 Earnings Per Share Yes Partial Partial
AS 21 Consolidated Financial Statements Yes No No
AS 22 Accounting for taxes on income Yes Yes Yes
AS 23 Accounting for Investments in Associates in Consolidated Financial Statements Yes No No
AS 24 Discontinuing Operations Yes No No
AS 25 Interim Financial Reporting Yes No No
AS 26 Intangible Assets Yes Yes Yes
AS 27 Financial Reporting of Interests in Joint Ventures Yes No No
AS 28 Impairment of Assets Yes Yes Yes
AS 29 Provisions, Contingent Liabilities and Contingent Assets Yes Partial Partial


1. AS 19 Leases

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

2. AS 20 Earnings Per Share

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.

3. AS 29, Provisions, Contingent Liabilities, and Contingent Assets

  • Paragraph 67 does not apply to Level II enterprises
  • Paragraphs 66 and 67 does not apply to Level II and Level III enterprises

 

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All Articles

  1. ICDS 10 deals with theContingent Liabilities and Contingent Assets. Know about its recognition, measurement, review, disclosure & compare it with AS 29.
  2. ICDS IX deals with the treatment of borrowing costs and other costs which are incurred in relation to borrowing of funds. Know about its capitalization, disclosure & compare it with AS 16.
  3. ICDS VIII deals with securities held as stock-in-trade and securities held by a scheduled bank or public financial institutions. Know how it differs from AS 13.
  4. ICDS VII deals with the accounting treatment of Government grants, subsidies, duty drawbacks, waiver, concessions, incentives, reimbursements. Know how this differ from AS 12.
  5. ICDS VI deals with the treatment of transactions in foreign currencies and forward contracts involving foreign currencies. Know about its recognition, conversion & compare it with Accounting Standard 11.
  6. ICDS V shall be applied for tangible fixed assets. Know about identification, components, disclosure and how these are different from notified Accounting Standard 10
  7. ICDS I deals with significant accounting policies. ICDS II covers valuation of inventories. Know these are different from Notified AS-1 & AS-2 respectively
  8. ICDS II shall be applied for valuation of inventories. Know about measurement of inventories and how these are different from notified Accounting Standard 2
  9. ICDS III shall be applied for construction contracts. Compare ICDS III with notified AS 7 and know about contract segmentation, revenue, cost and much more.
  10. ICDS IV shall be applied for revenue recognition. Compare ICDS IV with notified AS 9 and know about how revenue is recognized & it's disclosure.
  11. IND AS 115 Revenue from Contracts with Customers talks about revenue recognition from a contract with a customer for transfer of goods and services
  12. ICDS were issued by the Government of India in exercise of powers conferred to it under section 145(2) of The Income Tax Act, 1961. Read this article to know all about Income Computation and Disclosure Standards.
  13. Ind AS 16 Property Plant Equipment it's applicability, scope, recognition, derecognition, disclosure, cost model, difference with AS 10
  14. IND AS 18 Revenue Recognition - applicability, definitions, revenue measurement, identification of transaction, disclosure, difference with AS 9 explained
  15. IND AS 109 Financial Instruments accounting, classification, reclassification, recognition, derecognition, impairment, hedging instruments
  16. MCA notified applicability of IND AS in a phased manner beginning from 2016-17 depending on Net Worth, Turnover and listing status
  17. Accounting Standard (AS) 2 - Valuation of Inventories
  18. AS 3 Cash Flow Statements it's Applicability and scope, presentation, operating, financing and investing activities, disclosures, differences with IND AS 7
  19. AS 4 Contingencies and Events Occurring After the Balance Sheet Date, applicability, accounting treatment, disclosures, definitions, differ with IND AS 10
  20. AS 5 deals with uniformity in presentation among all enterprises, treatment of changes in accounting estimates and disclosures to made on account of changes
  21. AS 7 Construction Contract describes accounting treatment of revenue and costs, accounting of construction contracts in financial statements of contractors
  22. AS 9 Revenue Recognition explains the applicability, recognition of sale of goods, services, other income, Difference between IND AS -18 & AS 9
  23. AS 10 Property, Plant and Equipment prescribes accounting treatment, depreciation, carrying amount calculation for properties, P&E
  24. AS 11 The Effects of Changes in Foreign Exchange Rates, it's applicability, recognition, differences with IND AS 21, tax differences
  25. AS 12 Accounting for government grants explains accounting for government grants. It is a basic duty of any government to develop the industries & economy
  26. AS 13 Accounting for Investments know about applicability, classification, cost, carrying amount, treatment on disposal, disclosures, compare with IND AS 40
  27. AS 15 Employee Benefits deals with the forms of employee benefits, consideration given by an enterprise in exchange for the services rendered by employees
  28. Learn about accounting standard principles for the accounting of borrowing cost i.e AS 16. Know about AS 16 nature, assets, disclosure, capitalization, examples and much more.
  29. Know all about related parties for a Business enterprise & Disclosure required to be made in the Financial Statements with illustrations
  30. This covers the principles laid down in AS 19 for accounting of Finance & operating Leases by lessor & lessee
  31. This covers the computation of Basic Earnings per share & Diluted earnings per share as per AS 20 alongwith valuable illustrations under different scenarios
  32. AS 21 Consolidated Financial Statements and its applicability, scope, consolidation procedures, disclosures, differences with IND AS 110
  33. AS 22 Accounting for Taxes on Income explained including applicability, scope, consolidation process, disclosures required, subsidiaries excluded, differences with IND AS 110
  34. Learn about accounting standard principles for the accounting of assets i.e AS 28. Know about AS 28 applicability, indicators, Cash Flow Projections, disclosure and much more.