Hello, in this post we will discuss compliance with accounting standards and the classification of enterprises.
According to the Companies Act, 1956 it has been defined that all the profit/loss account and the balance sheet should comply with the Accounting Standards of ICAI.
Classification of Enterprises
The enterprises are classified as Level I, Level II and Level III enterprises. Also, the accounting standards are applicable to the enterprises based on the classification and the category in which they fall.
Level I enterprise
The enterprise which falls under any of the below categories at the end of the respective FY is termed as Level I companies.
- Enterprise whose equity or debt security is listed or is in the process of being listed on any Indian or foreign stock exchange, then it will come to level 1.
- Financial institutions
- Banks including co-operative banks
- Enterprises which carry out insurance business.
- All entities who are commercial, industrial and business reporting and whose turnover exceeds Rs. 50 crore in the immediately preceding accounting period. (Other incomes is ignored for calculation of turnover).
- All entities who are commercial, industrial and business reporting and whose borrowings, including public deposits, exceeds Rs. 10 crores in the immediately preceding accounting period.
- Holding and subsidiary enterprises of any one of the above at any time during the accounting period.
Level II enterprise
Enterprises who do not fall under the level 1 entities but come under one of the below lists are level 2 entities.
- All commercial, industrial and business reporting entities whose turnover exceeds Rs. 40 lakhs but falls below Rs. 50 Crore in the immediately preceding accounting period.
- All entities who are commercial, industrial and business reporting and whose borrowings, including public deposits, exceed Rs. 1 crore but falls within Rs. 10 crores in the immediately preceding accounting period.
- Holding and subsidiary enterprises of any one of the above at any time during the accounting period
Level III enterprise
Enterprises which do not fall under Level I and Level II, are considered as Level III enterprises.
Applicability of Accounting standards
|Indian Accounting Standard No (IAS No)||Name of Indian Accounting Standard||Level I||Level II||Level III|
|Ind AS 1||Disclosure of Accounting Principles||Yes||Yes||Yes|
|Ind AS 2||Valuation of inventories||Yes||Yes||Yes|
|Ind AS 3||Cash flow statements||Yes||No||No|
|Ind AS 4||Contingencies and Events occurring after the balance sheet date||Yes||Yes||Yes|
|Ind AS 5||Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies||Yes||Yes||Yes|
|Ind AS 7||Construction contracts||Yes||Yes||Yes|
|Ind AS 9||Revenue recognition||Yes||Yes||Yes|
|Ind AS 10||Accounting for Fixed Assets||Yes||Yes||Yes|
|Ind AS 11||The Effects Of Changes In Foreign Exchange Rates (Revised 2003)||Yes||Yes||Yes|
|Ind AS 12||Accounting for Govt grants||Yes||Yes||Yes|
|Ind AS 13||Accounting for Investments||Yes||Yes||Yes|
|Ind AS 14||Accounting for Amalgamations||Yes||Yes||Yes|
|Ind AS 15||Employee benefits||Yes||Yes||Yes|
|Ind AS 16||Borrowing Costs||Yes||Yes||Yes|
|Ind AS 17||Segment reporting||Yes||No||No|
|Ind AS 18||Related party disclosures||Yes||No||No|
|Ind AS 19||Leases||Yes||Partial||Partial|
|Ind AS 20||Earnings per share||Yes||Partial||Partial|
|Ind AS 21||Consolidated Financial Statements||Yes||No||No|
|Ind AS 22||Accounting for taxes on income||Yes||Yes||Yes|
|Ind AS 23||Accounting for Investments in Associates in Consolidated Financial Statements||Yes||No||No|
|Ind AS 24||Discontinuing operations||Yes||No||No|
|Ind AS 25||Interim financial reporting||Yes||No||No|
|Ind AS 26||Intangible assets||Yes||Yes||Yes|
|Ind AS 27||Financial Reporting of Interests in Joint Ventures||Yes||No||No|
|Ind AS 28||Impairment of Assets||Yes||Yes||Yes|
|Ind AS 29||Provisions, Contingent Liabilities, and Contingent Assets||Yes||Partial||Partial|
This ends the post. Also, let us know your opinion by commenting below.