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Accounting Standards (AS)

Updated on September 30th, 2019 in Finance & Accounts

Accounting Standards (AS)

Accounting Standards are written policy documents issued by government or expert accounting body or other regulatory body covering the aspects of measurement, recognition, presentation, treatment and disclosure of accounting transactions in financial statements. Currently, in India, there are 27 Accounting Standards (AS).

Objective of Accounting Standards (AS)

The objective of Accounting Standards (AS) is to standardize the diversified policies and practices of accounting with a view to ensure the reliability to the financial statements and to eliminate the possibility of financial statements non-comparability.

Classification of Enterprises

The enterprises can be classified and labelled in three categories namely Level I, Level II and Level III companies. Accounting Standards (AS) are applicable to the enterprises based on such classification and such category in which they come under.

Level I Enterprises

Enterprises are termed as Level I companies when they come under in one or more below mentioned categories

  • Enterprises whose securities are listed either in India or outside India
  • Enterprises that are in process to list their securities providing that resolution of Board of directors shall be available as evidence
  • All banks including co-operative banks
  • Enterprises carrying on insurance business
  • Financial institutions
  • Enterprises carrying on insurance business
  • All industrial, commercial and business reporting enterprises, where the turnover not consisting other income for the immediately preceding accounting period on the basis of audited financial statements exceeds 50 Crore INR
  • All industrial, commercial and business reporting enterprises whose borrowings consisting public deposits exceed 10 Crores INR at any time during the accounting period
  • Holding and subsidiary enterprises of any one of the above-mentioned companies at any time during the accounting period

Level II Enterprises

Enterprises that are not Level I enterprise and comes under any one or more category below mentioned are classified as Level II Companies

  • All industrial, commercial and business reporting enterprises, whose turnover not consisting other income for the immediately preceding accounting period on the basis of audited financial statements cross 40 Lakhs INR but does not cross than 50 Crore INR
  • All industrial, commercial and business reporting enterprises having borrowings consisting public deposits crosses 1 Crore INR but does not crosses 10 Crores INR at any time during the accounting period
  • Holding and subsidiary enterprises of any one of the above-mentioned companies at any time during the accounting period

Level III Enterprises:

Level III enterprises are those companies which do not come under Level I and Level II categories of enterprises.

Accounting Standards (AS) Applicability

ASParticularsApplicability
Level ILevel IILevel III
AS 1Accounting Standard for Disclosure of Accounting Principles
AS 2Accounting Standard relating Valuation of Inventories
AS 3Accounting Standard regarding Cash Flow StatementsXX
AS 4Accounting Standard for Contingencies and Events Occurring After the Balance Sheet Date
AS 5Accounting Standard relating to Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies
AS 6Accounting Standard regarding Depreciation Accounting
AS 7Accounting Standard for Construction Contracts (Revised 2002)
AS 9Accounting Standard regarding Revenue Recognition
AS 10Accounting Standard relating to Accounting for Fixed Assets
AS 11Accounting Standard for The Effects Of Changes In Foreign Exchange Rates (Revised 2003)
AS 12Accounting Standard relating to Accounting for Government Grants
AS 13Accounting Standard for Accounting for Investments
AS 14Accounting Standard regarding Accounting for Amalgamations
AS 15Accounting Standard for Employee Benefits (Revised 2005)
AS 16Accounting Standard relating to Borrowing Costs
AS 17Accounting Standard for Segment ReportingXX
AS 18Accounting Standard regarding Related Party DisclosuresXX
AS 19Accounting Standard for LeasesPartialPartial
AS 20Accounting Standard related to Earnings Per SharePartialPartial
AS 21Accounting Standard regarding Consolidated Financial StatementsXX
AS 22Accounting Standard for Accounting for taxes on income
AS 23Accounting Standard relating to Accounting for Investments in Associates in Consolidated Financial StatementsXX
AS 24Accounting Standard for Discontinuing OperationsXX
AS 25Accounting Standard regarding Interim Financial ReportingXX
AS 26Accounting Standard relating to Intangible Assets
AS 27Accounting Standard for Financial Reporting of Interests in Joint VenturesXX
AS 28Accounting Standard relating to Impairment of Assets
AS 29Accounting Standard includes Provisions, Contingent Liabilities and Contingent AssetsPartialPartial

 

The Requirement to Follow Accounting Standards (AS)

As per Section 129 of the Companies Act, 2013, every enterprise are required to follow Accounting Standards (AS) (given under section 133) at the time of preparing its financial statements.

Enterprises shall comply with AS 25 only if they are required or voluntarily choose to prepare and present an interim financial report.

A Conflict Between Act and Accounting Standards (AS)

In a case, if there is any conflict between any applicable Act provisions and Accounting Standard (AS) than is such case the provisions of the Act shall prevail to that extent.