In indian accounting blog everything is explained about AS in very short and meaningful way.
WHAT IS AS
Accounting standards are written , policy documents issued by expert accountingbody or by Government or other regulatory authorities covering the aspects of recognition, measurement, treatment, presentation and disclosure of accounting transaction in the financial statement.
The main purpose of formulating accounting standard is to standardize the diverse accounting policies with a view to eliminate to the extent possible the in-comparability of information provided in financial statements and add reliability to such financial statements.
To discuss on whether such standards are necessary in present days it will be beneficial to go through the advantages and disadvantages which they are said to provide.
APPLICABILITY OF AS
A three tier classification has been framed to ensure compliance of accounting standards for reporting enterprises.Level I Enterprises:
- Enterprises whose equity or debt securities are listed whether in India or outside India.
- Enterprises which are in the process of listing their equity or debt securities as evidenced by the Board resolution in this regard.
- Banks including co-operative banks
- Financial institutions
- Enterprises carrying insurance business
- Enterprises whose turnover exceeds Rs.50 crores
- Enterprises having borrowings in excess of Rs.10 crores at any time during the accounting period.
- Holding companies and subsidiaries of enterprises falling under any one of the categories mentioned above.
Level II Enterprises:
- Enterprises whose turnover exceeds Rs.40 lakhs but does not exceed Rs.50 crores.
- Enterprises having borrowings in excess of Rs.1 crore but not in excess of Rs.10 crores at any time during the accounting period.
- Holding companies and subsidiaries of enterprise falling under any one of the categories mentioned above.
Level III Enterprises:
Enterprises which are not covered under Level I and Level II.
Accounting Standard Applicability (Based on the three tier classification)
| AS 3,17,18,24, | Not applicable to Level II and Level III enterprises in their entirety. |
| AS 19,20,29 | All enterprises but relaxation given to Level I and Level II enterprises for certain disclosure requirements. |
| AS 21,23,27 | Not applicable to Level II and Level III enterprises |
| AS 25 | Not mandatorily applicable to Level II and Level III enterprises |
| AS 30,31,32 | W.e.f. accounting periods commencing on or after 1-4-2009 and will be recommendatory in nature for an initial period of two years. |
