Applicability of Accounting standards

Can also be reviewed on https://sites.google.com/a/vnv.ca/intranet/resources/accounts/asapplicability

 

 

SMCs(Small and Medium Companies): It means a Company                 (i)          whose equity or debt securities are not listed or are not in the process of listing on any stock exchange, whether in India or outside India;                (ii)          which is not a bank, financial institution or an insurance company;              (iii)          whose turnover (excluding other income) does not exceed rupees fifty crore in the immediately preceding accounting year;              (iv)          which does not have borrowings (including public deposits) in excess of rupees ten crore at any time during the immediately preceding accounting year; and                (v)          which is not a holding or subsidiary company of a company which is not a small and medium-sized company.

Non-SMCs: Companies not falling within the definition of SMC are considered as Non- SMCs.

 

 

Ref.	Description	SMCs	Non-SMCs
A S–1	Disclosures of Accounting Policies	Y	Y
A S–2	Valuation of Inventories	Y	Y
A S-3	Cash Flow Statements	N	Y
A S-4	Contingencies and Events occurring after the Balance Sheet date	Y	Y
A S-5	Net Profit or Loss for the period, Prior Period items and changes in Accounting Policies	Y	Y
A S-6	Depreciation Accounting	Y	Y
A S-7	Construction Contracts	Y	Y
A S-9	Revenue Recognition	Y	Y
A S-10	Accounting for Fixed Assets	Y	Y
A S-11	The Effects of Changes in Foreign Exchange Rates	Y	Y
A S-12	Accounting for Government Grants	Y	Y
A S-13	Accounting for Investments	Y	Y
A S-14	Accounting for Amalgamation	Y	Y
A S-15	Employee Benefits	Partly (Note 1)	Y
A S-16	Borrowing Costs	Y	Y
A S-17	Segment Reporting	N	Y
A S-18	Related Party Disclosures	Y	Y
A S-19	Leases	Partly (Note 2)	Y
A S-20	Earnings Per Share	Partly (Note 3)	Y
A S-21	Consolidated Financial Statements	N	Y
A S-22	Accounting for Taxes on Income	Y	Y
A S-23	Accounting for Investments in Associates in Consolidated Financial Statements	N	Y
A S-24	Discontinuing Operations	Y	Y
A S-25	Interim Financial Reporting	Y (Note 4)	Y
A S-26	Intangible Assets	Y	Y
A S-27	Financial Reporting of Interests in Joint Venture	N	Y
A S-28	Impairment of Assets	Partly (Note 5)	Y
A S-29	Provisions, Contingent Liabilities and Contingent Assets	Partly (Note 6)	Y

 

 

 

 

NOTES

1.      A S 15 : Employee Benefits

a)          A Small and Medium-sized Company, as defined above, may not comply with recognition and measurement of short-term accumulating compensated absences, which are non-vesting (i.e., short term accumulating compensated absences in respect of which employees are not entitled to cash payment for unused entitlement on leaving).

b)         It may not discount contributions and termination benefits that fall due more than 12 months after the balance sheet date.

c)          It may not comply with recognition and measurement principle as laid down in paragraphs 50 to 116 and presentation and disclosure requirements laid down in paragraphs 117 to 123 of the standard in respect of accounting for defined benefit plans. However, such companies should actuarially determine and provide for the accrued liability in respect of defined benefit plans by using projected unit credit method and the discount rate used should be determined by reference to market yields at the balance sheet date on government bonds. The currency and term of the government bonds should be consistent with the currency and estimated term of the post-employment benefit obligations. Such companies should disclose the following actuarial assumptions

o   the discount rates;

o   the expected rates of return on any plan assets for the periods presented in the financial statements;

o   the expected rates of return for the periods presented in the financial statements on any reimbursement right recognised as an asset in accordance with paragraph  103;

o   medical cost trend rates; and

o   any other material actuarial assumptions used.

 

An enterprise should disclose each actuarial assumption in absolute terms (for example, as an absolute percentage) and not just as a margin between different percentages or other variables.

Apart from the above actuarial assumptions, an enterprise should include an assertion under the actuarial assumptions to the effect that estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

d)          It may not comply with the recognition and measurement principles laid down in paragraphs 129 to 131 of the Standard in respect of accounting for other long-term employee benefits. However, such a company should actuarially determine and provide for the accrued liability in respect of other long-term employee benefits by using the Projected Unit Credit Method and discount rate used should be determined by reference to market yields at the balance sheet date on government bonds.

2.      A S 19 Leases:

Disclosures in respect of the following provisions are not applicable to SMCs

Leases in the Financial Statements of Lessees

For Finance leases:

(a)        a reconciliation between the total of minimum lease payments at the balance sheet date and their present value. In addition, an enterprise should disclose the total of minimum lease payments at the balance sheet date, and their present value, for each of the following periods:

(i)            not later than one year;

(ii)           later than one year and not later than five years;

(iii)          later than five years;

(b)        the total of future minimum sublease payments expected to be received under non-cancellable subleases at the balance sheet date; and

(c)        a general description of the lessee’s significant leasing arrangements including, but not limited to, the following:

                                                    i.     the basis on which contingent rent payments are determined;

                                                   ii.     the existence and terms of renewal or purchase options and escalation clauses; and

                                                  iii.     restrictions imposed by lease arrangements, such as those concerning dividends, additional debt, and further leasing.

For Operating Leases:

(a)        the total of future minimum lease payments under non-cancellable operating leases for each of the following periods:

(i) not later than one year;

(ii) later than one year and not later than five years;

(iii) later than five years;

(b)        the total of future minimum sublease payments expected to be received under non-cancellable subleases at the balance sheet date;

(c)        a general description of the lessee’s significant leasing arrangements including, but not limited to, the following:

(i) the basis on which contingent rent payments are determined;

(ii) the existence and terms of renewal or purchase options and escalation clauses; and

(iii) restrictions imposed by lease arrangements, such as those concerning dividends, additional debt, and further leasing.

 

 

Leases in the Financial Statements of Lessors

For Finance leases:

(a)        a reconciliation between the total gross investment in the lease at the balance sheet date, and the present value of minimum lease payments receivable at the balance sheet date. In addition, an enterprise should disclose the total gross investment in the lease and the present value of minimum lease payments receivable at the balance sheet date, for each of the following periods:

(i) not later than one year;

(ii) later than one year and not later than five years;

(iii) later than five years;

(b)        a general description of the significant leasing arrangements of the lessor; and

For Operating Leases:

(a)        the future minimum lease payments under non-cancellable operating leases in the aggregate and for each of the following periods:

(i) not later than one year;

(ii) later than one year and not later than five years;

(iii) later than five years;

(b)        a general description of the lessor ’s significant leasing arrangements.

 

3.      A S 20 Earnings Per Share: Disclosure of diluted Earnings per Share is exempted for SMCs.

 

4.      A S 25 Interim Financial Reporting: AS 25 is applicable only if a company/non-corporate entity elects to prepare and present an interim financial report. Only certain Non-SMCs/Level I entities are required by the concerned regulatory to present interim financial results, e.g., quarterly financial results required by the SEBI.

5.      A S 28 Impairment of Assets: SMCs are allowed to measure the "Value in use" on the basis of reasonable estimate thereof instead of computing the value in use by present value technique. Consequently, the relevant provisions such as discount rate, etc. are not applicable for it.

 

6.      A S 29 Provisions, Contingent Liabilities and Contingent Assets:

Disclosures in respect of the following provisions are not applicable to SMCs:

(A) For each class of provision:

(a)        the carrying amount at the beginning and end of the period;

(b)        additional provisions made in the period, including increases to existing provisions;

(c)        amounts used (i.e. incurred and charged against the provision) during the period; and

(d)        unused amounts reversed during the period.

(B) For each class of provision:

(a)        a brief description of the nature of the obligation and the expected timing of any resulting outflows of economic benefits;

(b)        an indication of the uncertainties about those outflows. Where necessary to provide adequate information, an enterprise should disclose the major assumptions made concerning future events, i.e. Future events that may affect the amount required to settle an obligation should be reflected in the amount of a provision where there is sufficient objective evidence that they will occur.

(c)        the amount of any expected reimbursement, stating the amount of any asset that has been recognised for that expected reimbursement.