Applicability of AS to Non-Corporate Entities

applicability of AS to non-corporate entities
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Applicability of AS to Non-Corporate Entities

ICAI has revised the classification criteria of Non-Corporate entities. Based on the classification of such Non-company entities, the applicability of Accounting Standards will be determined. Entities at levels II, III, and IV will be referred to as Micro, Small & Medium Size Entities commonly known as MSMEs.

Classification Criteria of Non-company entities

Level I – Large Size Entities

  • Non Corporate Entities whose securities are listed on any stock exchange in India or outside India.
  • Non Corporate Entities whose securities are in the process of listing on any stock exchange in India or outside India.
  • Banks including co-operative banks
  • Financial institutions
  • Insurance business entities
  • An entity engaged in commercial, industrial, or business activities
    • If turnover exceeds Rs 250 Crores in the immediately preceding accounting year. (Other income will not be included)
    • If borrowing exceeds Rs 50 Crores in the immediately preceding accounting year. (Public deposits will be included)
  • Holding and subsidiary entities of any one of the above.

Level II  – Medium-Size Entities

  • An entity that does not qualify as a Level I entity.
  • An entity engaged in commercial, industrial, or business activities
    • If turnover ranges between Rs 50 – Rs 250 Crores in the immediately preceding accounting year. (Other income will not be included)
    • If borrowing ranges between Rs 10 – Rs 50 Crores in the immediately preceding accounting year. (Public deposits will be included)
  • Holding and subsidiary entities of any one of the above.

Level III – Small Size Entities

  • An entity that does not qualify as a Level I or Level II entity.
  • An entity engaged in commercial, industrial, or business activities
    • If turnover ranges between Rs 10 – Rs 50 Crores in the immediately preceding accounting year. (Other income will not be included)
    • If borrowing ranges between Rs 2 – Rs 10 Crores in the immediately preceding accounting year. (Public deposits will be included)
  • Holding and subsidiary entities of any one of the above.

Level IV  – Micro Size Entities

  • An entity that does not qualify as a Level I or Level II or Level III entity.

 

List of applicable Accounting Standards based on categories

Level I – Large Size Entities

All accounting standards need to be complied with in full.

Level II  – Medium-Size Entities

AS 1 – Disclosure of Accounting Policies
AS 2 – Valuation of Inventories
AS 4 – Contingencies and Events Occurring After the Balance Sheet Date
AS 5 – Net Profit or Loss for the Period, Prior Period Items, and Changes in Accounting Policies
AS 7 – Construction Contracts
AS 9 – Revenue Recognition
AS 10 – Property, Plant, and Equipment
AS 11 – The Effects of Changes in Foreign Exchange Rates
AS 12  – Accounting for Government Grants
AS 13  – Accounting for Investments
AS 14 – Accounting for Amalgamations
AS 15 – Employee Benefits (Note 1)
AS 16 – Borrowing Costs
AS 18 – Related Party Disclosures
AS 19 –  Leases (Note 2)
AS 22 – Accounting for Taxes on Income
AS 24 –
Discontinuing Operations
AS 26 –
Intangible Assets
AS 28 –
Impairment of Assets (Note 2)
AS 29 –
Provisions, Contingent Liabilities, and Contingent Assets (Note 2)

Level III  – Small-Size Entities

AS 1 – Disclosure of Accounting Policies
AS 2 – Valuation of Inventories
AS 4 – Contingencies and Events Occurring After the Balance Sheet Date
AS 5 – Net Profit or Loss for the Period, Prior Period Items, and Changes in Accounting Policies
AS 7 – Construction Contracts
AS 9 – Revenue Recognition
AS 10 – Property, Plant, and Equipment (Note 2)
AS 11 – The Effects of Changes in Foreign Exchange Rates (Note 2)
AS 12  – Accounting for Government Grants
AS 13  – Accounting for Investments
AS 14 – Accounting for Amalgamations
AS 15 – Employee Benefits (Note 1)
AS 16 – Borrowing Costs
AS 19 –  Leases (Note 2)
AS 22 – Accounting for Taxes on Income
AS 26 – Intangible Assets
AS 28 –
Impairment of Assets (Note 2)
AS 29 –
Provisions, Contingent Liabilities, and Contingent Assets (Note 2)

Level IV  – Micro-Size Entities

AS 1 – Disclosure of Accounting Policies
AS 2 – Valuation of Inventories
AS 4 – Contingencies and Events Occurring After the Balance Sheet Date
AS 5 – Net Profit or Loss for the Period, Prior Period Items, and Changes in Accounting Policies
AS 7 – Construction Contracts
AS 9 – Revenue Recognition
AS 10 – Property, Plant, and Equipment (Note 2)
AS 11 – The Effects of Changes in Foreign Exchange Rates (Note 2)
AS 12  – Accounting for Government Grants (Note 2)
AS 13  – Accounting for Investments (Note 2)
AS 14 – Accounting for Amalgamations
AS 15 – Employee Benefits (Note 1)
AS 16 – Borrowing Costs
AS 19 –  Leases (Note 2)
AS 22 – Accounting for Taxes on Income
AS 26 – Intangible Assets (Note 2)
AS 28 –
Impairment of Assets (Note 2)

Note 1 – Accounting Standards to the concerned non-corporate entity will be applicable with exemptions.

Note 2 – Accounting Standards to the concerned non-corporate entity will be applicable with disclosure exemptions.

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About CA Ankita Khetan 166 Articles
Ankita is a Chartered Accountant in practice and holds a Diploma in IFRS (from ACCA, UK). She is also a Commerce PG and Certified Independent Director (from IICA). She holds a certification in Forex and Treasury Management. Her area of expertise is GST and Income tax. She is passionate about reading, writing, and sharing knowledge on areas related to finance and taxation.

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