CA Foundation · Accounting · Theoretical Framework
Aarav Ltd. is a company whose accounts are prepared as per Accounting Standards notified under the Companies (Accounting Standards) Rules, 2021. The company is a non-listed entity with net worth of ₹100 crore, which is below the Ind AS threshold of ₹250 crore, and is not a holding, subsidiary, joint venture or associate of an Ind AS-applicable company. Which statement is correct?
Aarav Ltd. falls outside the mandatory Ind AS net-worth threshold of ₹250 crore and has no group link to an Ind AS company, so it follows the notified Accounting Standards. It may, however, voluntarily adopt Ind AS, and once adopted it cannot revert.
- AIt is not required to apply Ind AS and follows the notified Accounting Standards (AS), but may opt to adopt Ind AS voluntarilyCorrect
- BIt must apply Ind AS because all companies with net worth above ₹10 crore must do so
- CIt must apply Ind AS since it is a company registered under the Companies Act
- DIt may not adopt Ind AS even voluntarily
Explanation
Ind AS applies mandatorily to listed companies, unlisted companies with net worth of ₹250 crore or more, and their holding, subsidiary, joint venture and associate companies. Aarav Ltd. meets none of these tests, so it follows AS, though voluntary adoption of Ind AS is permitted. Once adopted voluntarily it must be applied consistently thereafter.
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