Skip to content

CA Intermediate · Advanced Accounting · Applicability of Accounting Standards

Himalaya Cements Ltd. is listed on a recognised stock exchange in India. Its turnover is Rs 30 crore and borrowings are Rs 5 crore. Which statement is correct about its applicability of Accounting Standards?

Himalaya Cements is a non-SMC because it is listed. An SMC must be unlisted, so small turnover of Rs 30 crore and borrowings of Rs 5 crore do not help. It must therefore comply with all applicable Accounting Standards in full without any SMC relaxations.

  1. AIt is an SMC because turnover and borrowings are small
  2. BIt is a non-SMC because it is listed, so all Accounting Standards apply in fullCorrect
  3. CIt is an SMC only if its net worth is below Rs 10 crore
  4. DIt can choose to be treated as an SMC by board resolution

Explanation

A company whose equity or debt securities are listed, or in the process of listing, cannot be an SMC, whatever its size. Himalaya is listed, so it is a non-SMC and must apply all standards in full. Turnover and borrowings are irrelevant once the listing test fails, and there is no option to elect SMC status.

Did you get it right without looking?

One question tells you little. A timed set on Applicability of Accounting Standards shows your real accuracy, how long you take and where you lose marks.

Practise Applicability of Accounting StandardsFree diagnostic mock

More Applicability of Accounting Standards questions