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CA Intermediate · Advanced Accounting · Applicability of Accounting Standards

Kaveri Pharma Ltd is an unlisted company with turnover of Rs 300 crore in the previous year. It is not a bank, financial institution or insurer. Its borrowings are Rs 30 crore. Which of the following statements about Kaveri Pharma is correct?

Kaveri Pharma is a Non-SMC because its turnover of Rs 300 crore exceeds the Rs 250 crore limit. The turnover and borrowing tests are alternatives, so exceeding either one is enough, and the company must comply with all Accounting Standards in full.

  1. AIt is an SMC because it is unlisted
  2. BIt is a Non-SMC because its turnover exceeds Rs 250 crore, so it must comply fully with all Accounting StandardsCorrect
  3. CIt is an SMC because borrowings are below Rs 50 crore, which is the only test
  4. DIt is a Non-SMC only if its borrowings also exceed Rs 50 crore

Explanation

Turnover above Rs 250 crore (excluding other income) alone makes a company Non-SMC; the tests are alternatives. Borrowings of Rs 30 crore are below Rs 50 crore but that does not rescue it. Therefore full compliance is required.

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