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CA Intermediate · Advanced Accounting · Applicability of Accounting Standards

Kaveri Textiles Ltd is an unlisted company with no securities in the process of being listed. Its turnover for the year was Rs 85 crore, borrowings from banks at the year end were Rs 18 crore, and it is not a bank, financial institution or insurer. It has no holding or subsidiary. Under the ICAI classification of companies for Accounting Standards, how is it classified?

Kaveri Textiles is a Level II company. It is unlisted and not a bank or insurer, and its turnover of Rs 85 crore and borrowings of Rs 18 crore are below the Level I limits but above the Level III limits of Rs 50 crore and Rs 10 crore.

  1. ALevel I company
  2. BLevel II companyCorrect
  3. CLevel III company
  4. DSmall and Medium Sized Company that is exempt from all Accounting Standards

Explanation

Level I covers listed or to-be-listed entities, banks, insurers and entities with turnover above Rs 250 crore or borrowings above Rs 50 crore. Kaveri is unlisted, with turnover Rs 85 crore (above Rs 50 crore) and borrowings Rs 18 crore, so it is not Level I. Level III needs turnover up to Rs 50 crore and borrowings up to Rs 10 crore, which it fails. Hence it is Level II.

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