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CA Final · Financial Reporting · Introduction to Indian Accounting Standards

Mahalaxmi Textiles Ltd, an unlisted company, has a net worth of Rs 180 crore as at 31 March of the preceding year. It is neither a holding, subsidiary, associate nor joint venture of any company that is required to follow Ind AS. It has no listed or about-to-be-listed securities. Under the Companies (Indian Accounting Standards) Rules, 2015, what is the position regarding Ind AS applicability for Mahalaxmi Textiles Ltd?

Ind AS is not mandatory for Mahalaxmi Textiles. The mandatory threshold for unlisted companies is net worth of Rs 250 crore or more, or being linked to a covered entity. With Rs 180 crore and no other trigger, it may follow Accounting Standards or voluntarily adopt Ind AS.

  1. AInd AS is mandatory because net worth is Rs 100 crore or more
  2. BInd AS is mandatory because net worth is Rs 250 crore or less
  3. CInd AS is not mandatory, since the net worth is below Rs 250 crore, and it may follow Accounting Standards or opt voluntarily for Ind ASCorrect
  4. DInd AS is prohibited for unlisted companies

Explanation

For unlisted companies, Ind AS is mandatory when net worth is Rs 250 crore or more (or the company is a holding, subsidiary, associate or JV of a company covered). Net worth here is Rs 180 crore and no other trigger applies, so Ind AS is not mandatory. The company may opt voluntarily, and once opted must continue. The Rs 100 crore option confuses this with another threshold.

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