Saturday, February 21, 2015

MCA notifies Ind AS


MCA has notified Companies (Indian Accounting Standards) Rules, 2015 which shall come into effect from 1 April 2015. The said rules require adoption for Indian Accounting Standards (Ind AS) :-

1.From FY 15-16: Any company can voluntary adopt Indian Accounting Standards from Financial year 15-16 with comparatives to be given for the period ending on 31 March 2015 or thereafter.

2.From FY 16-17:Following companies to mandatorily adopt Ind AS from FY 16-17 onwards with comparatives for period ending 31 March 2016 or thereafter:-

•Companies with net worth of Rs 500 crores or more and whose equity or debt securities are either listed or in the process of listing in any Indian stock exchange.

•Companies other than above and whose net worth is Rs 500 crores or more.

•Holding, subsidiary, joint venture and associate of above companies.

3.From FY 17-18: Following companies to mandatorily adopt Ind AS from FY 17-18 onwards with comparatives for period ending 31 March 2017 or thereafter:-

•Companies with net worth less than Rs 500 crores and whose equity or debt securities are either listed or in the process of listing in any Indian stock exchange.

•Companies other than above and whose net worth is Rs 250 crores or more but less than Rs 500 crores.

•Holding, subsidiary, joint venture and associate of above companies.

Provided that nothing stated above, except companies adopting Ind AS voluntarily, shall apply to companies whose securities are listed or are in the process of being listed on SME exchange as referred to in Chapter XB or on the Institutional Trading Platform without initial public offering in accordance with the provisions of Chapter XC of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.

Note 1:- ‘Net worth’ shall have the meaning assigned to it in clause (57) of section 2 of the Companies Act, 2013. The net worth shall be calculated in accordance with the stand-alone financial statements of the company as on 31st March, 2014 or the first audited financial statements for accounting period which ends after that date.

For companies which are not in existence on 31st March, 2014 or an existing company falling under any of thresholds specified above for the first time after 31st March, 2014, the net worth shall be calculated on the basis of the first audited financial statements ending after that date in respect of which it meets the thresholds specified above. Such companies should adopt Ind AS for immediately next year. For e.g. The companies meeting threshold for the first time as on 31st March, 2018 shall apply Ind AS for the financial year 2018-19 onwards and so on.

Note 2:- MCA has notified 39 Ind AS. The Ind AS should be adopted for standalone financial statements as well as consolidated financial statements.

Note 3:- Overseas subsidiary, associate, joint venture and other similar entities of an Indian company may prepare its standalone financial statements in accordance with the requirements of the specific jurisdiction. Provided that such Indian company shall prepare its consolidated financial statements in accordance with the Indian Accounting Standards (Ind AS) either voluntarily or mandatorily if it meets the criteria as specified above.

Note 4:- Indian company which is a subsidiary, associate, joint venture and other similar entities of a foreign company shall prepare its financial statements in accordance with the Indian Accounting Standards (Ind AS) either voluntarily or mandatorily if it meets the criteria as specified above.

Note 5:- Once the option for applying Ind AS is applied then company should keep on applying Ind AS consistently.

Note 6:- The insurance companies, banking companies and non-banking finance companies shall not be required to apply Indian Accounting Standards (Ind AS) for preparation of their financial statements either voluntarily or mandatorily.

Note 7:- For the companies on which Ind AS is not applicable as per the rules mentioned above, such companies can continue to apply Accounting Standards as notified by Companies (Accounting Standards) Rules, 2006.
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