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What is the legal effect when Statute conflicts with an Accounting Standard?
AStatute prevails over the AS
BThe AS prevails
CBoth are equally binding
DThe ICAI Council decides case by case
Answer & Solution
Correct answer: A. Statute prevails over the AS
1. Step 1: Per Ch 1, "Accounting Standards have to be read in line with the legal requirements, i.e., in case of any conflict, Statute would prevail over Accounting Standards".
2. Step 2: ASs are subordinate to enacted law.
3. Step 3: Hence (B) is correct.
_Source: ICAI BoS CA Inter Paper 1, Ch 1 "Introduction to Accounting Standards"_
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