Accounting Standard 10: Accounting for Fixed Assets

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Accounting Standard 10: Accounting for Fixed Assets

• Fixed asset is an asset held for producing or providing goods and/or services and is not held for sale in the normal course of the business.
• Cost to include purchase price and attributable costs of bringing asset to its working condition for the intended use. It includes financing cost for period up to the date of readiness for use.
• Self-constructed assets are to be capitalised at costs that are specifically related to the asset and those which are allocable to the specific asset.
• Fixed asset acquired in exchange or part exchange should be recorded at fair market value or net book value of asset given up adjusted for balancing payment, cash receipt etc. Fair market value is determined with reference to asset given up or asset acquired.
• Revaluation, if any, should be of class of assets and not an individual asset.
• Basis of revaluation should be disclosed.
• Increase in value on revaluation be credited to Revaluation Reserve while the decrease should be charged to P & L A/c.
• Goodwill should be accounted only when paid for.
• Assets acquired on hire purchase be recorded at cash value to be shown with appropriate note about ownership of the same. (Not applicable for assets acquired after 1st April, 2001 in view of AS 19 – Leases becoming effective).
• Gross and net book values at beginning and end of year showing additions, deletions and other movements, expenditure incurred in course of construction and revalued amount if any be disclosed.
• Assets should be eliminated from books on disposal/when of no utility value.
• Profit/Loss on disposal be recognised on disposal to P & L statement.
Also refer ASI 2 which deals with accounting for machinery spares.

Accounting Standard 11: The Effects of Changes in Foreign Exchange Rates (Revised 2003)

• The Statement is applied in accounting for transactions in foreign currency and translating financial statements of foreign operations. It also

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