ACCOUNTING FOR FIXED ASSETS (AS-10)
1. Fixed assets shall be shown in financial statements at historical cost less depreciation.
2. What is Historical cost: The historical cost consists of the following:
a. Purchase price.
b. Import duties and other non-refundable taxes.
c. Cost of bringing the asset to the working condition like: Site preparation, Delivery cost, Installation cost, Expenditure incurred on test runs less income by sale of products, Administrative overheads specifically attributable for construction/ acquisition/installation.
d. Reduce Govt. grants received/receivable against fixed assets. e. Price adjustments, changes in duties etc.
3. Self – Constructed Assets: Cost of self-constructed assets shall not include any internal profit.
4. Accounting treatment of first time Revaluation:
a. Upward: Increase in net book value is credited to „Revaluation Reserveâ€Ÿ.
b. Downward: Decrease in net book value is charged to the profit & loss account.
5. Accounting for subsequent revaluation (Upward/Downward):