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Fixed Asset

Accounting Standard 10 (AS 10), issued in 1985, provides guidance on accounting for fixed assets. It defines a fixed asset as an asset used for producing goods or services and not held for sale, such as land, buildings, machinery, vehicles, and furniture. The cost of a fixed asset includes its purchase price, import duties, taxes, and directly attributable costs like site preparation, delivery, and installation. Goodwill is recorded at cost only if consideration was paid for it and is amortized over time. Certain assets related to natural resources, real estate development, and livestock are excluded from this standard.

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51 views

Fixed Asset

Accounting Standard 10 (AS 10), issued in 1985, provides guidance on accounting for fixed assets. It defines a fixed asset as an asset used for producing goods or services and not held for sale, such as land, buildings, machinery, vehicles, and furniture. The cost of a fixed asset includes its purchase price, import duties, taxes, and directly attributable costs like site preparation, delivery, and installation. Goodwill is recorded at cost only if consideration was paid for it and is amortized over time. Certain assets related to natural resources, real estate development, and livestock are excluded from this standard.

Uploaded by

Anant_Pratap_Y_6082
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Accounting Standard 10 (AS 10)

• Issued 1985
• Accounting for Fixed Assets
Definition
• Fixed asset is an asset held with the intention of being used for
the purpose of producing or providing goods or services and is
not held for sale in the normal course of business.
• For e.g.
– land,
– buildings,
– plant and machinery,
– vehicles,
– furniture and fittings,
– goodwill,
– patents, trade marks and designs
Definitions
• Fair Market Value:- Fair market value is the price that would
be agreed to in an open and unrestricted market between
knowledgeable and willing parties dealing at arm’s length who
are fully informed and are not under any compulsion to
transact.
• Gross Book Value:- Gross book value of a fixed asset is its
historical cost or other amount substituted for historical cost in
the books of account or financial statements. When this
amount is shown net of accumulated depreciation, it is termed
as net book value.
What is out of scope ?
• Accounting for fixed assets that reflects the effects of
changing prices.
• Does not apply to the following due to special considerations
– forests, plantations and similar regenerative natural
resources;
– wasting assets including mineral rights, expenditure on the
– exploration for and extraction of minerals, oil, natural gas
and similar non-regenerative resources;
– expenditure on real estate development; and
– livestock.
Components of Cost
• Cost of fixed asset item =
• Purchase Price + import duties + non-refundable taxes
(levies) + directly attributable costs
• Examples of directly attributable costs are:
– site preparation
– initial delivery and handling costs
– installation cost, such as special foundations for plant
– professional fees, for example fees of architects and
engineers
Non-monetary Consideration
• When a fixed asset is acquired in exchange for another asset,
its cost is usually determined by reference to the fair market
value of the consideration given.
• When a fixed asset is acquired in exchange for shares or other
securities in the enterprise, it is usually recorded at its fair
market value, or the fair market value of the securities issued.
Fixed Assets of Special Types
• Goodwill is recorded in the books only when some
consideration in money or money’s worth has been paid for it.
• Goodwill arises from business connections, trade name or
reputation of an enterprise or from other intangible benefits
enjoyed by an enterprise and is written off over a period

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