As 13

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As 13

  1. 1. ACCOUNTING STANDARD - 13 ACCOUNTING FOR INVESTMENTS J.P., KAPUR & UBERAI
  2. 2. PURPOSE <ul><li>Accounting for investments in the financial statements of enterprises and related disclosure requirements. </li></ul>J.P., KAPUR & UBERAI
  3. 3. DEFINITION <ul><li>INVESTMENTS </li></ul><ul><ul><ul><li>are assets held by an enterprise for earning income by way of dividends, interest, and rentals, for capital appreciation, or for other benefits to the investing enterprise. </li></ul></ul></ul><ul><ul><ul><li>Assets held as stock-in-trade are not ‘investments’. </li></ul></ul></ul>J.P., KAPUR & UBERAI
  4. 4. CLASSIFICATION <ul><ul><ul><li>1. LONG TERM INVESTMENTS </li></ul></ul></ul><ul><ul><ul><li>2. CURRENT INVESTMENTS. </li></ul></ul></ul>J.P., KAPUR & UBERAI
  5. 5. COST OF INVESTMENTS <ul><li>INCLUDES </li></ul><ul><ul><ul><li>1. Basic cost </li></ul></ul></ul><ul><ul><ul><li>2. Acquisition charges such as brokerage, fees and duties. </li></ul></ul></ul>J.P., KAPUR & UBERAI
  6. 6. OTHER MODES <ul><li>If an investment is acquired by the issue of shares or other securities, the acquisition cost is the Fair value of the securities issued. </li></ul><ul><li>The right shares, if subscribed to is added to the carrying amount of original shares but if rights are sold, the sale proceeds are treated as income and credited to profit and loss statement. </li></ul>J.P., KAPUR & UBERAI
  7. 7. INCOME FROM INVESTMENTS <ul><li>Interest, dividend and rentals receivable in respect of such investments are treated as income except where such interest or dividend relates to pre-acquisition period, in which case, such interest or dividend received is reduced from the acquisition cost. </li></ul>J.P., KAPUR & UBERAI
  8. 8. CARRYING AMOUNT OF INVESTMENTS <ul><li>Current Investments - At Lower of cost or fair value. </li></ul><ul><li>Long term investments - At C ost . </li></ul><ul><li>However, in case of a permanent decline, provision for diminution shall be made. </li></ul><ul><li>Any reduction in the carrying amount should be charged to the profit and loss statement. </li></ul>J.P., KAPUR & UBERAI
  9. 9. BASIS <ul><li>Current Investments : </li></ul><ul><li>Either on an individual investment basis or by category of investment, but not on an overall basis. </li></ul><ul><li>Long term investments : </li></ul><ul><li>Each investment individually </li></ul>J.P., KAPUR & UBERAI
  10. 10. DISPOSAL <ul><li>When any investments is sold, the difference between the carrying amount and net sale proceeds should be charged or credited to the profit and loss statement </li></ul><ul><li>In case of partial disposal, the carrying amount to be allocated to that part is to be determined on the basis of the average carrying amount of the total holding of the investment. </li></ul>J.P., KAPUR & UBERAI
  11. 11. DISCLOSURES <ul><li>1. Classification of investments, </li></ul><ul><li>2. The accounting policies for determination of carrying amount of investments, </li></ul><ul><li>3. The amounts included in profit and loss statement for interest, dividends, rentals,profits and losses on disposal of investments </li></ul><ul><li>contd….. </li></ul>J.P., KAPUR & UBERAI
  12. 12. DISCLOSURES <ul><li>4. Significant restriction on the right of ownership, realisability of investments or the remittance of income and proceeds of disposal; </li></ul><ul><li>5. The aggregate amount of quoted and unquoted investments </li></ul><ul><li>6. Other disclosures specifically required by the relevant statute. </li></ul>J.P., KAPUR & UBERAI

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