FY BAFFY BAF
FINANCIAL ACCOUNTINGFINANCIAL ACCOUNTING
BY GROUP NUMBER :03
DIVYA RANAVATDIVYA RANAVAT
DIVYA DADHEECHDIVYA DADHEECH
EKTA MANIKEKTA MANIK
RUTUJA CHUDNAIKRUTUJA CHUDNAIK
POULAMI SARKARPOULAMI SARKAR
RUSHABH CHANDANRUSHABH CHANDAN
ROLL NO.ROLL NO.
An accounting standard is a guideline for financialAn accounting standard is a guideline for financial
accounting, such as how a firm prepares andaccounting, such as how a firm prepares and
presents its business income and expense, assets andpresents its business income and expense, assets and
ACCOUNTING STANDARDS IN INDIA AREACCOUNTING STANDARDS IN INDIA ARE
ISSUSED BY INDIAN INSTITUTE OFISSUSED BY INDIAN INSTITUTE OF
CHARTERED ACCOUNTANTCHARTERED ACCOUNTANT (ICAI).(ICAI).
Applicability of accounting standards
NON CORPORATE ENTITIESNON CORPORATE ENTITIES
CO-OPERATIVE SOCITIESCO-OPERATIVE SOCITIES
CHARITABLE ENTITIESCHARITABLE ENTITIES
PARTNERSHIP & PROPRIETORSHIPPARTNERSHIP & PROPRIETORSHIP
SMALL & MEDIUM COMPANIESSMALL & MEDIUM COMPANIES
OBJECTIVES OF ACCOUNTINGOBJECTIVES OF ACCOUNTING
Is to standardize the diverse accounting policies & Practices with a
view to eliminate to the extent possible the non- comparability of
financial Statement and add the reliability to the financial
statements. The Institute of Chartered Accountant of India,
recognizing the need to harmonize the Diverse accounting policies
and practices, constituted an Accounting Standard Board (ASB) on
21st April, 1977.21st April, 1977.
Fixed assets, also known as a non-current asset or as property,Fixed assets, also known as a non-current asset or as property,
plant, and equipment (PP&E), is a term used in plant, and equipment (PP&E), is a term used in accountingaccounting for for
assetsassets and and propertyproperty which cannot easily be converted into which cannot easily be converted into cashcash. This. This
can be compared with can be compared with current assetscurrent assets such as cash or bank accounts, such as cash or bank accounts,
which are described as which are described as liquid assetsliquid assets. In most cases, only tangible. In most cases, only tangible
assets are referred to as fixed.assets are referred to as fixed.
EXAMPLES OF FIXED ASSETS
2.2. BUILDING - FREEHOLDBUILDING - FREEHOLD
3.3. LEASEHOLD – BUILDINGLEASEHOLD – BUILDING
4.4. PLANT AND MACHINERYPLANT AND MACHINERY
5.5. FURNITURE AND FITTINGSFURNITURE AND FITTINGS
6.6. FIXTURES AND FITTINGSFIXTURES AND FITTINGS
8.8. OFFICE EQUIPMENTSOFFICE EQUIPMENTS
9.9. MOTOR VEHICLESMOTOR VEHICLES
THE METHOD OF ACCOUNTING FOR FIXEDTHE METHOD OF ACCOUNTING FOR FIXED
ASSET INCLUDED @HISTORICAL COST &ASSET INCLUDED @HISTORICAL COST &
REVALUED COST.REVALUED COST.
COMPONENTS OF COST:
COST COMPRISES ITSCOST COMPRISES ITS PURCHASE PRICEPURCHASE PRICE & ANY& ANY
ATTRIBUTABLE COSTATTRIBUTABLE COST OF BRINGING THE ASSET TO ITSOF BRINGING THE ASSET TO ITS
WORKING CONDITION FOR ITS USE.WORKING CONDITION FOR ITS USE.
SELF CONSTRUCTED FIXED ASSETS: COMPRISES OF.
1.DIRECT ATTRIBUTABLE OVERHEADS1.DIRECT ATTRIBUTABLE OVERHEADS
2.GENERAL & ADMINISTRATIVE OVERHEADS2.GENERAL & ADMINISTRATIVE OVERHEADS
NON – MONETARY CONSIDERATION:
A non-monetary consideration includesA non-monetary consideration includes providingproviding
services, transferring tangible and intangibleservices, transferring tangible and intangible
property or any similar dealings.property or any similar dealings. The dealing may beThe dealing may be
a barter, swap, bonus or discount, or any type ofa barter, swap, bonus or discount, or any type of
similar agreement.similar agreement.
IMPROVEMENT & REPAIRS :IMPROVEMENT & REPAIRS :
The wordThe word ‘repairs’‘repairs’ ordinarily means theordinarily means the
remedying or making good of defects in, damageremedying or making good of defects in, damage
to, or deterioration of, the property to beto, or deterioration of, the property to be
repaired and contemplates the continuedrepaired and contemplates the continued
existence of the property .existence of the property .
Improvement - Its early spelling wasImprovement - Its early spelling was
emprowementemprowement, meaning, meaning "profit, profitable use or"profit, profitable use or
The process of getting better.The process of getting better.
Examples: 1) There is no improvement inExamples: 1) There is no improvement in
the cash flow situation. 2) Sales are showingthe cash flow situation. 2) Sales are showing
a sharp improvement over last year.a sharp improvement over last year.
3) Employees have noticed an improvement in3) Employees have noticed an improvement in
the working environment.the working environment.
AMOUNT SUBSITUTED FOR HISTORICAL COSTAMOUNT SUBSITUTED FOR HISTORICAL COST
FIRST TIME REVALUATION (UPWARD):FIRST TIME REVALUATION (UPWARD):
““CREDITED TO REVALUATION RESERVES”CREDITED TO REVALUATION RESERVES”
FIRST TIME REVALUATIOM (DOWNWARD):FIRST TIME REVALUATIOM (DOWNWARD):
““CREDITED TO PROFIT AND LOSS A/C.”CREDITED TO PROFIT AND LOSS A/C.”
RETIREMENT AND DISPOSAL:RETIREMENT AND DISPOSAL:
Material items retired from active use & held for disposal.Material items retired from active use & held for disposal.
Losses/gains arising from retirement & disposal of fixedLosses/gains arising from retirement & disposal of fixed
On disposal of previously revalued item of fixed asset.On disposal of previously revalued item of fixed asset.
VALUATION OF FIXED ASSETS IN SPECIAL CASES:VALUATION OF FIXED ASSETS IN SPECIAL CASES:
InIn finance, finance, a revaluation of fixed assets is a technique thata revaluation of fixed assets is a technique that
may be required to accurately describe the true value ofmay be required to accurately describe the true value of
the capital goods a business owns.the capital goods a business owns. The purpose of aThe purpose of a
revaluation is to bring into the books the fair marketrevaluation is to bring into the books the fair market
value of fixed assets. This may be helpful in order to decidevalue of fixed assets. This may be helpful in order to decide
whether to invest in another business.whether to invest in another business.
FIXED ASSETS OF SPECIAL TYPES: GOODWILL.FIXED ASSETS OF SPECIAL TYPES: GOODWILL.
Goodwill should be recorded in the books only when someGoodwill should be recorded in the books only when some
consideration in money or money’s worthconsideration in money or money’s worth has been paid for it.has been paid for it.
The following information should be disclosed in theThe following information should be disclosed in the
financial statements :financial statements :
Gross and net book values of fixed assets at theGross and net book values of fixed assets at the
beginning and end of an accounting period….beginning and end of an accounting period….
Expenditure incurred on account of fixed assets…Expenditure incurred on account of fixed assets…
Revalued amounts substituted for historical costs ofRevalued amounts substituted for historical costs of
fixed assets ……fixed assets ……
Legal or other
limits on the
use of the asset;
PLANT AND MACHINERY HAS USEFUL LIFE OFPLANT AND MACHINERY HAS USEFUL LIFE OF
10 YEARS, DEPRECIATION COST FOR 1 YEAR IS10 YEARS, DEPRECIATION COST FOR 1 YEAR IS
40 LAKH. AFTER 6 YEARS, COMPANY REALISE40 LAKH. AFTER 6 YEARS, COMPANY REALISE
THE PLANT HAVE 2 MORE YEARS ONLY.THE PLANT HAVE 2 MORE YEARS ONLY.
CALCULATION FROM 7CALCULATION FROM 7THTH
YEAR IS AS FOLLOWSYEAR IS AS FOLLOWS
40 - 40/10 * 6
Depreciation methods used.
Depreciation rates or the
useful lives of the assets, if
they are different from the
principal rates specified in
the statute governing the
The historical cost or other
amount substituted for
historical cost .
Total depreciation for the
period for each class of assets.
The related accumulated