This document summarizes Accounting Standard 10 regarding fixed assets. It defines fixed assets as assets held for use in producing goods or services rather than for sale. It outlines the components that make up the cost of fixed assets, such as purchase price, duties, and costs to ready the asset for use. It also discusses accounting for asset exchanges, capitalization, asset revaluation, disposal and retirement of fixed assets. Certain assets like natural resources and real estate development are excluded. The standard provides guidance on topics like self-constructed assets, goodwill, patents, and disclosure requirements.

2. Project Submitted By :-
Raveesh Samakria
INFORMATION TECHNOLOGY TRAINING

3. ACCOUNTING STANDARD – 10 :
ACCOUNTING FOR FIXED ASSETS

4. Objective of Standard
 Meaning of fixed assets
 Component of cost of fixed assets
 Exchange of assets
 Capitalization principle
 Evaluation of fixed assets
 Retirement and disposal of fixed assets

5. AS – 10 Does Not Deal With Following
1. Forest, plantation and similar regenerative natural
resources.
2. Wasting assets including mineral rights, expenditure on
the exploration for and extraction of minerals oils,
natural gases and similar non-regenerative resources.
3. Expenditure on real estate development and
4. Livestock.

6. What is Fixed Assets ?
Fixed Asset is an asset
held with the intention of being used for
producing or providing goods or services and
is not held for sale in normal course of business

7. Gross Book Value of Fixed Asset
Net Book Value of Fixed Asset
• Is it’s historical cost.
• Or other amount substituted for historical cost.
• Gross book value net of depreciation.

8. Components of Cost of Fixed Assets
Purchase Price
+
Import duties and other non refundable taxes
+
Any directly attributable cost on bringing the asset
to its working condition for its intended use

9. Following Items Comprises of Cost of
Fixed Assets
 Expenditure incurred on start up and commissioning of the
project including expenditure incurred on test runs and
experimental production less any income by sale of products.
 Finance cost charged to cost of fixed assets till the assets are
ready for use.
 Administrative and other overheads specifically incurred for the
construction/ acquisition/ installation of fixed asset.

10. Asset acquired by Non Monetary
Consideration
 When a fixed asset is acquired in exchange for another asset,
it’s cost is usually determined by reference to the fair market
value of the consideration given.
 It may be appropriate to consider also the fair market value of
the asset acquired if this is more clearly evident.

11. Improvements and Repairs
Added to value of fixed assets if
It increase future benefits
beyond its previously assessed
standards of performance

12. Evaluation of Fixed Asset
• An entire sheet asset should be revalued or the selection of assets
for revaluation should be made on systematic basis.
• The revaluation would not result in net book value of that class
being greater than the recoverable amount of assets.
• When a fixed asset is revalued upward any accumulated
depreciation existing at the date of revaluation should not be
credited to the profit and loss statement.

13. Retirement and Disposal
 Fixed assets that have been retired from active use and held for disposal are stated
at lower of their net book value and net realizable value.
 On disposal of fixed asset, the difference between net disposal proceeds and the net
book value is charged or credited to profit and loss statement.
 If any loss on disposal is related to a previously increase, credited to revaluation
reserves, such loss should be charged directly to that account.
 Revaluation reserves created by upward revaluation of fixed assets is not available
for distribution as dividend.
 Amount standing in revaluation reserves after retirement or disposal of an asset may
be transferred to general reserves.

14. Self – Constructed Fixed Assets
 Cost of construction that relate directly to the specific asset,
included in the gross book value of that asset.
 Cost that are attributable to construction activity in general can
be allocated to the specific asset.
 Any internal profits are eliminated in arriving at cost of self-
constructed fixed assets.

15. Fixed Asset Acquired on Hire Purchase
Basis
Joint Ownership
• In hire purchase, purchasing enterprise is not the legal owner, such
assets are recorded as “fixed asset on hire purchase” at their cash
value.
• When an enterprise owns fixed assets jointly with others, the extent
of it’s share in such assets, and proportion in the original cost,
accumulated depreciation and written down value required to be
stated in balance sheet.

16. Goodwill
Recorded in books only when some consideration
in money or money’s worth has been paid for it.
As a matter of financial prudence, goodwill is
written off over a period of time.

17. Patents
Acquired in Two ways
By Purchase By Development
Valued at purchase cost
including incidental
expenses, stamp duty, etc.
Valued by capitalization of
identifiable cost incurred
Written off over their legal term of validity or
their working life, which ever is shorter

18. Know How
Two Types
Relating to plans, designs,
drawings of buildings, plants or
machinery
Relating to
manufacturing
process
Capitalized under the relevant
asset head
Book expense in the year in
which it is incurred

19. Disclosure Requirements
 Gross and net book values of fixed assets at the beginning and end
of an accounting period showing additions, disposals and other
movements;
 Expenditure incurred on account of fixed assets in the course of
construction or acquisition; and
 Revalued amount substituted for fixed assets, method adopted to
compute revalued amount, year of appraisal made and whether an
external value was involved.

20. THANK YOU…!!!