This document discusses Accounting Standards 6 and 10 regarding fixed assets and depreciation. It defines fixed assets as non-current assets used over multiple accounting periods with a limited useful life. It outlines various methods for calculating depreciation expense, such as the straight-line and reducing balance methods. The document also discusses disclosure requirements regarding depreciation policies, accumulated depreciation amounts, and revaluations of fixed assets.

1. SMT.P.D.HINDUJASMT.P.D.HINDUJA
TRUST’STRUST’S
K.P.B.HINDUJA COLLEGE
OF COMMERCE
FY BAFFY BAF
2011-20122011-2012
FINANCIAL ACCOUNTINGFINANCIAL ACCOUNTING

2. ACCOUNTING STANDARDS
6 &10
BY GROUP NUMBER :03
NAMENAME
DIVYA RANAVATDIVYA RANAVAT
DIVYA DADHEECHDIVYA DADHEECH
EKTA MANIKEKTA MANIK
RUTUJA CHUDNAIKRUTUJA CHUDNAIK
POULAMI SARKARPOULAMI SARKAR
RUSHABH CHANDANRUSHABH CHANDAN
ROLL NO.ROLL NO.
1414
1616
1717
1919
2020
2424

4. INTRODUCTION
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
liabilities. liabilities.
ACCOUNTING STANDARDS IN INDIA AREACCOUNTING STANDARDS IN INDIA ARE
ISSUSED BY INDIAN INSTITUTE OFISSUSED BY INDIAN INSTITUTE OF
CHARTERED ACCOUNTANTCHARTERED ACCOUNTANT (ICAI).(ICAI).

5. Applicability of accounting standards
NON CORPORATE ENTITIESNON CORPORATE ENTITIES
CO-OPERATIVE SOCITIESCO-OPERATIVE SOCITIES
CHARITABLE ENTITIESCHARITABLE ENTITIES
PARTNERSHIP & PROPRIETORSHIPPARTNERSHIP & PROPRIETORSHIP
COMPANIESCOMPANIES
SMALL & MEDIUM COMPANIESSMALL & MEDIUM COMPANIES
ENTERPRISESENTERPRISES

6. OBJECTIVES OF ACCOUNTINGOBJECTIVES OF ACCOUNTING
STANDARDSTANDARD
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.

8. Fixed assets
 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
1.1. LANDLAND
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
7.7. COMPUTERSCOMPUTERS
8.8. OFFICE EQUIPMENTSOFFICE EQUIPMENTS
9.9. MOTOR VEHICLESMOTOR VEHICLES

10. 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.

13. 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
management."management."
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.

15. 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.”

16. 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
assets.assets.
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.

17. 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.

18. 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 ……
DisclosureDisclosure

20. INTRODUCTIONINTRODUCTION..
DEFINITION.DEFINITION.

21.  Used during more than one
accounting period.
 Have a limited useful life.
 Held by an enterprise for
production and supply of goods.

22.  Regenerative natural
resources.
 Wasting assets.
 Intangible assets.
 Research and development
 Live stock.
 Land.

23.  STRAIGHTLINE METHOD.STRAIGHTLINE METHOD.
 REDUCING BALANCE METHOD.REDUCING BALANCE METHOD.
 ANNUITY METHOD.ANNUITY METHOD.
SUM OF THE DIGITS METHODSUM OF THE DIGITS METHOD
DEPRECIATION METHODDEPRECIATION METHOD
INSURANCE POLICY METHODINSURANCE POLICY METHOD
REVALUATION METHODREVALUATION METHOD
DEPLITION METHODDEPLITION METHOD
MACHINE HOUR RATE METHODMACHINE HOUR RATE METHOD
REPAIRS PROVISION METHODREPAIRS PROVISION METHOD

24.  RETROSPECTIVE
CHANGE.
 PROSPECTIVE
CHANGE.

25. Expected physical
wear and
tear;
 Obsolescence;
 Legal or other
limits on the
use of the asset;
 Experience.


26. EXAMPLESEXAMPLES
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
8
=2 LAKHS.

27.  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
enterprise.

28.  The historical cost or other
amount substituted for
historical cost .
 Total depreciation for the
period for each class of assets.
 The related accumulated
depreciation.

29. REFERENCEREFERENCE
InvestopediaInvestopedia
Google searchGoogle search
TAXMANN AccountingTAXMANN Accounting
standardsstandards
ICAI BOOKS.ICAI BOOKS.