AS-10

INTRODUCTION

Accounting Standard 10 Issued at 1985Financial Statements disclose certain information

relating to Fixed assets. In many enterprises this Assets are grouped into various categories, such as Land, Building, Machinery, Vehicles, Furniture &Fittings, Goodwill, Patents, Trademarks etc.

WHAT IS FIXED ASSETS ?

Fixed assets are those assets which are purchase for the purpose of operating the business and not for resale.

Example:- Land, Building, Machinery, Furniture etc.

TYPES OF FIXED ASSETS

TANGIBLE ASSETSEXAMPLE:-Land , building and Computer etc.

INTANGIBALE ASSETSEXAMPLE:-Goodwill, Patents and Trademarks etc.

VALUATION OF FIXED ASSETS

The ICAI has issued the Accounting Standard (AS-10) “Accounting for Fixed Assets” which defines fixed assets, sets out their significance, specifies the fixed assets excluded from its scope coverage and prescribes the principles and norms of standards accounting treatment for various aspects of fixed assets valuation and accounting, i.e.., identification , measurement, valuation, recognition, retirements and disposals and disclosure requirement in financial statements prepared on historical cost basis including revaluation. Let us discus, understand and analysis these.

FIXED ASSETS OF SPECIAL TYPESGoodwill, in general, is recorded in the books

only when some consideration in money or money’s worth has been paid for it.

Whenever a business is acquired for a price which is in excess of the value of the net assets of the business taken over, the excess is termed as ‘goodwill’.

Goodwill arises from business connections, trade name or reputation of an enterprise or from other intangible benefits enjoyed by an enterprise.

EXAMPLE FOR VALUATION OF FIXED ASSETS :

XYZ Ltd has certain Assets :Building Rs. 200000Plant & Machinery Rs. 100000Furniture Rs. 80000Goodwill Rs. 50000Stock Rs. 65000Sundry Debtors Rs. 10000Cash Rs. 54000Find out the Fixed Assets & Charge

Depreciation

Fixed Assets :-

Building Rs. 200000Less – Dep. (10%) Rs. 20000

Rs. 180000

* If the Dep. is not mentioned in the question we assumed the Dep. On Building would be 10% p.a as per Accounting Standard 6.

Fixed Assets :-

Plant & Machinery Rs. 100000Less – Dep. (15%) Rs. 15000

Rs. 85000

* If the Dep. is not mentioned in the question we assumed the Dep. On Plant & Machinery would be 15% p.a as per Accounting Standard 6.

Fixed Assets :-

Furniture Rs. 80000Less – Dep. (5%) Rs. 4000

Rs. 76000

* If the Dep. is not mentioned in the question we assumed the Dep. On Furniture would be 5% p.a as per Accounting Standard 6.

Fixed Assets :-

Goodwill is a Non Tangible Asset.

No Depreciation is charged in Goodwill as per Accounting Standard 6.

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