Asset Accounting

1
Asset Accounting

• Sess 6

2
Assets

• Investment within the business
• Fixed Assets
• Current Assets
• Investment outside the business
• Shares
• Bonds
• Debenture

3
Fixed Assets

• Cost of Acquisition (AS-10)
• Purchase Price
• Incidental expenses
• Depreciation(AS-6)
• SLM Straight Line Method
• RBM Reducing Balance Method

• What is the effect of COA on FS?
• What is the effect of Depr on FS?

4
Depreciation

• SLM
• Dep is calculated on the original of COA
• Written Down Value (Cost Dep) will go on
  reducing.
• WDV will be zero

• RBM
• Dep in the first year is calculated on the Cost
• Second year onwards, dep is calculated on the WDV
• Dep will also go on reducing

5
Revaluation of Assets (AS-10)

• IF MV gt BV
• If market value of asset is greater than the BV
  (WDV) of the asset
• The company can revalue the assets
• Create a corresponding Source REVALUATION
  RESERVES
• MV
• Replacement cost
• Releasable Cost
• PV of FutureCash flow

6
IF MV lt BV

• The difference should be shown in the income
  statement as IMPAIRMENT LOSS. (AS- 28)
• Depreciation (COA/life or COA Rate)
• Impairment MV ltBV
• Revaluation MVgt BV

7
FIXED ASSET

• COA
• Depreciation
• Revaluation
• Impairment loss
• Impairment Loss

8
Inventory (stock of revenue goods)

• Issues
• Cost of inventory
• Purchase Price Incidental Expenses
• Cost of Goods Sold