presentation accounts

8/14/2019 Presentation Accounts

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A.S.10


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VSITVIDYALANKAR SCHOOL

OF INFORMATION

TECHNOLOGY.

[VIDYALANKAR MARG, WADALA-(E).MUMBAI-400 037.]


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SUBJECT: FINANCIAL ACCOUNTING.

TEACHER INCHARGE: VIJAY GAWDE.GROUP NO: 9

MEMBERS NAME:YASH-6

ROHIT-41

NIKITA-9

MOHITOSH-7

VISHAKHA-31


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1.INTRODUCTION.

2.WHAT ARE ACCOUNTING STANDARDS.

3.DEFINITION & EXPLANATION.

4.WHAT ARE FIXED ASSETS.5.IDENTIFICATION OF FIXED ASSETS.

6.COMPONENTS OF COST.

7.SELF-CONSTRUCTED FIXED ASSETS.

8.NON-MONETARY CONSIDERATIONS.

9.IMPROVEMENTS & REPAIRS.

10.VALUATION OF FIXED ASSETS.

11.DISCLOSURE.


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INTRODUCTION.

1.Financial statements disclose certain information relating tofixed assets. In many enterprises these assets are grouped into

various categories such as land, buildings, goodwill, patents, etc..This statement deals with accounting for such fixed assets.

2.This statement does not deal with the specialized aspects ofaccounting for fixed asset that arises under a comprehensive

system reflecting the effects of changing prices but applies tofinancial statements prepared on historical cost basis.

3.This statement does not deal with accounting for the followingitems to which special considerations apply:

i-forest, plantations, natural resources..

ii-wasting assets including mineral rights, oil, natural gas.

iii-expenditure on real estate development & livestock.

4.This statement does not deal with govt. grants & subsidies. It

only makes a brief reference to the amalgamation or merger.


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WHAT ARE ACCOUNTING STANDARDS &OBJECTIVES.

These are the principles that is prescribed by the ICAI to be followedin preparation & presentation of financial statement. These are

statements of code of practice of the regulatory accounting bodiesthat are to be observed during the presentation. In laymans term

accounting standard are the written documents issued by the expert

institutes or other regulatory bodies covering various aspects ofmeasurements, treatment & disclosure of accounting transactions.

OBJECTIVES.

The basic objective of accounting standards is to remove variations inthe treatment of several accounting aspects and to bring aboutstandardization in presentation. They intent to harmonize the diverseaccounting policies followed in preparation & presentation of financialstatements by different reporting enterprises so as to facilitate intra-

firm and inter-firm comparison.


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DEFINITION & EXPLANATION.

Fixed asset is an asset held with the intention of being used forthe purpose of producing or providing goods or services and is not

held for sale in the normal course of business.

EXPLANATION.

Fixed assets often comprise a significant portion of the total assetof an enterprise and therefore are important in the presentationof financial position. Furthermore the determination of whether an

expenditure represents an asset or an expense can have amaterial effect on an enterprises reported result of operations.


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WHAT ARE FIXED ASSETS?

A long term tangible piece of property that a firm owns and usesin the production of its income & is not expected to be consumedor converted into cash any sooner than at least one years time.

Fixed assets are sometimes collectively referred to as plant,building, machinery, are good examples of fixed asset.

Generally, intangible long term assets such as trademarks &patents are not categorized as fixed assets but are more

specifically referred as intangible assets.

Long lived property owned by a a firm that is used by a firm inthe production of its income. Tangible fixed assets include realestates, plant and equipments. Intangible fixed assets include

patents, trademarks, customer recognition etc..


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IDENTIFICATION OF FIXED ASSETS.

1.Gives criteria determining whether items are to beclassified as fixed asset. Judgment is required in applying

the criteria to specific circumstances or specific types ofenterprises. It may be appropriate to aggregate

individually insignificant items, & to apply the criteria tothe aggregative value. An enterprise may decide toexpense an item which could otherwise have beenincluded as fixed asset, because the amount of the

expenditure is not material.


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COMPONENTS OF COST.

The cost of an item of fixed asset comprises its purchase price,including import duties & other non-refundable taxes or levies & anydirectly attributes cost of bringing the asset to its working condition

for its intended use: any trade discounts and rebates are deducted inarriving at the purchase price.

i-site preparation.

ii-initial delivery & handling cost.

iii-installation cost, such as special foundations for plant.

iv-professional fees.The cost of fixed asset may undergo changes subsequent to its

acquisition or construction on account of exchange fluctuations, priceadjustments, changes in duties or similar factors.


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SELF-CONSTRUCTED FIXED ASSET.

In arriving at the gross book value of self-constructed fixed asset, thesame principles include in the gross book value are cost of

construction that relate directly to the specific asset & cost that areattributes to the construction activity in general & can be allocated to

the specific asset. Any internal profits are estimated in arriving atsuch costs.

NON-MONETARY CONSIDERATION.

When a fixed asset is acquired in exchange for another asset, its costis usually determined by reference to the fair market value of the

consideration given. It may be appropriate to consider also the fairmarket value of the asset acquired if this is more clearly evident. Analternative accounting treatment that is sometimes used for an

exchange of asset, particularly when the asset exchanged are similar,is to record the asset acquired at the net book value of the assetgiven up in each case an adjustment is made for any balancing

receipt or payment of cash or other consideration.


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IMPROVEMENT & REPAIRS.

Frequent, it is difficult to determine whether subsequent expenditurerelated to fixed asset represents improvement that ought to be

added to the gross book value or repairs that ought to be charged to

the P/L statement. Only expenditure that increases the futurebenefits from the existing asset beyond its previously assessedstandard of performance is included in the gross book value.

The cost of an addition or extension to an existing asset which is of acapital nature and which becomes an integral part of the existing

asset is usually added to its gross book value. Any addition orextension, which has a separate identity and is capable of being used

after the existing asset is disposed of, is accounted for separately.


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VALUATION OF FIXED ASSET.

In the case of fixed asset acquired on hire purchase terms, althoughlegal ownership does not vest in the enterprise , such asset are

recorded at their cash rate of value, which if not readily available, iscalculated by assuming an appropriate rate of interest . They are

shown in the balance sheet with an appropriate narration to include

that the enterprise does not have full ownership thereof.

Where an enterprise owns a fixed asset jointly with others the extentof its share in such assets, and the proportion in the original cost,

accumulated depreciation and written down value are stated in thebalance sheet.

Where several assets are purchased for a consolidate price, theconsideration is apportioned to the various assets on a fair basis as

determined by competent value.


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DISCLOSURE.

Certain specific disclosures on accounting for fixed asset arealready required by IACI . Further disclosures that are

sometimes made in financial statement include:

1. Gross & net book values of fixed asset at the beginning & end of

an accounting period showing additions, disposals, acquisition, &other movements.

2. Expenditure incurred on account of fixed asset in the course ofconstruction or acquisition.

3. Revalued amounts substituted by historical costs of fixed assets,the method adopted to compute the relevant amounts, thenature of any indices used, the year of any appraisal made, &whether an external value was involved in case where fixed

asset are stated at relevant amounts.


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VARIOUS BOOKS.

1. N.RAMACHANDRA & RAM KUMAR KAKANIS..

2. VIPUL PRAKASHAN..

INTERNET.

1. GOOGLE.COM

2. ASK.COM

3. CASPL.IN.

SUBJECT TEACHER & VSIT LIBRARY.

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