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AS - 10




This standard gives answer what is fixed asset and how to value the fixed assets. Initially this accounting standard will be recommendatory in character. During this period, this standard is recommended for use by companies listed on a recognized stock exchange and other large commercial, industrial and business enterprises in the public and private sectors.



This standard applicable to all fixed assets such as land, buildings, plant and machinery, vehicles, furniture and fittings, goodwill, patents, trade marks and designs.


But it does not deal with the following assets:

a. Forests, plantations and similar regenerative natural resources;

b. Wasting assets including mineral rights, expenditure on the exploration for and extraction of minerals, oil, natural gas and similar non-regenerative resources;

c. Expenditure on real estate development; and

d. Live stock

And it does not cover the following:

a.     Inflation accounting

b.     Capitalization of borrowing costs

c.      Assets acquired on amalgamation of merger.





Fixed asset:

It is an asset held with the intention of being used for the purpose of producing or providing goods or services and is not held for sale in the normal course of business.


Fair Market Value:

It is the price that would be agreed to in an open and unrestricted market between knowledgeable and willing parties dealing at arm’s length.


Gross Book Value:

It is its historical cost or other amount substituted for historical cost in the books of accounts. When this amount is shown net of accumulated depreciation, it is termed as net book value. 


Net book value:

Gross book value

Less: Accumulated depreciation


Elements of Historical cost of fixed asset are as follows:


Purchase price:

Add: Import duties

         Non-refundable taxes

         Any cost that bring the asset for its intended use

         E.g., Site preparation costs

                  Installation costs.

Less: Trade discount



If the time gap between the date of a project is ready to commence production and when production actually begins is prolonged, all expenses incurred during this period are charged to the profit and loss Account.



Non – monetary consideration:

When a fixed asset is acquired in exchange or in part exchange for another asset, the cost of the asset acquired should be recorded either at fair market value or at the net book value of the asset given up, adjusted for any balance payment or receipt of cash or other consideration.

    For this purpose fair market value may be determined by reference either to the asset given up or to the asset acquired, whichever is more clearly evident.


Improvement and repairs:

All these costs should be added to book value only if it increases the life of the asset than previously assessed life.




Disclosure requirements:

a. The company should disclose Gross and net book values of fixed assets at the beginning and end of an accounting period along with additions, disposals, acquisitions and other movements during the year.

b. Expenditure incurred in the course of construction or acquisition.

c. Revalued amounts substituted for historical costs of fixed assets, the method adopted for revaluation, the nature of indices used, the year of any appraisal made and whether an external valuer was involved in carrying out the revaluation.


Assets acquired on Hire Purchase:      

Assets should Record at their cash value with suitable disclosure.


Assets owned jointly with others:

Asset should record in the Balance sheet to the extent of the enterprise’s share in such assets, original cost, accumulated depreciation and written down value.


Assets purchased for a consolidated price:

The consideration is apportioned to the various assets on a fair basis determined by competent valuers.



Goodwill needs to be accounted for only when some consideration in money or money’s worth has been paid for it.





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