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AS - 13 ACCOUNTING FOR
INVESTMENTS (Revised in 2003)
Objective: Accounting
for investments in the financial statements of enterprises and
related disclosure requirements.
Scope: It deals
with investments in the financial statements of enterprises. It excludes
and does not deal with
a.
Operating or Finance Leases.
b.
Investments of Retirement Benefit Plans and Life Insurance
Enterprises.
c.
Mutual funds and venture capital funds.
Definitions:
INVESTMENTS: Investments
are assets held by an enterprise for earning income by way of
dividends, interest, and rentals, for capital appreciation, or
for other benefits to the investing enterprise. Assets held as
stock-in-trade are not ‘investments’. Two types of
investment are as follows:
1.
Long term investments: (Each
investment individually)
2.
Current investments: (These are
of either on an individual investment basis or by category of
investment, but not on an overall basis.)
Interest,
dividend and rentals receivable in respect of such investments
are treated as income except where such interest or dividend
relates to pre-acquisition period, in which case, such interest
or dividend received is reduced from the acquisition cost.
Recognition and measurement principles: Current
investments: At lower of cost or market price Long term
investments: At cost Incase of
disposal of investments: When any
investments are sold, the
difference between the carrying amount
and net sale proceeds should be charged or credited to the
profit and loss statement. In case of
partial disposal, the carrying amount to be allocated to that
part is to be determined on the basis of the average carrying
amount of the total holding of the investment.
Disclosure requirements: The
following should be disclosed:
1.
Investments should be classified first.
2.
The accounting policies followed for determining carrying
amounts should be disclosed.
3.
The amounts included in profit and loss statement for interest,
dividends, rentals, profits and losses on disposal of
investments.
4.
The aggregate amount of quoted and unquoted investments
5.
Significant restriction on the right of ownership or the
remittance of income and proceeds of disposal should be
disclosed.
6.
Any other disclosures specifically required by statute. |
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