AS 10 in Property, Plant and Equipment

AS 10 is applicable to property, accounting, and P&E (Plant and Equipment). However, the standard does not apply to the following:

• All biological assets related to agriculture except the produce of bearer plants. The standard applies to bearer plants themselves, but not the produce of the plant.
• Wasting assets including but not limited to: natural gas, minerals, mineral rights, finances directed towards the discovery and extraction of oil, and other non-regenerative resources.

Conditions for recognition under Property, Plant and Equipment

One can only recognize the cost of property and P&E as an asset under the following conditions:

• Businesses benefit from the asset economically and business-wise
• The cost of the asset can be accurately measured

How does one measure the cost of an asset?

First, if an asset has been revised or not, you must recognize the asset and measure its fair value. The revaluation model, or cost model, can be used. According to the revaluation model, an asset should be carried at the revalued amount or fair value of the asset at the date of its revaluation minus any impairment losses. At regular intervals, revaluations must be repeated to make sure the carrying amount does is not too different from what would be the fair value.

Depreciation charges for AS 10 P&E

Revised depreciation charges must be mentioned in the P/L Statement. Every component of a property of P&E (Plant and Equipment) with a high cost in respect to the whole cost of the item must be depreciated separately.

At the end of the financial calendar year, the asset’s worth and useful life must come under review. Changes in the accounting estimate according to Accounting Standard 5 such as the net profit or loss must be accounted for and dealt with accordingly.

SLM (Straight-line Method), the revised unit of production method and the diminishing balance method are all ways to see to it that depreciation must be used for allocating the asset over the useful life of the asset.

ICDS 5 versus AS 10

ICDS 5 does not include other taxes that can be redeemed from the cost of a fixed asset. The cost of assets that are acquired in exchange for other assets is found in ICDS 5, in which the permits for Accounting Standard ten determine the base price on Fair Market Value of the asset acquired or given up. The assets gained in an exchange for shares or securities are stated in ICDS 5. The treatment for spending that does not enhance future benefits is not stated in the ICDS. Such spending needs to be treated as an expenditure and acknowledged in the P/L Statement. ICDS contains more disclosure standards that must be met, including the grant or subsidy received on account of a fixed asset and revisions to a change in currency, etc.