S.No.

Scope of ICDS

Particulars

V 

Tangible Fixed Assets

1. Scope - Treatment of Tangible Fixed Assets

2. Terms used - a) Tangible Fixed assets (Held for providing goods or service or both)  b) Fair value (Price of Arm's length Transaction)

3. Identification of Tangible Fixed Asset - As per definition.

4. Stand -by equipment & servicing equipment needs to be capitalised. Machinery spares wil be charged to revenue on consumption except specific machinery spares which have irregular use.

5. Component of Actual Cost - includes purchase price, import duties, other taxes except those recoverable subsequently and direct expenditure which incurred to make asset ready to use. Trade discount and rebate will be deducted.

6. Cost of tangible fixed asset may change subsequent to its acquisition or construction due to price adjustment, change in duties or similar factors or change in foreign exchange fluctuations.

7. Administration and other general overheads will be excluded from cost of tangible fixed asset if they are not asset specific.

8. Startup expenses including test run and experimental production will be capitalised. Post commercial production expenses will be charged to revenue.

9. Self Constructed Tangible Fixed Assets - Same principles as followed in purchased tangible fixed assets. Any internal profits will be eliminated.

10. In case of tangible fixed asset acquired in exchange for share or other securities or exchange for another asset - Fair value of the acquired tangible fixed asset will be the  actual cost.

11. Improvements and Repairs: Those expenses which increases the future benefits will be added to actual cost. Any addition or extension which becomes an intergral part of the assset will be added to actual cost. Those addition or extensions which have separate identity & can be used even after the original asset will be booked as a separate asset.

12. Valuation of Tangible Fixed Assets in special cases : In case of Jointly owned tangible fixed assets , proportionate actual cost, depreciation and WDV of such assets will be clubbed with similar fully owned assets. Details of such jointly owned assets need to be shown separately in FAR register. In case of several assets are purchase for a consolidated price, it will be divided between assets on fair basis.

13. Depreciation & Income on transfer of tangible fixed assets will be  as per provisions of income tax act, 1961.

14. Disclosures : Description of assets or block of assets, rate of depreciation ,actual cost or WDV as the case may be , Addition or deletion with dates, Allowable depreciation and WDV at the end of the year. In the case of additions date of put to use including adjustment on account of CENVAT claimed and allowed , change in rate of exchange of currency ,subsidy or grant or any reimbursement.