1 / 9

Accounting for Investments

Accounting for Investments. AS 13. This AS is mandatory in nature and applicable to all entities. Investment means assets held by entity for earning income or for capital appreciation except stock. Investment can be : Current Investment Long Term Investment.

hunter-weiss
Download Presentation

Accounting for Investments

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Accounting for Investments AS 13 www.SafeEcollege.com

  2. This AS is mandatory in nature and applicable to all entities. • Investment means assets held by entity for earning income or for capital appreciation except stock. Investment can be : • Current Investment • Long Term Investment www.SafeEcollege.com

  3. 3. Current Investment means Investment which are ready, releasable and held with intention to dispose off within 12 months from day of purchase. 4. Long Term Investment are those which are other than Current Investment. 5. Investment should be disclosed in Balance Sheet as follows : • Investment in Government security • Investment in shares and Debentures • Investment Property • Other Investment www.SafeEcollege.com

  4. 6. Investment can be acquired as follows : • By Purchase : Cost = Purchase Price Add: Taken on purchase Add: Expenses on purchase Add: Expenses on Title Less: Pre acquisition Dividend Less: Sale Proceeds of Right to the Extent of decline in Market Price Cost Price www.SafeEcollege.com

  5. Note: Whenever shares purchased are Cum Right then difference between Purchase Price and Price Ex-Right. OR Actual Sale Proceeds whichever is lower will be deducted from cost. Note: Sale Proceeds other than above, transferred to P&L. www.SafeEcollege.com

  6. B) By Exchange : Value of shares to be recognized : Fair Value of asset surrendered OR Fair Value of Investment Obtained Whichever is more clearly evident. www.SafeEcollege.com

  7. 7. Valuation • Current Investment are valued at Cost Price or Fair Value which ever is Lower. Any Difference in Valuation is transferred to P&L A/c. • Permanent Investment are valued at Cost Price Only. However if there is any permanent decline, provision for permanent decline should be made. www.SafeEcollege.com

  8. 8. Reclassification of Investment : • From CI to LTI : Value of LTI will be Cost Price or Fair Value whichever is Lower. • From LTI to CI : Cost Value of CI will be Cost or Carrying Cost whichever is Lower. www.SafeEcollege.com

  9. 9. Disclosure Requirement • Investment should be disclosed as specified in Law or AS. • Investment Valuation Policy be disclosed. • Profit / Loss and earning from Investment shall be disclosed in P&L a/c. www.SafeEcollege.com

More Related