INVESTMENTS ACCOUNTING STANDARD - 13 ACCOUNTING FOR J.P., KAPUR & UBERAI

PURPOSE Accounting for investments in the financial statements of enterprises and related disclosure requirements. J.P., KAPUR & UBERAI

DEFINITION 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’. J.P., KAPUR & UBERAI

CLASSIFICATION 1. LONG TERM INVESTMENTS 2. CURRENT INVESTMENTS. J.P., KAPUR & UBERAI

COST OF INVESTMENTS INCLUDES 1. Basic cost 2. Acquisition charges such as brokerage, fees and duties. J.P., KAPUR & UBERAI

OTHER MODES If an investment is acquired by the issue of shares or other securities, the acquisition cost is the Fair value of the securities issued. The right shares, if subscribed to is added to the carrying amount of original shares but if rights are sold, the sale proceeds are treated as income and credited to profit and loss statement. J.P., KAPUR & UBERAI

INCOME FROM INVESTMENTS 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. J.P., KAPUR & UBERAI

CARRYING AMOUNT OF INVESTMENTS Current Investments - At Lower of cost or fair value. Long term investments - At Cost. However, in case of a permanent decline, provision for diminution shall be made. Any reduction in the carrying amount should be charged to the profit and loss statement. J.P., KAPUR & UBERAI

BASIS Current Investments: Either on an individual investment basis or by category of investment, but not on an overall basis. Long term investments: Each investment individually J.P., KAPUR & UBERAI

DISPOSAL When any investments is 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. J.P., KAPUR & UBERAI

DISCLOSURES 1. Classification of investments, 2. The accounting policies for determination of carrying amount of investments, 3. The amounts included in profit and loss statement for interest, dividends, rentals,profits and losses on disposal of investments contd….. J.P., KAPUR & UBERAI

DISCLOSURES 4. Significant restriction on the right of ownership, realisability of investments or the remittance of income and proceeds of disposal; 5. The aggregate amount of quoted and unquoted investments 6. Other disclosures specifically required by the relevant statute. J.P., KAPUR & UBERAI