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    As 13

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    abhishekkapse654
    This document outlines Accounting Standard 13 which provides guidance on accounting for investments. It defines investments as assets held for earning income, capital appreciation, or other benefits. Investments are classified as either current or long-term. Current investments are those readily realizable and intended to be held less than one year, valued at the lower of cost or fair value. Long-term investments are valued at cost less any provision for permanent decline in value. The standard provides details on measurement and disclosure of investments.

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    As 13

    Uploaded by

    abhishekkapse654
    23 views6 pages
    This document outlines Accounting Standard 13 which provides guidance on accounting for investments. It defines investments as assets held for earning income, capital appreciation, or other benefits. Investments are classified as either current or long-term. Current investments are those readily realizable and intended to be held less than one year, valued at the lower of cost or fair value. Long-term investments are valued at cost less any provision for permanent decline in value. The standard provides details on measurement and disclosure of investments.

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    AS 13 (1)

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    This document outlines Accounting Standard 13 which provides guidance on accounting for investments. It defines investments as assets held for earning income, capital appreciation, or other benefits. Investments are classified as either current or long-term. Current investments are those readily realizable and intended to be held less than one year, valued at the lower of cost or fair value. Long-term investments are valued at cost less any provision for permanent decline in value. The standard provides details on measurement and disclosure of investments.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    23 views6 pages

    As 13

    Uploaded by

    abhishekkapse654
    This document outlines Accounting Standard 13 which provides guidance on accounting for investments. It defines investments as assets held for earning income, capital appreciation, or other benefits. Investments are classified as either current or long-term. Current investments are those readily realizable and intended to be held less than one year, valued at the lower of cost or fair value. Long-term investments are valued at cost less any provision for permanent decline in value. The standard provides details on measurement and disclosure of investments.

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    © All Rights Reserved
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    of 6

    Accounting Standard 13

    ACCOUNTING STANDARD 13
    ACCOUNTING FOR INVESTMENTS
    1. Meaning of Investments:
    Investments are assets held by an enterprise for
    • earning income by way of dividends, interest, and rentals,
    • capital appreciation, or
    • other benefits.
    Attention:
    ✓ Shares, debentures and other securities held as stock-in-trade are not
    ‘investments’.
    ✓ However, they are accounted for and disclosed in the financial
    statements as per AS-13 to the extent they relate to current
    investment.

    2. Classification of Investments:
    An enterprise should classify and disclose investment as
    - current investments and
    - long-term investments

    3. Current Investments:
    Meaning: A current investment is an investment which is
    - readily realisable and
    - is intended to be held for not more than one year from the date on
    which such investment is made.
    Carrying amount of Investments:
    Current investment should be valued at
    - Cost Price or
    - Fair Value
    whichever is lower

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    Accounting Standard 13

    Note:
    a) Fair value is the amount for which an asset could be exchanged between
    a knowledgeable, willing buyer and a knowledgeable, willing seller in an
    arm’s length transaction.
    Market value or net realisable value provides evidence of fair value.
    b) The carrying amount of Current investments is determined on an
    individual basis or on category of investment, but not on an overall
    (or global) basis.
    b) For current investments, any reduction to fair value and any reversal
    of such reduction are included in the profit and loss statement.
    Accounting Treatment:
    Reduction in Fair Value:
    Profit and Loss A/c
    To Investment A/c
    Reversal of such reduction:
    Investment A/c
    To Profit and Loss A/c

    4. Long Term Investments:


    Meaning:
    A long term investment is an investment other than a current investment.
    Carrying Amount of Investments:
    Long-term investments are valued at
    Cost price xxx
    Less: Provision for Permanent diminution xxx
    Carrying Amount xxx
    Note
    ✓ Provision for diminution shall be made to recognize a decline, other
    than temporary in the value of the investments.

    P a g e | 70
    Accounting Standard 13

    ✓ Where there is a permanent decline in the carrying amounts of long-


    term investments, the resultant reduction in the carrying amount is
    charged to the profit and loss statement.
    Proft and Loss A/c
    To Provision for Permanent decline in Investment A/c
    ✓ The reduction in carrying amount is reversed when there is a rise in
    the value of the investment, or if the reason for the reduction no
    longer exists.
    Provision for Permanent decline in Investment A/c
    To Proft and Loss A/c
    ✓ The carrying amount of long-term investments is determined on an
    individual investment basis.

    5. Investment properties:
    ➢ Investment properties are always considered as Long-Term Investment.
    ➢ An investment property is an investment in land or buildings that are
    held for
    - earning income by way of rentals,
    - capital appreciation, or
    - both
    ➢ An Investment Properties is accounted as per cost model as prescribed
    in AS 10.
    ➢ Carrying amount of Investments:
    Cost price xxx
    Less: Accumulated Depreciation xxx
    Less: Accumulated Impairment Loss xxx
    Carrying Amount xxx

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    Accounting Standard 13

    6. Cost Price of Investments


    Acquisition against monetary consideration:
    Purchase Price XXX
    Add: Brokerage and fees XXX
    Add: Taxes on Purchase XXX
    Add: Expenses to claim titles XXX
    Cost Price XXX
    Acquired in Exchange of Non-monetary assets:
    Cost price of Investment acquired will be equal to
    • Fair value of asset given up ± cash adjustment
    (or)
    • Fair value of asset received (or) acquired
    Whichever is clearly evident.
    Acquired in Exchange of for shares or other securities
    Cost price of Investment acquired will be equal to
    • Fair value of securities issued

    7. Reclassification of Investments
    ➢ Where long-term investments are reclassified as current investments,
    transfers are made at the lower of
    - cost and
    - carrying amount at the date of transfer.
    ➢ Where current investment are reclassified as long-term, transfer are
    made at the lower of
    - cost and
    - fair value at the date of transfer.

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    Accounting Standard 13

    8. Disposal of Investments:
    ➢ On disposal of an investment,
    Net Disposal Proceeds XXX
    Less: Carrying amount XXX
    Gain or Loss on Sale (PL) XXX

    ➢ When a part of the holding of an individual investment is disposed,


    the carrying amount is required to be allocated to that part on the
    basis of the average carrying amount of the total holding of the
    investment.

    9. Applicability of AS-13:
    This Standard does not deal with
    ✓ The bases for recognition of interest, dividends and rentals;
    ✓ Operating or finance leases;
    ✓ Investments of retirement benefit plans and life insurance enterprises;
    ✓ Mutual funds, banks and public financial institutions

    10. Disclosure requirements:


    ✓ Accounting policies followed for valuation of investments.
    ✓ Classification of investment into current and long term.
    ✓ The amount included in profit and loss statements for:
    • Interest, dividends and rentals for long term and current
    investments
    • Profits and losses on disposal of current investment and long term
    investment and changes in carrying amount of such investments;
    ✓ Aggregate amount of quoted and unquoted investments, giving the
    aggregate market value of quoted investments;
    ✓ Any significant restrictions on investments.

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    Accounting Standard 13

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