ACCOUNTING STANDARD 9 Recognition Criteria 1 future economic

ACCOUNTING STANDARD 9 Recognition Criteria 1. future economic benefits associated with the item will flow to the enterprise. 2. cost of the item can be measured reliably.

COSTS Initial Costs Subsequent Costs (day-to-day expenses)

ELEMENTS OF COST The cost of an item of property, plant and equipment comprises: purchase price any costs directly attributable to bringing the asset to the location dismantling, removing the item and restoring the site on which it is located,

costs of site preparation initial delivery and handling costs installation and assembly costs of testing professional fees

COST NOT INCLUDED of opening a new facility costs of introducing a new product(advt) training costs

DEPRECIATION Factors to be considered Expected physical wear and tear Technical obsolescence arising from changes or improvements in production

RESIDUAL VALUE is the estimated value of depreciable assets at the end of its useful life

ACCOUNTING TREATMENT Profit and loss account Balance sheet

ACCOUNTING STANDARD-16 BORROWING COSTS. Interest and commitment charges on Bank Borrowing short-term and other long-term borrowings. discounts or premium relating to borrowings. Finance charges in respect of assets acquired Exchange differences arising from foreign currency borrowings

Income on the temporary investment of the borrowed funds be deducted from borrowing costs. Capitalization of borrowing costs should be suspended during extended periods in which development is interrupted

ACCOUNTING STANDARD 29: PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS provision is a liability, which can be measured only by using a substantial degree of estimation. Liability is a present obligation arising from past events,

CONTINGENT LIABILITY IS – a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence

CONTINGENT ASSET Contingent asset is a possible asset that arises from past events, the existence of which will be confirmed only by the occurrences or non-occurrence of one or more uncertain future events

PROVISION an enterprises has a present obligation as a result of a past event; – it is probable (more likely than not) that an outflow of resources will be required to settle the obligation; and – a reliable estimate can be made of the amount of the obligation. Over estimation should be avoided

Provisions should be reviewed at each balance sheet date and adjusted to reflect the current best estimate. provision should be used only for expenditures for which the provision was originally recognised and not against a provision recognised for another purpose

THREE COMPONENTS Beginning Closing period Additional during the period

A contingent liability is not recognised in financial statements but is disclosed. A contingent asset is not recognised in financial statements.

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