Exposure Draft
Amendments in Transitional Provisions of
Accounting Standards
(Last date for Comments: December 14, 2015)
Issued by
Accounting Standards Board
The Institute of Chartered Accountants of
India
Amendments in Transitional Provisions of
Accounting Standards
S. No. Accounting Standard
1. AS 10, Property, Plant and Equipment
2. AS 11, The Effects of Changes in Foreign Exchange Rates
3. AS 15, Employee Benefits
4. AS 21, Consolidated Financial Statements
5. AS 22, Accounting for Taxes on Income
6. AS 23, Accounting for Investments in Associates in
Consolidated Financial Statements1
7. AS 25, Interim Financial Reporting
8. AS 26, Intangible Assets
9. AS 28, Impairment of Assets
10. AS 29, Provisions, Contingent Liabilities and Contingent
Assets
Exposure Draft
Amendments in Transitional Provisions
of Accounting Standards
The existing Accounting Standards which were notified under the
Companies Act 1956 under the Companies (Accounting Standards
Rules) 2006 have to be notified afresh under Section 133 of the
Companies Act, 2013.
Certain existing Accounting Standards which were notified in 2006
contain 'Transitional Provisions'. The objective of these 'Transitional
Provisions' is to prescribe the accounting treatment when an Accounting
Standard becomes applicable for the first time. Accordingly, in 2006,
there was some justification to include these 'transitional provisions'.
As now the Accounting Standards are being notified afresh, so from the
perspective of their re-notification, 'Transitional Provisions' are being re-
examined.
Following is the Exposure Draft of the Amendments in Transitional
Provisions of Accounting Standards issued by the Accounting
Standards Board of The Institute of Chartered Accountants of India, for
comments.
The Board invites comments on any specific aspect of the Exposure
Draft. Comments are most helpful if they indicate the specific paragraph
or group of paragraphs to which they relate, contain a clear rationale
and, where applicable, provide a suggestion for alternative wording.
How to comment-
Comments should be submitted using one of the following methods not
later than December 14, 2015:
1. Electronically: Visit at the following link
http://www.icai.org/comments/asb/
2. Email: comments can be sent to: commentsasb@icai.in
3. Postal: Secretary, Accounting Standards Board,
The Institute of Chartered Accountants of India,
ICAI Bhawan, Post Box No. 7100,
Indraprastha Marg,
New Delhi 110 002
Further clarifications on this Exposure Draft may be sought by e-mail to
geetanshu.bansal@icai.in
Accounting Standard (AS) 10
Property, Plant and Equipment
The proposed changes are in the transitional provisions of AS 10
(revised), Property, Plant and Equipment which will replace the existing
AS 10. Accounting for Fixed Assets.
On November 25, 2014, the Accounting Standards Board of ICAI
issued the Exposure Draft of AS 10, Property, Plant and Equipment
for the public comments. A copy of the Exposure Draft issued by the
ICAI is available at the following link:
http://resource.cdn.icai.org/35700asb25187.pdf.
The draft of the AS 10 (revised) as finalised by the Council of ICAI was
sent to the National Advisory Committee on Accounting Standards
(NACAS). After making certain changes in the draft in consultation with
ICAI, the NACAS recommended the revised AS 10 to MCA for
notification. The revised AS 10 is yet to be notified by MCA.
In AS 10 (revised) the transitional provisions are included, as it would
replace the existing AS 10 and thus the revised AS 10 would be
applied for the first time, In the draft of revised AS 10 as finalised by
the NACAS, the paragraph 90 dealt with the depreciation of parts of an
item of property, plant and equipment, i.e., with component accounting.
Paragraph 90 was included in revised AS 10 as at that time Schedule
XIV (now Schedule II) to the Companies Act was silent on component
approach. However, with Schedule II mandating the component
approach, this paragraph is now not relevant. Accordingly, it is
proposed to delete the paragraph 90 of the AS 10 (revised) and retain
the remaining transitional provisions given below in paragraph 88-89
and 91-92.
Paragraph 90 is deleted. Paragraphs 88-89 and 91-92 are included for the
ease of reference. Deleted text is struck through.
Transitional Provisions
88. Where an entity has in past recognized an expenditure in the
statement of profit and loss which is eligible to be included as a
part of the cost of a project for construction of property, plant and
equipment in accordance with the requirements of paragraph 9, it
may do so retrospectively for such a project. The effect of such
retrospective application of this requirement, should be recognised
net-of-tax in revenue reserves.
89. The requirements of paragraphs 26-28 regarding the initial
measurement of an item of property, plant and equipment acquired
in an exchange of assets transaction should be applied
prospectively only to transactions entered into after this Standard
becomes mandatory.
90 The requirements of this Standard concerning separate depreciation
of parts of an item of property, plant and equipment (see paragraphs 45-
49) and concerning capitalisation of cost of replacing such parts (see
paragraphs 13-14) are applicable in respect of items of property, plant
and equipment on the date this standard becomes mandatory. The
effect of application of this requirement insofar as change in useful life of
various parts is concerned, should be accounted for in accordance with
paragraph 53 of the standard except that where a part does not have
any remaining useful life, the carrying amount of the part, if any, should
be recognised net-of-tax in the opening balance of revenue reserves.
90 91On the date of this Standard becoming mandatory, the spare parts,
which hitherto were being treated as inventory under AS 2, Valuation of
Inventories, and are now required to be capitalised in accordance with
the requirements of this Standard, should be capitalised at their
respective carrying amounts. The spare parts so capitalised should be
depreciated over their remaining useful lives prospectively as per the
requirements of this Standard.
9192The requirements of paragraph 32 and paragraphs 34 44
regarding the revaluation model should be applied prospectively. In
case, on the date of this Standard becoming mandatory, an enterprise
does not adopt the revaluation model as its accounting policy but the
carrying amount of item(s) of property, plant and equipment reflects any
previous revaluation it should adjust the amount outstanding in the
revaluation reserve against the carrying amount of that item. However,
the carrying amount of that item should never be less than residual
value. Any excess of the amount outstanding as revaluation reserve
over the carrying amount of that item should be adjusted in revenue
reserves.
Accounting Standard (AS) 11
The Effects of Changes in Foreign Exchange Rates
AS 11, The Effects of Changes in Foreign Exchange Rates contains the
transitional paragraphs in paragraph 45 to 46A. It is proposed to delete
the transitional provisions given in paragraph 45 as now these are no
longer relevant. Paragraphs 46 and 46A will be retained.
It is also proposed to add paragraph 46B in AS 11, that where a
company has exercised an option available under paragraph 46 and
46Ain respect of a long-term foreign currency monetary item, then the
same treatment should be made in respect of the exchange differences
related to the hedging instruments (forward covers) obtained to cover
the exchange risk on that monetary item.
Paragraph 45 is deleted and 46B is added. Deleted text is struck through and
new text is underlined.
Footnotes are not included
Transitional Provisions
45. On the first time application of this Standard, if a foreign branch
is classified as a non-integral foreign operation in accordance with
the requirements of this Standard, the accounting treatment
prescribed in paragraphs 33 and 34 of the Standard in respect of
change in the classification of a foreign operation should be
applied. [Deleted].
Paragraphs 46 and 46A for Companies
Paragraphs 46 and 46A for Companies
46. In respect of accounting periods commencing on or after 7th
December, 2006 and ending on or before 31st March, 2011, at the
option of the enterprise (such option to be irrevocable and to be
exercised retrospectively for such accounting period, from the date this
transitional provision comes into force or the first date on which the
concerned foreign currency monetary item is acquired, whichever is
later, and applied to all such foreign currency monetary items),
exchange differences arising on reporting of long-term foreign currency
monetary items at rates different from those at which they were initially
recorded during the period, or reported in previous financial statements,
in so far as they relate to the acquisition of a depreciable capital asset,
can be added to or deducted from the cost of the asset and shall be
depreciated over the balance life of the asset, and in other cases, can
be accumulated in a "Foreign Currency Monetary Item Translation
Difference Account" in the enterprise's financial statements and
amortized over the balance period of such long-term asset/liability but
not beyond 31st March, 2011, by recognition as income or expense in
each of such periods, with the exception of exchange differences dealt
with in accordance with paragraph 15. For the purposes of exercise of
this option, an asset or liability shall be designated as a long-term
foreign currency monetary item, if the asset or liability is expressed in a
foreign currency and has a term of 12 months or more at the date of
origination of the asset or liability. Any difference pertaining to
accounting periods which commenced on or after 7th December, 2006,
previously recognized in the profit and loss account before the exercise
of the option shall be reversed in so far as it relates to the acquisition of
a depreciable capital asset by addition or deduction from the cost of the
asset and in other cases by transfer to "Foreign Currency Monetary Item
Translation Difference Account" in both cases, by debit or credit, as the
case may be, to the general reserve. If the option stated in this
paragraph is exercised, disclosure shall be made of the fact of such
exercise of such option and of the amount remaining to be amortized in
the financial statements of the period in which such option is exercised
and in every subsequent period so long as any exchange difference
remains unamortized."
46A. (1) In respect of accounting periods commencing on or after the 1st
April, 2011, for an enterprise which had earlier exercised the option
under paragraph 46 and at the option of any other enterprise (such
option to be irrevocable and to be applied to all such foreign currency
monetary items), the exchange differences arising on reporting of long-
term foreign currency monetary items at rates different from those at
which they were initially recorded during the period, or reported in
previous financial statements, in so far as they relate to the acquisition
of a depreciable capital asset, can be added to or deducted from the
cost of the asset and shall be depreciated over the balance life of the
asset, and in other cases, can be accumulated in a ``Foreign Currency
Monetary Item Translation Difference Account" in the enterprise's
financial statements and amortized over the balance period of such long
term asset or liability, by recognition as income or expense in each of
such periods, with the exception of exchange differences dealt with in
accordance with the provisions of paragraph 15 of the said rules.
(2) To exercise the option referred to in sub-paragraph (1), an asset or
liability shall be designated as a long-term foreign currency monetary
item, if the asset or liability is expressed in a foreign currency and has a
term of twelve months or more at the date of origination of the asset or
the liability:
Provided that the option exercised by the enterprise shall disclose the
fact of such option and of the amount remaining to be amortized in the
financial statements of the period in which such option is exercised and
in every subsequent period so long as any exchange difference remains
unamortized."
46B Where a company has exercised an option available under
paragraphs 46 and 46A in respect of a long-term foreign currency
monetary item, then the same treatment should be made in respect of
the exchange differences related to the forward contracts obtained to
cover the exchange risk on that monetary item. For instance, where an
entity has obtained a forward contract to cover the exchange risk in
respect of a long-term foreign currency liability incurred to acquire a
depreciable capital asset, and the company has exercised the option
under paragraphs 46 and 46A to capitalise the exchange differences on
such a liability, the exchange differences on the forward contract should
also be capitalised, i.e., adjusted in the cost of the asset. Where such a
liability has not been incurred for the purpose of acquiring a depreciable
capital asset and by exercising the option available under paragraphs 46
and 46A, the company has transferred the exchange differences to the
Foreign Currency Monetary Items Translation Difference Account, the
exchange difference on the forward cover should also be transferred to
that account".
Accounting Standard (AS) 15
Employee Benefits
Paragraph 142-145 and Example illustrating paragraphs 144 and 145
are deleted. Deleted text is struck through
Transitional Provisions
142A. An enterprise may disclose the amounts required by paragraph
120(n) as the amounts are determined for each accounting period
prospectively from the date the enterprise first adopts this Standard
Employee Benefits other than Defined Benefit Plans and Termination
Benefits
143. Where an enterprise first adopts this Standard for employee
benefits, the difference (as adjusted by any related tax expense)
between the liability in respect of employee benefits other than defined
benefit plans and termination benefits, as per this Standard, existing on
the date of adopting this Standard and the liability that would have been
recognised at the same date, as per the pre-revised AS 15 issued by the
ICAI in 1995, should be adjusted against opening balance of revenue
reserves and surplus.
Defined Benefit Plans
144. On first adopting this Standard, an enterprise should determine its
transitional liability for defined benefit plans at that date as:
(a) the present value of the obligation (see paragraph 65) at the
date of adoption;
(b) minus the fair value, at the date of adoption, of plan assets (if
any) out of which the obligations are to be settled directly (see
paragraphs 100-102);
(c) minus any past service cost that, under paragraph 94, should
be recognised in later periods.
145. If the transitional liability is more than the liability that would have
been recognised at the same date as per the pre-revised AS 15, the
enterprise should make an irrevocable choice to recognise that increase
as part of its defined benefit liability under paragraph 55:
(a) immediately as an adjustment against the opening balance of
revenue reserve and surplus (as adjusted by any related tax
expense); or
(b) as an expense on a straight-line basis over up to five years from
the date of adoption.
If an enterprise chooses (b), the enterprise should:
(i) apply the limit described in paragraph 59(b) in measuring any
asset recognised in the balance sheet;
(ii) disclose at each balance sheet date (1) the amount of the
increase that remains unrecognised; and (2) the amount
recognised in the current period;
(iii) limit the recognition of subsequent actuarial gains (but not
negative past service cost) only to the extent that the net
cumulative unrecognised actuarial gains (before recognition of
that actuarial gain) exceed the unrecognised part of the
transitional liability; and
(iv) include the related part of the unrecognised transitional liability
in determining any subsequent gain or loss on settlement or
curtailment.
If the transitional liability is less than the liability that would have
been recognized at the same date as per the pre-revised AS 15, the
enterprise should recognise that decrease immediately as an
adjustment against the opening balance of revenue reserves and
surplus.
Example Illustrating Paragraphs 144 and 145
At 31st March 20X7, an enterprise's balance sheet includes a pension
liability of Rs. 100, recognised as per the pre-revised AS 15 issued by
the ICAI in 1995. The enterprise adopts the Standard as of 1st April
20X7, when the present value of the obligation under the Standard is
Rs. 1,300 and the fair value of plan assets is Rs. 1,000. On 1st April
20X1, the enterprise had improved pensions (cost for non-vested
benefits: Rs. 160; and average remaining period at that date until
vesting: 10 years).
(Amount in Rs.)
The transitional effect is as follows:
Present value of the obligation 1,300
Fair value of plan assets (1,000)
Less: past service cost to be recognised in later
periods
(160 x 4/10) (64)
Transitional liability 236
Liability already recognized 100
Increase in liability 136
An enterprise may choose to recognise the increase in liability (as
adjusted by any related tax expense) either immediately as an
adjustment against the opening balance of revenue reserves and
surplus as on 1 April 20X7 or as an expense on straight line basis over
up to five years from that date. The choice is irrevocable.
At 31 March 20X8, the present value of the obligation under the
Standard is Rs. 1,400 and the fair value of plan assets is Rs. 1,050. Net
cumulative unrecognised actuarial gains since the date of adopting the
Standard are Rs. 120. The enterprise is required, as per paragraph 92,
to recognise all actuarial gains and losses immediately.
The effect of the limit in paragraph 145 (b) (iii) is as (Amount in
follows: Rs.)
Net unrecognised actuarial gain 120
Unrecognised part of the transitional liability (136 × 4/5) 109
(If the enterprise adopts the policy of recognising it over
5 years)
-----
Maximum gain to be recognised 11
Accounting Standard (AS) 21
Consolidated Financial Statements
Transitional Provisions
30. On the first occasion that consolidated financial statements are
presented, comparative figures for the previous period need not be
presented. In all subsequent years full comparative figures for the
previous period should be presented in the consolidated financial
statements.
Accounting Standard (AS) 22
Accounting for Taxes on Income
Paragraphs 33-34 are deleted. Deleted text is struck through.
Transitional Provisions
33. On the first occasion that the taxes on income are accounted for in
accordance with this Standard, the enterprise should recognise, in the
financial statements, the deferred tax balance that has accumulated
prior to the adoption of this Standard as deferred tax asset/liability with a
corresponding credit/charge to the revenue reserves, subject to the
consideration of prudence in case of deferred tax assets (see
paragraphs 15-18). The amount so credited/charged to the revenue
reserves should be the same as that which would have resulted if this
Standard had been in effect from the beginning.
34. For the purpose of determining accumulated deferred tax in the
period in which this Standard is applied for the first time, the opening
balances of assets and liabilities for accounting purposes and for tax
purposes are compared and the differences, if any, are determined. The
tax effects of these differences, if any, should be recognised as deferred
tax assets or liabilities, if these differences are timing differences. For
example, in the year in which an enterprise adopts this Standard, the
opening balance of a fixed asset is Rs. 100 for accounting purposes and
Rs. 60 for tax purposes. The difference is because the enterprise
applies written down value method of depreciation for calculating
taxable income whereas for accounting purposes straight line method is
used. This difference will reverse in future when depreciation for tax
purposes will be lower as compared to the depreciation for accounting
purposes. In the above case, assuming that enacted tax rate for the
year is 40% and that there are no other timing differences, deferred tax
liability of Rs. 16 [(Rs. 100 -Rs. 60) x 40%] would be recognised.
Another example is an expenditure that has already been written off for
accounting purposes in the year of its incurrance but is allowable for tax
purposes over a period of time. In this case, the asset representing that
expenditure would have a balance only for tax purposes but not for
accounting purposes. The difference between balance of the asset for
tax purposes and the balance (which is nil) for accounting purposes
would be a timing difference which will reverse in future when this
expenditure would be allowed for tax purposes. Therefore, a deferred
tax asset would be recognised in respect of this difference subject to the
consideration of prudence (see paragraphs 15 - 18).
Accounting Standard (AS) 23
Accounting for Investments in Associates in Consolidated
Financial Statements1
Transitional Provisions
26. On the first occasion when investment in an associate is accounted
for in consolidated financial statements in accordance with this
Standard, the carrying amount of investment in the associate should be
brought to the amount that would have resulted had the equity method
of accounting been followed as per this Standard since the acquisition of
the associate. The corresponding adjustment in this regard should be
made in the retained earnings in the consolidated financial statements.
1 .It is clarified that AS 23 is mandatory if an enterprise presents
consolidated financial statements. In other words, if an enterprise
presents consolidated financial statements, it should account for
investments in associates in the consolidated financial statements in
accordance with AS 23.
ACCOUNTING STANDARD (AS) 25
Interim Financial Reporting
Transitional Provision
44. On the first occasion that an interim financial report is presented in
accordance with this Standard, the following need not be presented in
respect of all the interim periods of the current financial year:
(a) comparative statements of profit and loss for the comparable
interim periods (current and year-to-date) of the immediately
preceding financial year; and
(b) comparative cash flow statement for the comparable year-to-
date period of the immediately preceding financial year.
Accounting Standard (AS) 26
Intangible Assets
Paragraphs 99 -100 and Illustration B are is deleted. Deleted text is
struck through.
Transitional Provisions
99. Where, on the date of this Standard coming into effect, an enterprise
is following an accounting policy of not amortising an intangible item or
amortising an intangible item over a period longer than the period
determined under paragraph 63 of this Standard and the period
determined under paragraph 63 has expired on the date of this Standard
coming into effect, the carrying amount appearing in the balance sheet
in respect of that item should be eliminated with a corresponding
adjustment to the opening balance of revenue reserves.
In the event the period determined under paragraph 63 has not expired
on the date of this Standard coming into effect and:
(a) if the enterprise is following an accounting policy of not
amortising an intangible item, the carrying amount of the
intangible item should be restated, as if the accumulated
amortisation had always been determined under this Standard,
with the corresponding adjustment to the opening balance of
revenue reserves. The restated carrying amount should be
amortised over the balance of the period as determined in
paragraph 63.
(b) if the remaining period as per the accounting policy followed by
the enterprise:
(i) is shorter as compared to the balance of the period
determined under paragraph 63, the carrying amount of the
intangible item should be amortised over the remaining
period as per the accounting policy followed by the
enterprise,
(ii) is longer as compared to the balance of the period
determined under paragraph 63, the carrying amount of the
intangible item should be restated, as if the accumulated
amortisation had always been determined under this
Standard, with the corresponding adjustment to the
opening balance of revenue reserves. The restated
carrying amount should be amortised over the balance of
the period as determined in paragraph 63.
100. Illustration B attached to the Standard illustrates the application
of paragraph 99.
Illustration B
This illustration which does not form part of the Accounting Standard,
provides illustrative application of the requirements contained in
paragraph 99 of this Accounting Standard in respect of transitional
provisions.
Illustration 1 -Intangible Item was not amortised and the amortisation
period determined under paragraph 63 has expired.
An intangible item is appearing in the balance sheet of A Ltd. at Rs. 10
lakhs as on 1-4-2003. The item was acquired for Rs. 10 lakhs on April 1,
1990 and was available for use from that date. The enterprise has been
following an accounting policy of not amortising the item. Applying
paragraph 63, the enterprise determines that the item would have been
amortised over a period of 10 years from the date when the item was
available for use i.e., April 1, 1990.
Since the amortisation period determined by applying paragraph 63 has
already expired as on 1-4-2003, the carrying amount of the intangible
item of Rs. 10 lakhs would be required to be eliminated with a
corresponding adjustment to the opening balance of revenue reserves
as on 1-4-2003.
Illustration 2 - Intangible Item is being amortised and the amortisation
period determined under paragraph 63 has expired.
An intangible item is appearing in the balance sheet of A Ltd. at Rs. 8
lakhs as on 1-4-
2003. The item was acquired for Rs. 20 lakhs on April 1, 1991 and was
available for use from that date. The enterprise has been following a
policy of amortising the item over a period of 20 years on straight-line
basis. Applying paragraph 63, the enterprise determines that the item
would have been amortised over a period of 10 years from the date
when the item was available for use i.e., April 1, 1991.
Since the amortisation period determined by applying paragraph 63 has
already expired as on 1-4-2003, the carrying amount of Rs. 8 lakhs
would be required to be eliminated with a corresponding adjustment to
the opening balance of revenue reserves as on 1-4-2003.
Illustration 3 - Amortisation period determined under paragraph 63 has
not expired and the remaining amortisation period as per the accounting
policy followed by the enterprise is shorter.
An intangible item is appearing in the balance sheet of A Ltd. at Rs. 8
lakhs as on 1-4-2003. The item was acquired for Rs. 20 lakhs on April 1,
2000 and was available for use from that date. The enterprise has been
following a policy of amortising the intangible item over a period of 5
years on straight line basis. Applying paragraph 63, the enterprise
determines the amortisation period to be 8 years, being the best
estimate of its useful life, from the date when the item was available for
use i.e., April 1, 2000.
On 1-4-2003, the remaining period of amortisation is 2 years as per the
accounting policy followed by the enterprise which is shorter as
compared to the balance of amortisation period determined by applying
paragraph 63, i.e., 5 years. Accordingly, the enterprise would be
required to amortise the intangible item over the remaining 2 years as
per the accounting policy followed by the enterprise.
Illustration 4 - Amortisation period determined under paragraph 63 has
not expired and the remaining amortisation period as per the accounting
policy followed by the enterprise is longer.
An intangible item is appearing in the balance sheet of A Ltd. at Rs. 18
lakhs as on 1-4-2003. The item was acquired for Rs. 24 lakhs on April 1,
2000 and was available for use from that date. The enterprise has been
following a policy of amortising the intangible item over a period of 12
years on straight-line basis. Applying paragraph 63, the enterprise
determines that the item would have been amortised over a period of 10
years on straight line basis from the date when the item was available
for use i.e., April 1, 2000.
On 1-4-2003, the remaining period of amortisation is 9 years as per the
accounting policy followed by the enterprise which is longer as
compared to the balance of period stipulated in paragraph 63, i.e., 7
years. Accordingly, the enterprise would be required to restate the
carrying amount of intangible item on 1-4-2003 at Rs. 16.8 lakhs (Rs. 24
lakhs - 3xRs. 2.4 lakhs, i.e., amortisation that would have been charged
as per the Standard) and the difference of Rs. 1.2 lakhs (Rs. 18 lakhs-
Rs. 16.8 lakhs) would be required to be adjusted against the opening
balance of the revenue reserves. The carrying amount of Rs. 16.8 lakhs
would be amortised over 7 years which is the balance of the
amortisation period as per paragraph 63.
Illustration 5 - Intangible Item is not amortised and amortisation period
determined under paragraph 63 has not expired.
An intangible item is appearing in the balance sheet of A Ltd. at Rs. 20
lakhs as on 1-4-2003. The item was acquired for Rs. 20 lakhs on April 1,
2000 and was available for use from that date. The enterprise has been
following an accounting policy of not amortising the item. Applying
paragraph 63, the enterprise determines that the item would have been
amortised over a period of 10 years on straight line basis from the date
when the item was available for use i.e., April 1, 2000.
On 1-4-2003, the enterprise would be required to restate the carrying
amount of intangible item at Rs. 14 lakhs (Rs. 20 lakhs - 3xRs. 2 lakhs,
i.e., amortisation that would have been charged as per the Standard)
and the difference of Rs. 6 lakhs (Rs. 20 lakhs-Rs. 14 lakhs) would be
required to be adjusted against the opening balance of the revenue
reserves. The carrying amount of Rs. 14 lakhs would be amortised over
7 years which is the balance of the amortisation period as per paragraph
63.
Accounting Standard (AS) 28
Impairment of Assets
Paragraphs 124- 125 are deleted. Deleted text is struck through.
Transitional Provisions
124. On the date of this Standard becoming mandatory, an enterprise
should assess whether there is any indication that an asset may be
impaired (see paragraphs 5-13). If any such indication exists, the
enterprise should determine impairment loss, if any, in accordance with
this Standard. The impairment loss, so determined, should be adjusted
against opening balance of revenue reserves being the accumulated
impairment loss relating to periods prior to this Standard becoming
mandatory unless the impairment loss is on a revalued asset. An
impairment loss on a revalued asset should be recognised directly
against any revaluation surplus for the asset to the extent that the
impairment loss does not exceed the amount held in the revaluation
surplus for that same asset. If the impairment loss exceeds the amount
held in the revaluation surplus for that same asset, the excess should be
adjusted against opening balance of revenue reserves.
125. Any impairment loss arising after the date of this Standard
becoming mandatory should be recognised in accordance with this
Standard (i.e., in the statement of profit and loss unless an asset is
carried at revalued amount. An impairment loss on a revalued asset
should be treated as a revaluation decrease).
Accounting Standard (AS) 29
Provisions, Contingent Liabilities and Contingent
Assets
Transitional Provisions
68. All the existing provisions for decommissioning, restoration and
similar liabilities (see paragraph 35) should be discounted
prospectively with the corresponding effect to the related item of
property, plant and equipment.
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