Comments on: Query on Machinery Replaced !!! http://www.forum4ca.com/query-on-machinery-replaced/ India's First Ever Platform for Chartered Accountants and Finance Professionals. Tue, 11 Oct 2011 11:33:28 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: shashank http://www.forum4ca.com/query-on-machinery-replaced/comment-page-1/#comment-687 shashank Mon, 15 May 2006 12:21:51 +0000 http://www.forum4ca.com/archives/2006/05/13/query-on-machinery-replaced/#comment-687 Dear All, As per AS-10 point no.11.1 11.1 When a fixed asset is acquired in exchange for another asset, its cost is usually determined by reference to the fair market value of the consideration given. It may be appropriate to consider also the fair market value of the asset acquired if this is more clearly evident. An alternative accounting treatment that is sometimes used for an exchange of assets, particularly when the assets exchanged are similar, is to record the asset acquired at the net book value of the asset given up in each case an adjustment is made for any balancing receipt or payment of cash or other consideration. Dear All,
As per AS-10 point no.11.1
11.1 When a fixed asset is acquired in exchange for another asset, its cost is usually determined by reference to the fair market value of the consideration given. It may be appropriate to consider also the fair market value of the asset acquired if this is more clearly evident. An alternative accounting treatment that is sometimes used for an exchange of assets, particularly when the assets exchanged are similar, is to record the asset acquired at the net book value of the asset given up in each case an adjustment is made for any balancing receipt or payment of cash or other consideration.

]]> By: Varun Jain http://www.forum4ca.com/query-on-machinery-replaced/comment-page-1/#comment-680 Varun Jain Sun, 14 May 2006 15:28:09 +0000 http://www.forum4ca.com/archives/2006/05/13/query-on-machinery-replaced/#comment-680 Hi All, This was my query.... and in search of the answer asked this from many of my learned collegues... and what they say... As per Indian GAAP (AS-10) the asset is recorded at the historical cost.. not at the fair market value... though there is a clause of revaluation of assets but that is for either a) True and Fair pictue of accounts,or b) To show in the books at the Replacement cost. what can be done , considering the AS aplicability... we cn record the asset at the historical amount only but at the same time we can revalue that replaced asset . Now, My Depreciation expense (Hitting the P/L A/c) will be the same, also the replaced value is reflected. A disclosure should be given in the notes. Hi All,

This was my query…. and in search of the answer asked this from many of my learned collegues… and what they say…

As per Indian GAAP (AS-10) the asset is recorded at the historical cost.. not at the fair market value…
though there is a clause of revaluation of assets but that is for either
a) True and Fair pictue of accounts,or
b) To show in the books at the Replacement cost.

what can be done , considering the AS aplicability… we cn record the asset at the historical amount only but at the same time we can revalue that replaced asset .
Now, My Depreciation expense (Hitting the P/L A/c) will be the same, also the replaced value is reflected.

A disclosure should be given in the notes.

]]> By: Shashank http://www.forum4ca.com/query-on-machinery-replaced/comment-page-1/#comment-673 Shashank Sun, 14 May 2006 04:09:04 +0000 http://www.forum4ca.com/archives/2006/05/13/query-on-machinery-replaced/#comment-673 this is good to learn that vendor honored the commitment after <b> 3 years.</b> ;) this is good to learn that vendor honored the commitment after 3 years. ;)

]]> By: Akash http://www.forum4ca.com/query-on-machinery-replaced/comment-page-1/#comment-668 Akash Sat, 13 May 2006 14:50:58 +0000 http://www.forum4ca.com/archives/2006/05/13/query-on-machinery-replaced/#comment-668 Hi Radhika, As per the provided details, in my opinion the Net book value of the Old machine is to be treated as the Book Value of the replaced machine(which is apparently to be of the similar nature). This treatment can get covered under AS-10 which deals with the same situation in case of Exchange assets. This is my opinion. ciao, Bye Hi Radhika,
As per the provided details, in my opinion the Net book value of the Old machine is to be treated as the Book Value of the replaced machine(which is apparently to be of the similar nature).
This treatment can get covered under AS-10 which deals with the same situation in case of Exchange assets.
This is my opinion.
ciao,
Bye

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