 पवास्ल्मुचकी, अन और संप जाडाता, अपूर्च्रेटना नहीं जाडाता। जाडाती। मिहोर्च्रेट दीता। तो Most Help is your query which you asked earlier, can we have a separate rate, separate methods for one organization, this is the example of reliance, your query was, is it allowed, for fixed assets they are using WDV, but for credential SLF, for one more asset 100% depreciation in first year. 100% depreciation in first year for another one its life is more SLM even one organization can have a separate race can have a separate useful life can have a separate method allowed it law or AS never never stops I will pick up the major major issues second one point came to me which was a very good point automatic care absolutely sir notes to account is very good sir even accounting policies you can specify yes certainly sir certainly sir there was one good query sir let suppose we have given an advance to a supplier CPWD this is known as your capital advance of 100 rupees logically your bank must have decreased banded your payment so guaranteed from here it must have been 100 minus yes two query which was asked they were good points now the question was from which date we should transfer this to capital working progress which advance from which date we should start putting in CWIP and from which date we should charge to fix asset logically very simple advance even we do it at our home also if we have given the advance unless a person has started the work we don't capitalise it when after one year two years he will give you a certificate then you transfer to CWIP then there was a query sir how we can say how much work has been completed clearly given in year 7 construction contracts it says if you cannot calculate the actual cost but you have given the advance logically first he will be using your advance to create the asset and if the project is for let's say 10 month and you have given the advance on let's assume 1st November 05 then by 31st March 06 you have your 5 months 5 months out of 10 months have been used logically you will go to the site if substantial work has been done on time basis 5 by 10 at least we can assume at 50% work has been completed 50% co-op advance remove you can transfer to CWIP sir I agree the same thing I raised it I said CPWOD whatever it is they must be giving a certificate in that they must be writing how much work has been done if let's suppose even it is not available then this method is for mishable under ASM it means now if I prepare a balance sheet on 31st March 06 I will write CPWOD advance 50% and CWIP capital work in progress 50% and when it is ready it will transfer to fixed asset yes sir please very good sir 100% work done account sir me I agree if 100% work has been done they must be issuing some certificate to you know sir if 100% how would you say 100% work is done CPWOD is done right sir you should know that what work has been done sir please auditor account and never goes by the intuition they always go by the paper I know that I will be getting a property useless sir please even accounts takes time balance sheet is prepared by me but you still prepare your balance sheet you travel by my 31st March right accounts may be rendered later but if they have given a certificate that 100% work is completed right it means immediately how much cost has been incurred will be guaranteed immediately that cost you can transfer to CPWOD when it sir I am not saying CWIP when they issue the clearance certificate CWIP means the work in progress in CPWOD that may be the building right and when you they issue you the clearance certificate then you transfer entire CWIP to fixed asset I know even 100% work done sir but sir normal as of the clearance you cannot start sir it happens in lot of pollution plants everywhere plant is ready right but until unless you get a clearance you cannot execute your plant you cannot car you purchase it until car is transferred in your name you can never run the car on your road you run it but if you get stuck you will be charged apparently new car means when you do not get a number plate you always put a piece of paper as a number 1 clearance similarly you cannot charge it never next the good point which was asked here this I am raising to you guys I will not explain this it's a query which was asked let's suppose a grant is received for 1.4 crores this is a grant and asset has been purchased for 2 crores and the balance sheet already has let's say 10 crores the query is how to treat this how you guys are doing it right now we have also discussed before the break chocolates are waiting and after the lunch the desert was not as good so you can have good chocolates here yes sir in balance sheet 2 crores as of 8 crores you are explaining gross or net yes gross gross approach ok asset 2 crores sir right then yes ma'am bank will reduced by is 0.6 0.6 crores bank will decrease by 0.6 perfect ma'am now what balance sheet has not been matched capital fund will be added by 1.4 but balance sheet is not telling no sir let's go step by let's go step by step it was a query from one of the institution bank opening 10 crores capital fund 10 crores and we have received a grant of 1.4 and 1.2 now ma'am tell me ma'am forget about acquisition first tell me the asset you are right chocolate is waiting bank amount will be reduced by 2 crores ok sir and asset will mentioned for 2 crores now balance is telling ok now what next step depreciation ok first if I am preparing this by net then you tell me the balance sheet we will charge 1.4 as depreciation ok full amount right it may just become 9.4 9.4 9.4 capital fund is 10 crores now net approach no no bank will be 10 think sir yes bank will be 10 ok and then depreciation will be on 0.6 on net approach the bank to 9.4 yes yes yes sorry assets right up together perfect perfect 0.6 and then depreciation perfect income expenditure depreciation on 0.6 let's suppose 10% I take it be cool together perfect this is a net approach perfect but if but their auditor objection to this what auditor is saying you have been following gross approach for all the assets this is the first time in your history that you are getting some partial grant partial grant not 100% and therefore you should follow a net approach for this then that institute was in confusion can we follow for some asset and for some asset net tell me yes or no I hope the question is clear no one stops you sir first of all no one stops you ok it means if gross has to be followed for everything gross ok otherwise reasons are please remember auditor you will have to give reasons same procedure should be followed either net or gross otherwise depreciation calculation will be affected so simplified I agree with your approach but no one stops first of all AS never says separate asset you can have a separate policy for it but I agree simplified approach so simplify it and put it all together sir the following procedure consistency should be there I agree I am not denigrated but it's a new asset so if the same thing has to be done for the gross who will tell who will tell the same thing for the gross bank 10 crores capital fund 10 crores again a chocolate pudding yes sir you got chocolate not you you got chocolate someone else same thing with the gross approach then sir grant 1.4 crore capital fund capital fund is a grant grant 1.4 crore right sir bank 1.4 crore perfect sir asset purchase 2 crore brilliant sir then asset 2 crore I am repeating this again and again because this is the major point where we get stuck I am taking lot of examples for this sir then sir bank reduced to 9.4 crore perfect sir perfect bank is 9.4 billion 11.4 crore and this capital fund is also 11.4 crore right it means my new balance sheet will have bank 9.4 asset 2 asset 2 perfect ma'am 10 then and grant 1.4 right now what sir then sir if depreciation charge then depreciation brilliant sir brilliant brilliant 10 percent sir 10 percent right sir point 2 point 2 depreciation right then it will be reduced sir from asset and from right capital fund the approach which you guys are following you are taking as deficit and subtracting it or what I mentioned to you then take it as a as a best way because it will classify separate point 2 grant billion perfectly fine sir another query and I am happy those queries are all related to AS6 or AS10 now tell me one more query there was a query that in 1961 let me take a calendar year easy in 1961 there was some building was purchased let's suppose for 100 for these years no depreciation has been charged now you want to show in your balance sheet this asset this asset is coming at 100 your capital fund is coming at 100 for these many years you have to charge a depreciation how to how that organization can do it legally and accounting wise yes sir ok sir ok sir ok sir and for the past period retrospectively we have to calculate the depreciation and the depreciation amount for the capital fund it means even if anyone has not charged the depreciation till date please there is no harm it will not affect your income expenditure reason income expenditure is for the year for the year you are not you are not charging depreciation of current year you are charging the depreciation of the previous years and therefore very simple first atleast if I forget about the current year till 2012 till 2012 if a depreciation rate is let's say 2% I am assuming 2% 102% is 2 rupees from 61 to 2012 how many years let me take a very simple 1% 51% if it is 2% it will not even show in your balance sheet asset will be removed no harm just in that year in that year in notes 1 accounts it will come no harm if it is 1% 51 years 51 rupees goes here 51 goes here for the current year asset is 49 and fund is 49 rate simple approach so there is no harm I am just responding to a query which was asked there were 2 or 3 institution which were asked this query there is no harm in that next is I am just raising major major points another point was this which was applicable to you which was asked by some people about revaluation it is again given in year 6 now understand what is written because again it is very important if your balance sheet is showing an asset of 100 let's say capital 100 and due to any reason any natural calamity what normally due to any natural calamity this asset this asset is destroyed now you cannot charge a normal depreciation not possible you have to immediately revalue your asset ream is repeat now let's suppose the new value the new value you will not write yourself you have to ask the value roads, buildings civil engineers are right persons civil engineers tell you what is the value let's suppose the value is this asset is 60 decrease by how much amount 40 a simple logic for that year your asset is decreased it is a loss your AS6 says AS6 says charge to P&L account there was one more query which was asked sir still I was surprised sir does AS applies to us why not why not I said yesterday even one transaction which is commercial nature ASR applicable and no organization does 100% charity atleast 1% transaction 1 transaction is commercial nature so ASR applicable so for that year 40 becomes your loss what you can do there is one more variation which can be possible because frankly speaking ASR is not applicable to you guys you can even reduce it from capital fund because ultimately income expenditure deficit goes to which capital fund nahi very good doubt aya what happens in case of net value in case of net value it will not even appear you will just showing the notes to accounts as I mentioned lot of people ask me during the break sir if we are following net approach then then one query was aren't we showing our balance sheet at a lower value please understand we organization are not supposed to make our balance sheet say label we are not selling our balance sheet second you can prepare a one note of fixed asset as a separate disclosure don't make an entry for that all the asset at the cost price write the depreciation show that these are the actual book values but actual book values are never same as the market value we all know it because in account we show as per historical cost market value might be different you can show it as a separate disclosure then there was a query about this in this if natural calamity rises nothing in the balance sheet sir just in notes that this is the worth you must have seen correct me where I am wrong there are lot of computers you have charged a depreciation 60% am I correct you have charged a depreciation 60% 60% means guaranteed in 3 years 4 years in your books computer will be almost like 0 isn't it but tell me honestly does that computer physically available in the institute or not available those are known as unrequited assets which physically exist but book value is 0 due to depreciation same here in this method in net method we are not saying physically available physically available but we are saying it has been 100% appreciated because it was funded by the government simple logic so I hope this given query was clear it may got point as a revaluation sir this is a decrease let's suppose it's a land this is a tricky point in AS it's a tricky point now if land gets increased let's suppose you want to increase the value of land market valuation and you want to show it at the higher value your board of governance says let's go for the revised value fair enough let's suppose 400 profit but tell me does that profit have you received from sale of land that you have sold the land accounts is very very clear everyone knows it prudence, conservatism never anticipate the profit is this profit in your pocket no they were very very clear any profit will not be taken open a separate reserve rr revaluation reserve you can even add revaluation reserve in your fund also so ultimately all the reserves are added to the funds so please this is a major part if you increase any value of the land immediately do this do this part so if increase over rr otherwise p&l income expenditure so this is an example for the revaluation which will be important for you if you want to copy, most welcome otherwise it will be given what are you doing sir, revaluation in their case, in Uttarakhand what has happened there were lot of buildings now that building has been destroyed right sir now the worth of the building is around 10 rupees or 20 rupees loss has come at loss you have to show it somewhere okay right sir either you can charge immediate income expenditure due to the natural calamity it comes at the debit side or if you are charging as a loss you have revised the value reason due to some reasons whenever admission is there, retirement is there when some person says let's bring it to the real market worth in that case sir, revaluation permission is around but the revaluation of land so we can do the revaluation of land almost every year sir, I have told you you are not doing it even law never says do the appreciation yes but what I have said if your board of governance is not there we want to show it on the market price we advise the board of governance to do revaluation revaluation we will show it on the reserve sir, it makes nothing is wrong reason if you see it here we are not showing any income no taxes imposed we are just getting a reserve and even this reserve is not in cash definitely not in cash in kind but the reserve will be too much like the land of old universities its value will be in few lakhs today it will be 1000 crores so if we do revaluation the reserve will be 2000 crores, 10000 crores it can be that much 40-50 thousand crores sir, you know that the reserve is increased by any amount till the time the reserves are always substantiated by the asset side definitely that will counter when there is no cash CA institute has also issued a guidance document on this on the revaluation of the assets they are very very clear this reserve cannot be used for any purpose sure it is just they have given it because you know it when a treatment has to be given in the document they have to take all the possibility you are saying it is not possible but it might be in an institute it comes on top you have to revise it and he says no we have to revise it is there any possibility it is possible I am not saying that it is legally wrong legally allowed what is the fault of the legalists I agree with your point that the reserves will be increased sir, I am not denying it particular I am from Allahabad Allahabad, Bombay etc these are old universities so our land will be 2-3 lakhs today it may cost 1000 crores 2000 crores in other universities result is much more no no no let me clear this word there will be one doubt sir account says historical cost I don't know sir I know your question sir wait wait no no no no let me just come to that point this is the definition of cost in ASX cost means historical cost or any amount substituted by historical cost it means actual purchased by after 5 years 6 years if you have re-valued or change it then logically it gets repaired in case of Uttarakhand ASX 28 applies impairment of the asset asset is impaired users of the asset if asset is impaired then logically you will replace historical cost with the new cost for this chair if both the legs are broken and you still show it as an asset it is useless it is the impairment of the asset impairment means useless asset you are taking our laboratory equipments there are lot of laboratory equipments computers which you know are available but their market words are not there impairment books you are talking about you know the books are obsolete immediately charge the entire loss but problem is I have not touched that point because ASX 28 was not here ASX 28 has made that there are lot of assets which sometimes are not market available market means no value still with you immediately remove it you can do it allowed but my point of discussion here was if anyone ask you to do it is it legally allowed or not legally it is this is the point sir I have totally understood I was knowing this point let's take one more thing I am just referring you there was one query depreciation rate options at present three options are available to you which I know one is income tax act please income tax act means not only to follow everything of income tax act you can only use the rate of the guidelines company's act and there is a national municipal valuation model which ministry of finance and urban urban has passed it central government this is a change in income tax act or company's act if you see at the last one unit of production method of depreciation is not permissible as per mc sir earlier but now it is permitted that 5000 point which I have mentioned to you I am not saying I know new okay new format may be given I am just sharing the knowledge earlier if you see companies act companies act only talks about depreciation rate of tangible assets but now they covered both tangible and tangible earlier there was a rates of tangible assets now just see it contains only the useful life of tangible assets does not prescribe the depreciation rates even they know it mca ministry of corporate is not a fool that they have removed the rate they were knowing that everyone was facing a trouble in this they were applying the rates assuming that rate applied to all the assets blindly whether it is 2% we are applying 2% all the furniture but logically it should be as per the life and useful life the person knows it for this useful life a very good question was asked during the break sir now as a accountant are we supposed to find out the useful life also of every asset see in the real life accountants are not supposed to do this this is a task to be done by the engineering department engineering department gives you yes these are the lives now you calculate the depreciation real life may a sara calculation we only do the calculation estimation we never do it estimation is always done by the valuation department always i have raised your point i hope income tax is a book of the point sir i have checked yesterday the rates of books in the income tax act they only talk about these clauses books owned by SSC caring on the profession is 100 books being the annual publication annual means every year they are charging 60% books are there than those covered by A is 100 so logically 4.75% i didn't get now you will check sir that was tough when old income tax rates are being revised every assessment year these rates have changed 2 or 3 years there was a separate block for books if you go through the block of asset concept where plant is a block the definition of plant says under the income tax act the plant includes books also so we are following that rate plant rate is 4.75% sir plant rate plant mean a lot of classifications single shift 4.75% never use it because books are never the concept of single shift so now there is a separate heading for books so now the rate suggest 100% 60% 100% that is also not acceptable 100% means in one year all my books will go that one saying that one saying whenever you go for this income tax rate only are the guidelines all are the guidelines please these are given we followed blindly you are right that is the reason companies act if you ask me I have taken a right approach see the life use take a decision if you feel it can be used for 4 years please start for 4 years or books useful life can never be one year 100% never as per the income tax act if you ask an academician academician they will say it will never because in academician almeera always you find books guaranteed now intangible asset many people were asking me specially in the engineering department I was asking 2 or 3 organizations you guys must be developing some software patents copyrights then I was asking whether those patents were in the name of the professor or in the name of the institute I was advised they are always in the name of the institute you remember it means like in 3 idiots also if you take an example when America last seen all the patents were in his name so when patent are clearly now given in AS26 the problem which was discussed was it is very tough to find out the cost it is very tough to find out the cost of the patent copyright trademark it is very very simply given in AS26 paragraph 44 AS26 paragraph 44 is clearly given it says if we have incurred expenditure on research research let's suppose 5 lakh rupees and that expenditure only the person who is doing a research will tell you he will have a proof his effort and from that research if a concrete item has been developed which is registered as a patent registered as a trademark then you immediately you immediately should record in the books if you are not recording take my words in writing record my words I am telling you day is not far behind when the auditor is going to comment if you are not recording because logically you must have incurred lot of expenditure if you have incurred expenditure then guarantee the money must have gone out it means you are charging entire money as a waste you are charging as expenditure which guaranteed somewhere in the future auditor will raise this point 100% take one more example if you guys are reading the newspaper last month there was in the news that state bank of India is selling the trademark of kingfisher airlines flying high flying high was a trademark they are selling a trademark it means the trademark must be registered in the balance sheet of kingfisher you take your time after the class go and check the balance sheet of infosys ran back see all the research companies they always show they always show the intangible asset because their major task is only the intangible part software IBM go and check IBM STL Apple iPhones because that's the research they are doing it kindly my advice will be intangible asset if you are not recording it start doing it income tax may not search to your point income tax may carried 25% will you believe AS26 AS26 talks about 3 to 5 years AS26 says this was the impairment which i was talking about for you your balance sheet if you write AS28 impairment perfectly fine no auditor can raise the objection if you read the second paragraph intangible asset below 25000 can be expense need not be capitalized and they use the word can be shall be or must be its advice the higher limit is prescribed to avoid detailed recording and amortization of minor items like software which are generally below 25000 and if you see the top one period of amortization will depend on the asset AS26 prescribes a presumption 10 years for the life of intangible however in case of item like software where technological advances will result in quicker loss a time frame of 3 to 5 years 3 to 5 means around 30% but income tax says 25 no one says to follow the 5% you can use 3 to 5 years so I have given you two ways follow either income tax 25% or given in AS26 3 to 5 years you can follow it but I can guarantee especially if you know engineering department will come and nowadays in all the institutes at least you guys are purchasing the CDs when you are purchasing a CD it means you have purchased a license even license fees which you have paid is an intangible asset is an intangible asset the day has gone when we were talking about goodwill patent copyright trademarks all are now you will be surprised there is one more item given in the intangible asset recipes recipes of any of the good cook because recipe is a unique recipe and recipes are now being sold nowadays even against the intangible asset so this is again a part which you can have it