1. Fixed assets and DepreciationFixed assets and Depreciation
 Fixed assets : assets used in the business forFixed assets : assets used in the business for
long – termlong – term
 Gross value ( book value ) of the Fixed assets :Gross value ( book value ) of the Fixed assets :
Purchase cost of the assets +
Import Duty+ Octroi+
Loading and unloading expenses
+installation charges +
Technical consultancy fees
( -) trade discount

2.  Restatement of value of assets with the help ofRestatement of value of assets with the help of
appraisal undertaken by competent approvedappraisal undertaken by competent approved
valuersvaluers
 When an asset revalued upward :- the ownersWhen an asset revalued upward :- the owners
fund will be increasedfund will be increased
REVALUATION OF ASSETSREVALUATION OF ASSETS

3. Terms of writing off for fixed assetsTerms of writing off for fixed assets
 Tangible assetsTangible assets
1.1. LandLand NoneNone
2.2. Plant, machinery , equipments,Plant, machinery , equipments, DepreciationDepreciation
furniture etcfurniture etc
1.1. Natural resourcesNatural resources DepletionDepletion
 Intangible assetsIntangible assets
 Patent copy right etcPatent copy right etc AmortisationAmortisation

4. DEPLETIONDEPLETION
 Allocation of a portion of cost of natural
resources to the extraction or production
income
 Depletion rate :
Acquisition and development cost – residual value
Estimated recoverable units
 Depletion Amount = Depletion rate X
No. units
extracted

5. AMORTISATIIONAMORTISATIION
 Allocation of cost of acquiring intangible longAllocation of cost of acquiring intangible long
term assets over the estimated life of the assetsterm assets over the estimated life of the assets
to reflect the decline in its service potential .to reflect the decline in its service potential .
 Expected life of this Assets :- Legal life orExpected life of this Assets :- Legal life or
economic advantage it offerseconomic advantage it offers
 Amortization per period =Amortization per period =
Cost of the intangible assetsCost of the intangible assets
Expected life

6. DEPRECIATIONDEPRECIATION
 Allocation of the cost of the assets against theAllocation of the cost of the assets against the
income generated by itincome generated by it
 It is measure of wearing out , consumption orIt is measure of wearing out , consumption or
other loss of value of depreciable assets arisingother loss of value of depreciable assets arising
from the use time obsolescence due tofrom the use time obsolescence due to
technology and market changestechnology and market changes
 Allocate fair amount of cost against the revenueAllocate fair amount of cost against the revenue

7. OBJECTIVESOBJECTIVES
 Correct income statementCorrect income statement
 True financial positionTrue financial position
 Fund for replacementFund for replacement

8. METHODSMETHODS
 Straight line MethodStraight line Method
 Written Down Value MethodWritten Down Value Method