In this article, we will explain about ICDS V and its difference with respective Notified AS.
ICDS V deals with the treatment of tangible fixed assets, which can be a land, a building, a machinery, a plant or a furniture, and that it is not held for sale, but is meant to be used for the purpose of producing or providing goods or services.
1. Machine spares are charged to revenue as and when consumed 2. If machine spares are used only in connection with the tangible fixed asset and the use is not the regular one, then machine spares will be capitalized 3. Stand-by and servicing equipments are to be capitalized
Disclosure should be made in respect of :
|Sl. No.||Basis||ICDS V||AS 10|
|1.||Exclusions||It does not specify the asset which it does not deal with||AS 10 does not deal with biological assets related to agricultural activity, wasting assets like, mineral rights, oil, natural gas and similar assets|
|2.||Identification||It prescribes capitalization of machinery spares when they are used only in connection of tangible fixed asset and its use is irregular||Spares are recognized as asset if their usage is irregular and the cost should be allocated over a period|
|3.||Revaluation||It does not recognize re-evaluation of asset||AS 10 provides re-evaluation of asset which should be done regularly in order to ensure that carrying amount does not differ materially from fair value at the balance sheet date|
|4.||Retirement||ICDS does not provide for retirement of assets||Assets retired from active use and held for disposal should be stated at the lower of their carrying amount and net realizable value|
|5.||Depreciation method||It does not provide for the methods of depreciation||AS 10 provides for different types of depreciation method that can be adopted|
For further reading on these series, check out our next article on ICDS VI