Topic

Change in

method of
depreciatio
n

Review of
residual
value

Reassessm
ent of
useful life
Frequency
of
revaluation

Component
ization of
assets
Governmen

t grant
received
for PPE
Cost of
major
Inspections

Estimated
costs of
dismantling,
removing or
restoring
items of PPE

Spare parts
and servicing
equipments
 AS 6, AS 10

Requires retrospective re-

computation of depreciation and

accounted for prospectively.
Treated as a change in
accounting policy.

Estimates with respect to RV are

not required to be reviewed and
updated.

Reviewed periodically.
Prospective application.

No equivalent guidance

There is a slight discussion of the

same under AS 10.
Further, Schedule II to the

Companies Act, 2013 specifically

mandates FA to be
componentised for depreciation
purposes.
AS 12 provides an option of

reducing the grant received from

the gross value of the asset
concerned.
Costs of major inspections are
generally expensed when
incurred.

No specific guidance in AS 10.

However, as per AS 29, an

enterprise recognizes a
provision for the
decommissioning cost of an oil
installation to the extent that
there is an obligation to rectify
damage already caused.
These provisions are not
required to be discounted.
Further, GN on ‘Accounting For
Oil & Gas producing Activities’
provides some guidance on the
same.
Normally, standby equipments
and servicing equipment are
capitalized.
Machinery spares are generally
charged to P&L as and when
these are consumed. However,
if such spares can be used only
in connection with an item of
fixed asset and their use is
expected to be irregular, it
would be capitalized &
depreciated (not exceeding the
useful life of the principal item).
 Ind AS 16

Considered as change in accounting

estimate and applied prospectively.

The RV should be reviewed at least at

each financial year-end and, the
change(s) shall be accounted for as a
change in an accounting estimate in
accordance with Ind AS 8.
Reviewed at least at each financial year-
end. Prospective application.

Revaluations are required to be made

with sufficient regularity to ensure that
the CV does not differ materially from
the FV at the end of the previous
reporting period.

Componentization approach mandatory

for PPE. Accordingly, these are
depreciated separately.
Ind AS 20 does not allow the same.

Cost of major inspections is recognised

in the carrying amount of PPE, if
recognition criteria are satisfied and any
remaining carrying amount of the cost of
previous inspection is derecognised.
The initial estimate of the costs of with
respect to dismantling and removing an
item of PPE restoring the site is required
to be included in the cost of the
respective item of PPE.

Generally carried as inventory. Once

consumed-recognized in P&L
major spare parts and stand-by
equipment qualify as PP&E only (either):
• when it is expected to be used during
more than one period.
• it can be used only in with an item of

PP&E.