AS - 10

PROPERTY, PLANT AND EQUIPMENT

Vs
IND AS – 16
DEPRECIATION OF PROPERTY, PLANT AND
EQUIPMENT
 INTRODUCTION

The main objective of AS 10 is to prescribe the

accounting treatment for properties, plant, and
equipment. It enables the users to understand the
accounting treatment for investments made by an
entity. The issues discussed in this Accounting standard
are the recognition of assets, depreciation charges, and
impairment of assets.
 Property, plant and equipment are
tangible items that:

(a) are held for use in the production or supply of goods

or services, for rental to others, or for administrative
purposes; and
(b) are expected to be used during more than a period
of twelve months. 
 Applicability of the AS 10
 AS 10 is to be applied in accounting for property, P&E
(Plant and Equipment) and this standard are not
applicable to:
 (a) biological assets which are related to agricultural
activities except for bearer plants. The Standard is
applicable to bearer plants, however, it doesn’t apply
to the produce on bearer plants; and
 (b) wasting assets which include mineral rights,
expenses related to exploration for and extraction of
oil, minerals, natural gas and other non-regenerative
resources.
 What are Biological and Wasting assets?

 Biological assets are living animals or plants and are

related to agricultural activities excluding produce on
bearer plants. Agriculture produce is the harvested
product of biological assets of an entity.
 Wasting assets are mineral rights, expenditure on
exploration and extraction of mineral oil, natural gas
and similar non-regenerative resources.
Recognition of Asset under AS 10 Property, Plant and Equipment
 The cost of property and P&E should be recognized as an asset only if:
 (i) it is apparent that the future economic benefits related to such asset
would flow to the business; and
 (ii) the cost of such asset could be reliably measured.

Measurement of cost of the asset

An enterprise can select the revaluation model or the cost model as the
accounting policy and employ the same to the entire class of its
properties and P&E. According to the cost model, after recognizing the
asset as an item of property or plant and equipment, it should be carried
at the cost less the accumulated depreciation and the accumulated
impairment losses (if any). As per revaluation model, once the asset is
recognized and its fair value could be measured reliably, then it must be
carried at the revalued amount, which is the fair value of such asset at the
date of the revaluation as reduced any following accumulated
depreciation and accumulated impairment losses (if any).
Depreciation under AS 10 Property, Plant and
Equipment

 As per the standard, depreciation charge for every period

must be recognized in the P/L Statement unless it’s
included in carrying the amount of any another asset.
Depreciable amount of any asset should be allocated on a
methodical basis over the useful life of the asset.
 Every part of property or P&E (Plant and Equipment)
whose cost is substantial with respect to the overall cost
of the item must be depreciated separately.
 The standard also prescribes, that the residual value and
useful life of an asset must be reviewed at the end of
each financial year.
 Major Differences Between AS 10 and Ind AS 16
 Ind AS 16 Property, Plant, and Equipment deal with accounting
for fixed assets which are covered by AS 10. This Ind AS also
deals with the depreciation of property, plant, and equipment
that covered by AS 6. The key differences between the existing
AS 10 and Ind AS 10 are mentioned below:
Particulars
Ind AS 16 AS 10
Accounting Ind AS 16 doesn’t AS 10 explicitly excludes from its
for real estate exclude real estate scope the accounting for real estate
 developers developers

Capitalization Ind AS 16 necessitates AS 10 doesn’t deal with such aspect

of inspections capitalization of major
cost inspections cost with
consequent de-recognition of
any residual carrying the
amount of cost of the prior
inspection
Self- Ind AS 16 with respect to self- AS 10 doesn’t mention the same
constr constructed assets, explicitly
ucted state that unusual amounts
assets of labor, wasted material or
other resources employed in
constructing any asset aren’t
included in asset’s cost

Joint AS 10 deals specifically with Ind AS 16 doesn’t deal specifically

Owners fixed assets which are jointly with this as these are covered in Ind
hip owned with others AS 31

Assets Ind AS 16 doesn’t deal with AS 10 deals with accounting for

Held for assets held for sale as the assets held for sale and items of fixed
Sale and accounting treatment is assets retired from active use
Fixed
Assets
defined in Ind AS 105, Non-
retired current Assets Held for Sale
from and Discontinued Operations.
Active
Use