Accounting principles
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
10 February 2014
As per accounting principles, Fixed assets be always valued at historical cost as per cost concept.Then why at the time of revaluation ,fixed asset is revalued and recorded at Realisable value(market value).and as per conservatism concept no future profit can be record but why profit on revaluation on fixed asset be recorded in books ???
10 February 2014
You are mixing two aspect, first is accounting approach & second is accounting policy.
Framework of Indian GAAP state to use the historic way, based on cost convention. This means that FIRST RECOGINATION should be on cost basis.
The accounting policies refer to the specific accounting principles and
the methods of applying those principles adopted by the enterprise in the
preparation and presentation of financial statements.
Therefore, on the basis of above, an entity may choose the different a/cing policy..
Framework of Indian GAAP state to use the historic way, based on cost convention. This means that FIRST RECOGINATION should be on cost basis.
The accounting policies refer to the specific accounting principles and
the methods of applying those principles adopted by the enterprise in the
preparation and presentation of financial statements.
Therefore, on the basis of above, an entity may choose the different a/cing policy..
Querist : Anonymous
Querist :
Anonymous
(Querist)
10 February 2014
Yes, but my question is different that i was ask that why we recognise fixed asset as realisable value(cost concept) at revaluation point as we only recognise fixed asset at realisable value when goint to closes the business as per going concern and another that why we recognise profit on revaluation (agianst conservatism)? I am highly confuse about this two treatment . I hope you understand my query .
11 February 2014
Your point that revaluation is to be done only at the time of closure of business is 100% wrong, since as per the Guidance Note on revaluation, an entity can revalue its assets as and when required consistence for all assets.
Also, the accounting is done as per the standard, issues by ICAI, but you are stick to one point of historic approach & conservative, rather, these are the broader area, in short, this is called framework.
Apart, from the framework, there are 32 accounting standards, so certainly, the accounting will be done as per AS. framework is just an boundary..
I hope now you get that...If not, I am sorry... you need to read the framework and AS with logical interpretation, called ASI.
Also, the accounting is done as per the standard, issues by ICAI, but you are stick to one point of historic approach & conservative, rather, these are the broader area, in short, this is called framework.
Apart, from the framework, there are 32 accounting standards, so certainly, the accounting will be done as per AS. framework is just an boundary..
I hope now you get that...If not, I am sorry... you need to read the framework and AS with logical interpretation, called ASI.
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