If i have purchased MS and SS Pipe in industry?
So what treatment will be done?
Is it under Fixed assets or indirect exp.
The Revised AS-10 is in accordance with INDAS 16. This means, it should be treated as a fixed asset when the asset has useful life of more than 12 months, it can be measured reliably and it is solely used for production purpose ie,, part of PPE.
Then, it is separately recognised and presented in the balance sheet as a fixed asset and depreciated.
As I have observed, there is a remark here: spare parts are treated as inventory as well in IAS 16, INDAS 16 & Revised AS-10 while in the old AS 10 it is expensed. This nature of transaction’s measurement & recognition is sort of confusing because, like in your scenario, if you don’t store spares and replace them when items are obsolete does not need the involvement of Inventory. So, it can also be presented under Inspection & Overhaul expenses.
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