Indian Accounting Standard IND AS


Ministry of Corporate Affairs (MCA) has notified Ind AS on 16.02.2015 the convergence with the IFRS whose global acceptance highlighted Indian Accounting Standard.

The major standard under Ind AS is Property, Plant and Equipment where the bearer Plant is also included for the first time under Property, Plant and Equipment. The biological assets growing on this bearer plant are covered in Ind AS 41 Agriculture. The important changes are also made in accounting Standard 10. The companies were notified on 30th March 2016.


  • To provide an accurate accounting treatment of property, plant & equipment which was earlier known as fixed assets
  • The basic objective of PPE is to provide the investor’s information about the company’s investment in PPE and any changes in investment


Unless there is another standard that permits a different accounting treatment this standard will be applied for PPE accounting:

  • PPE classified as held for sale in accordance with IndAS 105.  Non-current Assets held for sale and discontinued operation.
  • Biological assets related to agriculture activity wrt IndAS 41.
  • The recognition and measurement of exploration and evaluation.
  • Mineral rights and mineral reserves such as oil, natural gas, and similar non-regenerative resources.


The product i.e. mango-growing on the bearer plant is a biological asset.


PPE item cost will be recognized as an asset if:

  • It is probable that future economic benefits associated with the items will flow to the entity
  • The cost of the items can be measured accurately

Measurement at Recognition

PPE item that qualified for recognition as an asset shall be measured at cost but in the Profit and Loss account, daily service cost will be treated as an expense.

Both bearer plants and self-constructed items of PPE are accounted for in the same way – before they are in the location & condition necessary to be capable of operating in the manner as intended by the management.

Measurement of Cost

PPE items will cost what the cash price is at the recognition date. If the payment is put off beyond the normal credit terms, the difference between the cash price equivalent and the total payment will be the interest & credit unless such interest is capitalized in accordance with IndAS 23.

Cost Model

Items of PPE, after recognition as an asset, will be carried at its cost less accumulated depreciation and any accumulated impairment losses.

But the derecognition respect items of PPE may be directly transferred from revaluation surplus included in equity under the heading Revaluation Surplus to retain earnings.


Every part of a PPE item with a cost that is significant in relation to the total cost of the item will be depreciated separately. The depreciation charge for every period will be recognized in P&L unless it is included in carrying the amount of another asset.

Depreciation Amount And Depreciation Period

The Depreciation amount of an asset will be allocated and a systematic basis over its useful life.

The residual value and the useful life of an asset will all be reviewed every financial year ended & if there are any changes from previous estimates, the changes shall be accounted for as a change in accounting estimates in accordance with IndAS 8.

Depreciable amount of an item of PPE is calculated after deducting its residual value.

Depreciation Method

This will show how the asset’s future economic benefits will be consumed by the entity. This method will be reviewed every financial year and if there are any significant changes in the patterns of consumption of future economic benefits, it will be reviewed and will be accounted for as per IndAS 8.

Compensation for Impairment

PPE items that were impaired, lost or given up will be compensated by third parties. This will be included in P & L. when compensation receivable


The Carrying Amount of an item of PPE will be derecognized

  • Disposal
  • When no future economic benefits are expected from its use or disposal

When an item of PPE is derecognized, the gain or loss arising will be included in P & L

When an item of PPE is derecognized, the gain or loss arising will be determined as the difference between the net disposal proceeds, if any and carrying amount of the item.


The financial statement should have sufficient disclosure reader or investor of the entity:

  • Disclosure for the existence and amount of restriction on the title and PPE pledged as security for Liability.
  • The amount of expenditure on account of PPE in the course of its construction.
  • Measurement basis for determining the gross carrying value
  • Depreciation methods
  • Useful lives or depreciation rates used
  • At the beginning and end of the periodGross carrying amount and accumulated depreciation
  • Reconciliation of the carrying amount at the beginning and end of the period (Addition, Deletion, Assets classified as held for sale, Business Combination, Revaluation, impairment, exchange difference & Other charges).

Leave a Reply

Your email address will not be published. Required fields are marked *