Accounting for Investments
AS 13
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1.
This AS is mandatory in nature and applicable to all
entities.
2.
Investment means assets held by entity for earning
income or for capital appreciation except stock.
Investment can be :


Current Investment
Long Term Investment
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3. Current Investment means Investment which are ready,
releasable and held with intention to dispose off within
12 months from day of purchase.
4. Long Term Investment are those which are other than
Current Investment.
5. Investment should be disclosed in Balance Sheet as
follows :




Investment in Government security
Investment in shares and Debentures
Investment Property
Other Investment
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6. Investment can be acquired as follows :
A)
By Purchase : Cost =
Add:
Add:
Add:
Less:
Less:
Purchase Price
Taken on purchase
Expenses on purchase
Expenses on Title
Pre acquisition Dividend
Sale Proceeds of Right to the Extent
of decline in Market Price
Cost Price
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Note: Whenever shares purchased are Cum Right
then difference between Purchase Price and Price
Ex-Right.
OR
Actual Sale Proceeds
whichever is lower will be deducted from cost.
Note: Sale Proceeds other than above, transferred to P&L.
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B) By Exchange :
Value of shares to be recognized :
Fair Value of asset surrendered
OR
Fair Value of Investment Obtained
Whichever is more clearly evident.
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7. Valuation

Current Investment are valued at Cost Price or Fair
Value which ever is Lower.
Any Difference in Valuation is transferred to P&L A/c.

Permanent Investment are valued at Cost Price
Only.
However if there is any permanent decline, provision for
permanent decline should be made.
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8. Reclassification of Investment :
a)
From CI to LTI :
Value of LTI will be Cost Price or Fair Value whichever is
Lower.
b)
From LTI to CI :
Cost Value of CI will be Cost or Carrying Cost whichever is
Lower.
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9. Disclosure Requirement
i)
Investment should be disclosed as specified in Law or
AS.
ii)
Investment Valuation Policy be disclosed.
iii)
Profit / Loss and earning from Investment shall be
disclosed in P&L a/c.
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