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AS 10: Property, Plant and Equipment


Last Updated on May 13, 2023 by Kanakkupillai

AS 10: Property, Plant and Equipment – An Outline

Except for bearer plants, AS 10 is to be used in accounting for property, P&E (Plant and Equipment), and this standard is not applicable to:
(a) Biological Assets relating to agricultural operations. The Standard applies to bearer plants, but not to the product produced by bearer plants; and
(b) Wasting Assets, which include mineral rights, costs linked to oil, mineral, natural gas, and other non-regenerative resources exploration and exploitation.

Recognition of Assets under AS 10 Property, Plant, and Equipment

Only if it is clear that the future economic advantages associated with such an asset will flow to the firm, and the cost of such an asset can be reliably determined, should the cost of such an asset be recognized as an asset.

Cost of the asset is calculated

An organisation can use the revaluation model or the cost model as its accounting policy and apply it to all of its properties and Plant & Equipment. According to the cost model technique, after recognizing the asset as a piece of property or plant and equipment, it should be held at cost less cumulative depreciation and accumulated impairment losses, if any.
According to the revaluation model, an asset must be carried at the revalued amount, which is the fair value of the asset at the revaluation date less any cumulative depreciation and accumulated impairment losses, if any. Revaluations must be performed on a frequent basis to ensure that the carrying amount does not fluctuate significantly from the fair value at the balance sheet date.

AS 10 Property, Plant and Equipment Depreciation

Depreciation charges must be recorded in the P/L Statement for each period unless they are included in the carrying value of any other asset, according to the standard. The depreciable value of any asset should be dispersed in a methodical manner during its useful life.Every piece of property or P&E (Plant and Equipment) whose cost is significant in comparison to the item’s overall cost must be depreciated individually. The guideline further states that at the conclusion of each financial year, the residual value and usable life of an asset must be assessed, and if the expectations differ from the prior projections, the item must be replaced.
Accounting Standard 5 – Net Profit or Loss for the Period, Prior Period Items, and Modifications in Accounting Policies requires changes to be accounted for as changes in accounting estimates. The depreciation method utilised must be compatible with the asset’s anticipated economic advantages. For allocating the depreciable amount of an asset on a systematic basis over the asset’s useful life, many depreciation procedures might be utilised. SLM or the Straight-line Method or Technique, units of production method, and written down value methodare some of the approaches available.

The Most Significant Differences Between AS 10 and Ind AS 16

Property, Plant, and Equipment (Ind AS 16) deals with the accounting for fixed assets not covered by AS 10. This Industry AS also covers the depreciation of property, plant, and equipment.
And the key differences between these two are provided in a table below:

1 Accounting for the Real-Estate Real estate developers are not exempt from Ind AS 16. Real estate developer accounting is specifically excluded from the scope of AS 10.
2 Inspection expenses are capitalised Ind AS 16 requires the capitalization of significant inspection costs, as well as the de-recognition of any residue bearing the cost of the previous inspection. AS 10 is not addressing this issue as stated.
3 Assets that areself-constructed or was built yourself Ind AS 16 specifically states that extraordinary quantities of labour, wasted material, or other resources used in the construction of any asset are not included in the item’s cost. The same isn’t provided or mentioned in AS 10.
4 Shared Ownership AS 10 is a standard that applies to fixed assets that are held jointly with others. Ind AS 16 does not deal with this particularly because it is addressed in Ind AS 31.
5 Fixed Assets Retired from Active Use and Assets Held for Sale The accounting approach for non-current assets held for sale and discontinued operations is described in Ind AS 105, Non-current Assets Held for Sale and Discontinued Operations. Ind AS 16 is not dealing with assets held for sale or is providing. The accounting for assets that have been placed up for sale and fixed assets that have been retired from active use is covered by AS 10.

Difference Between ICDS 5 And AS 10

The idea of Materiality, which allows AS to identify an item as a cost, is not permitted under ICDS. Other Taxes that are recoverable from the cost of an acquired tangible fixed asset are specifically excluded from ICDS 5. For assets acquired in exchange for other assets, the actual cost is recognised under ICDS 5, whereas AS 10 allows determining the cost base on FMV (Fair Market Value) of the asset acquired or given up, whichever is appropriate. AS 10 recommends or stated the recording or documenting the cost at the asset’s Net Book Value or NBV. The real cost of assets obtained in exchange for shares or securities is recorded in accordance with ICDS 5.
Where AS 10 allows for computing the cost base based on the Fair Market Value or FMV of the asset bought or share or securities given up, whichever is appropriate, ICDS does not specify treatment for an expenditure that does not boost future benefits. However, according to Accounting Standard 10, such an expense should be considered as such and recorded in the income statement. Accordingly. ICDS contains further disclosure obligations, such as grants or subsidies received in connection with a tangible fixed asset, changes in currency exchange rates, and so on.
Accounting Standards would provide the entity with clarification regarding how a particular accounting item or scenario should be handled and taken decision such that there is no confusion, error or mistake committed. This is because, if such confusion, error is committed it will also affect the stakeholders who are relying on the accounting data of the entity.


1. Provide a glimpse on the Provisions contained in the Accounting Standard in respect of Revaluation of fixedassets.
Fixed Assets Revaluation
Accounting Standard 10 on Property, Plant and Equipment states that
(a) When revaluing fixed assets in financial statements, the selection should be made on the basis of an entire class of assets or on a systematic basis. The criteria for selection should be made public.
(b) Revaluation of any asset class should not result in the net book value of that asset class exceeding the recoverable amount of that asset class.
(c) Depreciation should not be recorded to the profit and loss statement.
(d) The revaluation reserve account should be credited with the net increase in book value.
2. How to value Fixed Assets in special cases?
The following regulations addressing the value of fixed assets in unusual instances are included in paragraph 15 of Accounting Standard 10 on Property, Plant and Equipment:

  1. Although legal ownership of fixed assets bought on hire purchase terms does not vest in the business, such assets are recorded at their cash value, which is computed by assuming a suitable rate of interest if the cash value is not immediately accessible. They are included on the balance sheet with suitable narrative to highlight that the company does not own them entirely.
  2. The amount of an enterprise’s stake in fixed assets, as well as the percentage in the initial cost, cumulative depreciation, and written down value, are reported in the balance sheet when it owns fixed assets jointly with others (other than as a partner in a business). Alternatively, the pro rata cost of such jointly owned assets is pooled with the cost of similarly held fully owned assets. In the fixed assets registry, such jointly held assets are listed separately.
  3. When numerous assets are acquired for a single price, the consideration is divided fairly among the assets, as decided by competent valuers.
  4. What should the value of assets purchased in exchange or for compensation in kind be documented in AS-10 books?

When a fixed asset is bought in exchange or in part exchange for another asset, the cost of the acquired asset should be recorded at fair market value or net book value of the asset given up, adjusted for any balancing payment or receipt of cash or other compensation. Fair market value can be assessed for these reasons by comparing the asset given up to the item obtained, whichever is more obvious. The fair market value of a fixed asset bought in exchange for shares or other securities in the company should be recorded at its fair market value, or the fair market value of the securities is


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