(a,) Proper records shall be maintained in respect of direct expenses in such a manner as to enable company to book these expenses cost centre wise or cost abject or department wise with reference to goods or services under reference and to furnish necessary particulars.
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(d)
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(h)
(b) Direct expenses incurred for the use of bought out resources shall be determined at invoice or agreed price including duties and taxes, and other expenditure directly aftributable thereto net of trade discounts, rebates, taxes and duties refundable or to be credited.
(c/ Other direct expenses shall be determined on the basis of amount incurred in connection therewith.
Direct expenses paid or incurred in lump-sum or which are in the nature of 'one - time' payment, shall be amortised on the basis of the estimated output or benefit to be derived from such direct expenses.
lf an item of direct expenses does not meet the test of materiality, it can be treated as part of overheads.
Finance costs incurred in connection with the self-generated or procured resources shall not form part ofdirect expenses. Direct expenses shall not include imouted costs.
Where direct expenses are accounted at standard cost, variances due to normal reasons shall be treated as part of the direct expenses. Variances due to abnormal reasons shall not form part of the direct expenses.
Subsidy or grant or incentive and any such payment received or receivable with respect to any direct expenses shall be reduced from cost ofthe cost object in the financial year when such subsidy or grant or incentive and any such payment is recognised as income.
Any abnormal portion of the direct expenses where it is material and quantifiable shall not form part of the direct expenses.
Penalties, damages paid to statutory authorities or other third parties shall not form part of the direct expenses.
Credits or recoveries relating to the direct expenses, material and quantifiable, shall be deducted to arrive at the net direct exoenses.
(l) Any change in the cost accounting principles applied for the measurement of the direct expenses should be made only if, it is required by law or a change would result in a more appropriate preparation or presentation of cost statements of an organisation.
(m) Direct expenses that are directly traceable to the cost object shall be assigned to that cost object.