(a) Proper and adequate records shall be maintained for assets used for production of goods or rendering of services under reference in respect of which depreciation or amortisation has to be orovided for. These records shall. inter-alia. indicate grouping of assets under each good or service, the cost of acquisition of each item of asset including installation charges, date of acquisition and rate of depreciation.
(b) The depreciation and amortisation shall be the amount recognised as an expense for the year in the financial statements, which shall be measured as per the provisions contained in Schedule ll of the Companies Act, 2013 and the accounting standards applicable for the time being in force. The amount of Depreciation and Amortisation not recognised as expense in the financial statements shall be treated as a non-cost item.
Depreciation on an asset which is temporarily retired from production of goods and services shall be considered as abnormal cost for the oeriod when the asset is not in use.
lmoairment loss on assets shall be excluded from cost of production/service.
(c)
(d) r)
(e) Spare parts, stand-by equipment and servicing equipment shall be recognised as property, plant and equipment when they meet the definition of property, plant and equipment and depreciated accordingly. Otherwise, such items shall be classified as inventory.
(fl Depreciation shall be traced to the cost object to the extent economically feasible.
(g) Where the depreciation is not directly haceable to cost object, it shall be assigned based on either of the following two principles; namely:- i) Cause and Effect - Cause is the process or operation or activity and effect is the incurrence of cost and ii) Benefits received - overheads are to be apportioned to the various cost objects in proportion to the benefits received by them.