Think of AS 10 as the rulebook for how a company accounts for its tangible long-term assets — land, buildings, machinery, vehicles, computers — anything held for production, supply of goods/services, rental, or administration (not for resale). The standard answers three big questions: When do you record an asset? At what value? How do you write it down over time?
Recognition happens when two conditions are BOTH met: (1) it is probable that future economic benefits will flow to the company, and (2) the cost can be measured reliably. Day-to-day repairs fail condition 1 — they just maintain, not enhance. A major overhaul that extends useful life? That passes both tests, so capitalise it.
Initial measurement is always at cost. Cost = Purchase price (net of trade discounts, GST if not recoverable) + directly attributable costs (freight, installation, site preparation, professional fees) + estimated dismantling/restoration costs (discounted to present value). Interest during construction is capitalised only if AS 16 applies (qualifying asset). After recognition, AS 10 allows two models — the Cost Model (cost minus accumulated depreciation minus impairment) or the Revaluation Model (fair value at revaluation date minus subsequent depreciation). If you choose revaluation, you must apply it to the entire class of assets (e.g. all plant & machinery), not cherry-pick. Revaluation surplus goes to Other Comprehensive Income (OCI), not P&L — but a downward revaluation hits P&L unless a previous surplus exists for that asset.
Depreciation under AS 10 uses the component approach — if a part of an asset has a cost that is significant relative to the total, depreciate it separately over its own useful life. Classic exam example: an aircraft body vs. its engines. The standard does NOT prescribe specific rates (unlike the Companies Act Schedule II), but useful life and residual value must be reviewed at least at each financial year-end. Derecognition (removing the asset from books) happens on disposal or when no future economic benefits are expected; any gain/loss goes to P&L. Spare parts qualify as PPE only if they meet the recognition criteria above — otherwise they sit in inventory.