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ASLB 17 PPE

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Accounting Standard for Local Bodies (ASLB) 17

Property, Plant and Equipment

Contents
Paragraphs
OBJECTIVE 1
SCOPE 2–11
Heritage Assets 8–11
DEFINITIONS 13
RECOGNITION 14–15
Infrastructure Assets 21
Initial Costs 22
Subsequent Costs 23-25
MEASUREMENT AT RECOGNITION 26–41
Elements of Cost 30–36
Measurement of Cost 37-41
MEASUREMENT AFTER RECOGNITION 42–87
Cost Model 43
Revaluation Model 44–58
Depreciation 59–65
Depreciable Amount and Depreciation Period 66–75
Depreciation Method 76–78
Compensation for Impairment or Losses 80–81
DERECOGNITION 82–87
Compendium of ASLBs

DISCLOSURE 88–94
TRANSITIONAL PROVISIONS 95–106
APPENDICES :
Appendix A :
Implementation Guidance: 1 – Determination of fair
value of Property, Plant and Equipment by appraisal
Implementation Guidance: 2 – Frequency of Revaluation
of Property, Plant and Equipment
Implementation Guidance: 3 - Illustrative Disclosure Examples
Appendix 1:
Comparison with IPSAS 17, ‘Property, Plant & Equipment’

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Property, Plant and Equipment

Accounting Standard for Local Bodies (ASLB) 17

Property, Plant and Equipment
(This Accounting Standard includes paragraphs set in bold italic type and plain
type, which have equal authority. Paragraphs in bold italic type indicate the
main principles. This Accounting Standard should be read in the context of its
objectives and the Preface to the Accounting Standards for Local Bodies1).

The Accounting Standard for Local Bodies (ASLB) 17, ‘Property, Plant and
Equipment’, issued by the Council of the Institute of Chartered Accountants of
India, will be recommendatory2 in nature in the initial years for use by the local
bodies. This Standard will be mandatory for Local Bodies in a State from the
date specified in this regard by the State Government concerned3.

The following is the text of the Accounting Standard for Local Bodies.

Objective
1. The objective of this Standard is to prescribe the accounting treatment for
property, plant and equipment so that users of financial statements can discern
information about an entity’s investment in its property, plant and equipment
and the changes in such investment. The principal issues in accounting for
property, plant and equipment are the recognition of the assets, the determination
of their carrying amounts and the depreciation charges and impairment losses
to be recognised in relation to them.

1
Attention is specifically drawn to paragraph 4.2 of the ‘Preface to the Accounting
Standards for Local Bodies’, according to which Accounting Standards are intended to
apply only to items which are material.
2
Till this standard is notified and made mandatory by the concerned State Government,
it is recommended that Fixed Asset Register, as per format prescribed in the National
Municipal Accounting Manual / State Municipal Accounting Manual, may be maintained.
3
Reference may be made to the paragraph 7.1 of the ‘Preface to the Accounting
Standards for Local Bodies’ providing the discussion on the compliance with the
Accounting Standards for Local Bodies.
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Compendium of ASLBs

Scope
2. An entity that prepares and presents financial statements under the
accrual basis of accounting should apply this Standard in accounting for
property, plant and equipment, except:

(a) When a different accounting treatment has been adopted in
accordance with another Accounting Standard for Local
Bodies; and

(b) In respect of heritage assets. However, the disclosure
requirements of paragraphs 88, 89 and 92 apply to those
heritage assets that are recognised.

3. This Standard applies to entities described as local bodies in the
Preface to the Accounting Standards for Local Bodies4.

4. This Standard applies to property, plant and equipment including
infrastructure assets5.

5. This Standard does not apply to:

(a) Biological assets, i.e., living animals or plants, related to agricultural
activity;

(b) Mineral rights and mineral reserves such as oil, natural gas and
similar non-regenerative resources; and

However, this Standard applies to property, plant and equipment used to develop
or maintain the assets described in paragraphs 5(a) to 5(c).

6. Accounting Standards for Local Bodies may require recognition of an
item of property, plant and equipment based on an approach different from that

4
Refer paragraph 1.3 of the ‘Preface to the Accounting Standards for Local Bodies’.
5
Assets under Service Concession Arrangements are not included. Separate
pronouncement is under preparation.
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Property, Plant and Equipment

in this Standard. For example, ASLB on ‘Leases’6 requires an entity to evaluate
its recognition of an item leased property, plant and equipment on the basis of
the transfer of risks and rewards. However, in such cases other aspects of the
accounting treatment for these assets, including depreciation, are prescribed by
this Standard. Guidance on accounting for leases can be found in Accounting
Standard (AS) 19, ‘Leases’ until the ASLB on this subject is formulated.

7. An entity should apply this Standard to property that is being constructed
or developed for future use as investment property but does not yet satisfy the
definition of ‘investment property’ in ASLB on ‘Investment Property’7. Once the
construction or development is complete, the property becomes investment
property and the entity is required to apply ASLB on ‘Investment Property’.
ASLB on ‘Investment Property’ also applies to investment property that is being
redeveloped for continued future use as investment property. An entity using
the cost model for investment property in accordance with ASLB on ‘Investment
Property’ should use the cost model in this Standard. Guidance on accounting
for investment property can be found in Accounting Standard (AS) 13,
‘Investments’ until the ASLB on this subject is formulated.

Heritage Assets8

8. This Standard does not require an entity to recognise heritage assets
that would otherwise meet the definition of, and recognition criteria for, property,
plant and equipment. If an entity does recognise heritage assets, it must apply
the disclosure requirements of this Standard and may, but is not required to,
apply the measurement requirements of this Standard.

9. Some assets are described as ‘heritage assets’ because of their cultural,
environmental or historical significance. Examples of heritage assets include
historical buildings and monuments, archaeological sites, conservation areas
and nature reserves, and works of art. Certain characteristics, including the
following, are often displayed by heritage assets (although these characteristics
are not exclusive to such assets):
6
The Accounting Standard for Local Bodies is under preparation.
7
‘Investment Property is property (land or a building – or part of a building – or both) held
to earn rentals or for capital appreciation or both, rather than for, use in the production
or supply of goods or services or for administrative purposes, or sale in the ordinary
course of operations’. The Accounting Standard for Local Bodies on the subject is
under preparation.
8
The formulation of the ASLB on ‘Heritage Assets’ is yet to be taken up.
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Compendium of ASLBs

(a) Their value in cultural, environmental, educational and historical
terms is unlikely to be fully reflected in a financial value based
purely on a market price;

(b) Legal and/or statutory obligations may impose prohibitions or severe
restrictions on disposal by sale;

(c) They are often irreplaceable and their value may increase over
time even if their physical condition deteriorates; and

(d) It may be difficult to estimate their useful lives, which in some
cases could be several hundred years. Entities may have large
holdings of heritage assets that have been acquired over many
years and by various means, including purchase, donation, bequest
and sequestration. These assets are rarely held for their ability to
generate cash inflows, and there may be legal or social obstacles
to using them for such purposes.

10. Some heritage assets have service potential other than their heritage
value, for example, an historic building being used for office accommodation or
for commercial purposes. In these cases, they may be recognised and measured
on the same basis as other items of property, plant and equipment. For other
heritage assets, service potential is limited to their heritage characteristics, for
example, monuments and ruins. The existence of alternative service potential
can affect the choice of measurement base.

11. The disclosure requirements in paragraphs 88 to 94 require entities to
make disclosures about recognised assets. Therefore, entities that recognise
heritage assets are required to disclose in respect of those assets such matters
as, for example:

(a) The measurement basis used;

(b) The depreciation method used, if any;

(d) The accumulated depreciation at the end of the period, if any; and

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Property, Plant and Equipment

(e) A reconciliation of the carrying amount at the beginning and end of
the period showing certain components thereof.

12. [Refer to Appendix 1]

Definitions
13. The following terms are used in this Standard with the meanings
specified:

Carrying amount (for the purpose of this Standard) is the amount at which
an asset is recognised after deducting any accumulated depreciation and
accumulated impairment losses9.

Class of property, plant and equipment means a grouping of assets of a
similar nature or function in an entity’s operations that is shown as a
single item for the purpose of disclosure in the financial statements.

Cost is the amount of cash or cash equivalents paid and the fair value of
the other consideration given to acquire an asset at the time of its
acquisition or construction.

Depreciation is the systematic allocation of the depreciable amount of an
asset over its useful life.

Depreciable amount is the cost of an asset, or other amount substituted
for cost, less its residual value.

Fair value is the amount for which an asset could be exchanged, or a
liability settled, between knowledgeable, willing parties in an arm’s length
transaction.

Property, plant and equipment are tangible items that:

(a) Are held for use in the production or supply of goods or

9
Guidance on accounting for impairment losses on cash generating assets can be found
in Accounting Standard (AS) 28, ‘Impairment of Assets’ until the ASLB on this subject
is formulated.
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Compendium of ASLBs

services, for rental to others, or for administrative purposes;
and

(b) Are expected to be used during more than one reporting period.

The residual value of an asset is the estimated amount that an entity
would currently obtain from disposal of the asset, after deducting the
estimated costs of disposal, if the asset were already of the age and in the
condition expected at the end of its useful life.

Useful life is:

(a) The period over which an asset is expected to be available for
use by an entity; or

(b) The number of production or similar units expected to be
obtained from the asset by an entity.

Terms defined in other Accounting Standards for Local Bodies are used in
this Standard with the same meaning as in those other Standards.

Recognition
14. The cost of an item of property, plant and equipment should be
recognised as an asset if, and only if:

(a) It is probable that future economic benefits or service potential
associated with the item will flow to the entity; and

(b) The cost or fair value of the item can be measured reliably.

15-16. [Deleted]

17. Spare parts and servicing equipment are usually carried as inventory and
recognised in the statement of income and expenditure as consumed. However,
major spare parts and stand-by equipment qualify as property, plant and
equipment when an entity expects to use them during more than one period.
Similarly, if the spare parts and servicing equipment can be used only in

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Property, Plant and Equipment

connection with an item of property, plant and equipment, they are accounted
for as property, plant and equipment.

18. This standard does not prescribe the unit of measure for recognition, i.e.
what constitutes an item of property, plant and equipment. Thus, judgment is
required in applying the recognition criteria to an entity’s specific circumstances.
It may be appropriate to aggregate individually insignificant items, such as
library books, computer peripherals and small items of equipment, and to apply
the criteria to the aggregate value.

19. An entity evaluates under this recognition principle all its property, plant
and equipment costs at the time they are incurred. These costs include costs
incurred initially to acquire or construct an item of property, plant and equipment
and costs incurred subsequently to add to, replace part of, or service it10.

20. [Refer to Appendix 1]

Infrastructure Assets

21. Some assets are commonly described as ‘infrastructure assets’. While
there is no universally accepted definition of infrastructure assets, these assets
usually display some or all of the following characteristics:

(a) They are part of a system or network;

(b) They are specialised in nature and do not have alternative uses;

(d) They may be subject to constraints on disposal.

Although ownership of infrastructure assets is not confined to Local Bodies,
significant infrastructure assets are frequently found in the Local Bodies.
Infrastructure assets meet the definition of property, plant and equipment and
should be accounted for in accordance with this Standard. Examples of
infrastructure assets include road networks, sewer systems, water and power
supply systems and communication networks.

10
See paragraph 25
189
Compendium of ASLBs

Initial Costs

22. Items of property, plant and equipment may be required for safety or
environmental reasons. The acquisition of such property, plant and equipment,
although not directly increasing the future economic benefits or service potential
of any particular existing item of property, plant and equipment, may be necessary
for an entity to obtain the future economic benefits or service potential from its
other assets. Such items of property, plant and equipment qualify for recognition
as assets because they enable an entity to derive future economic benefits or
service potential from related assets in excess of what could be derived had
those items not been acquired. For example, fire safety regulations may require
a hospital to acquire new sprinkler systems. These enhancements are recognised
as an asset because without them the entity is unable to operate the hospital in
accordance with the regulations.

Subsequent Costs

23. Under the recognition principle in paragraph 14, an entity does not
recognise in the carrying amount of an item of property, plant and equipment
the costs of the day-to-day servicing of the item. Rather, these costs are
recognised in the statement of income and expenditure as incurred. Costs of
day-to-day servicing are primarily the costs of labor and consumables, and may
include the cost of small parts. The purpose of these expenditures is often
described as for the ‘repairs and maintenance’ of the item of property, plant and
equipment.

24. Parts of some items of property, plant and equipment may require
replacement at regular intervals. For example, a road may need resurfacing
every few years, or a furnace may require relining after a specified number of
hours of use. Items of property, plant and equipment may also be required to
make a less frequently recurring replacement, such as replacing the interior
walls of a building, or to make a non-recurring replacement. Under the recognition
principle in paragraph 17, an entity recognises in the carrying amount of an item
of property, plant and equipment the cost of replacing part of such an item when
that cost is incurred if the recognition criteria are met. The carrying amount of
those parts that are replaced is derecognised in accordance with the derecognition
provisions of this Standard (see paragraphs 82 to 87).

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Property, Plant and Equipment

25. A condition of continuing to operate an item of property, plant and
equipment (for example, a water treatment plant) may be performing regular
major inspections for faults regardless of whether parts of the item are replaced.
When each major inspection is performed, its cost is recognised in the carrying
amount of the item of property, plant and equipment a replacement if the
recognition criteria are satisfied. Any remaining carrying amount of the cost of
previous inspection (as distinct from physical parts) is derecognised. This occurs
regardless of whether the cost of the previous inspection was identified in the
transaction in which the item was acquired or constructed. If necessary, the
estimated cost of a future similar inspection may be used as an indication of
what the cost of the existing inspection component was when the item was
acquired or constructed.

Measurement at Recognition
26. An item of property, plant and equipment that qualifies for recognition
as an asset should be measured at its cost.

27. Where an asset is acquired at nil or nominal consideration, its cost
should be measured at its fair value as at the date of acquisition.

28. An item of property, plant and equipment may be acquired at nil or
nominal consideration. For example, land may be contributed/ transferred to a
Local Body by a State Government or a Government agency or a developer at
no or nominal consideration, to enable the Local Body to develop parks, roads
and paths in the development. An asset may also be acquired at nil or nominal
consideration by the exercise of powers of acquisition. Under these circumstances
the cost of the item is its fair value as at the date it is acquired.

29. For the purposes of this Standard, the measurement at recognition of an
item of property, plant and equipment, acquired at no or nominal cost, at its fair
value consistent with the requirements of paragraph 27, does not constitute a
revaluation. Accordingly, the revaluation requirements in paragraph 44, and the
supporting commentary in paragraphs 45 to 50, only apply where an entity
elects to revalue an item of property, plant and equipment in subsequent reporting
periods.

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Compendium of ASLBs

Elements of Cost

30. The cost of an item of property, plant and equipment comprises:

(a) Its purchase price, including import duties and non-refundable
purchase taxes, after deducting trade discounts and rebates.

(b) Any costs directly attributable to bringing the asset
to the location and condition necessary for it to be capable of
operating in the manner intended by management.

(c) The initial estimate of the costs of dismantling and removing the
item and restoring the site on which it is located, the obligation for
which an entity incurs either when the item is acquired or as a
consequence of having used the item during a particular period for
purposes other than to produce inventories during that period.

31. Examples of directly attributable costs are:

(a) Costs of employee benefits11 arising directly from the construction
or acquisition of the item of property, plant and equipment;

(b) Costs of site preparation;

(d) Installation and assembly costs;

(e) Costs of testing whether the asset is functioning properly, after
deducting the net proceeds from selling any items produced while
bringing the asset to that location and condition (such as samples
produced when testing equipment); and

(f) Professional fees.

11
Guidance on accounting for employee benefits can be found in AS 15 (Revised 2005)
until the ASLB on this subject is formulated.

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Property, Plant and Equipment

32. An entity applies ASLB 12, ‘Inventories’, to the costs of obligations for
dismantling, removing and restoring the site on which an item is located that are
incurred during a particular period as a consequence of having used the item to
produce inventories during that period. The obligations for costs accounted for
in accordance with ASLB 12, ‘Inventories’ and this Standard are recognised and
measured in accordance with ASLB 19, ‘Provisions, Contingent Liabilities and
Contingent Assets’.

33. Examples of costs that are not costs of an item of property, plant and
equipment are:

(a) Costs of opening a new facility;

(b) Costs of introducing a new product or service (including costs of
advertising and promotional activities);

(d) Administration and other general overhead costs.

34. Recognition of costs in the carrying amount of an item of property, plant
and equipment ceases when the item is in the location and condition necessary
for it to be capable of operating in the manner intended by management.
Therefore, costs incurred in using or redeploying an item are not included in the
carrying amount of that item. For example, the following costs are not included
in the carrying amount of an item of property, plant and equipment:

(a) Costs incurred while an item capable of operating in the manner
intended by management has yet to be brought into use or is
operated at less than full capacity;

(b) Initial operating losses, such as those incurred while demand for
the item’s output builds up; and

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Compendium of ASLBs

35. Some operations occur in connection with the construction or development
of an item of property, plant and equipment, but are not necessary to bring the
item to the location and condition necessary for it to be capable of operating in
the manner intended by management. These incidental operations may occur
before or during the construction or development activities. For example, revenue
may be earned through using a building site as a car park until construction
starts. Because incidental operations are not necessary to bring an item to the
location and condition necessary for it to be capable of operating in the manner
intended by management, the revenue and related expenses of incidental
operations are recognised in the statement of income and expenditure, and
included in their respective classifications of income and expense.

36. The cost of a self-constructed asset is determined using the same
principles as for an acquired asset. If an entity makes similar assets for sale in
the normal course of operations, the cost of the asset is usually the same as the
cost of constructing an asset for sale (see ASLB 12, ‘Inventories’). Therefore,
any internal surpluses are eliminated in arriving at such costs. Similarly, the
cost of abnormal amounts of wasted material, labor, or other resources incurred
in self-constructing an asset is not included in the cost of the asset. ASLB 5,
‘Borrowing Costs’, establishes criteria for the recognition of interest as a
component of the carrying amount of a self-constructed item of property, plant
and equipment.

Measurement of cost

37. The cost of an item of property, plant and equipment is the cash price
equivalent or, for an item referred to in paragraph 27, its fair value at the
recognition date. If payment is deferred beyond normal credit terms, the difference
between the cash price equivalent and the total payment is recognised as
interest over the period of credit unless such interest is recognised in the carrying
amount of any item in accordance with ASLB 5, ‘Borrowing Costs’.

38. One or more items of property, plant and equipment may be acquired in
exchange for a non-monetary asset or assets, or a combination of monetary
and non-monetary assets. The cost of such an item of property, plant and
equipment is measured at the fair value of the consideration given. It may be
appropriate to consider also the fair value of the asset acquired if this is more
clearly evident. An alternative accounting treatment that is sometimes used for

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Property, Plant and Equipment

an exchange of assets, particularly when the assets exchanged are similar, is to
record the asset acquired at the net book value of the assets given up; in each
case an adjustment is made for any balancing receipt or payment of cash or
other consideration.

39-40. [Refer to Appendix 1]

41. The cost of an item of property, plant and equipment held by a lessee
under a finance lease is determined in accordance with ASLB on ‘Leases’.
Guidance on accounting for ‘Leases’ can be found in Accounting Standard (AS)
19, ‘Leases’, until the ASLB on this subject is formulated.

Measurement after Recognition
42. An entity should choose either the cost model in paragraph 43 or
the revaluation model in paragraph 44 as its accounting policy and should
apply that policy to an entire class of property, plant and equipment.

Cost Model

43. After recognition as an asset, an item of property, plant and
equipment should be carried at its cost less any accumulated depreciation
and any accumulated impairment losses.

Revaluation Model

44. After recognition as an asset, an item of property, plant and
equipment whose fair value can be measured reliably should be carried at
a revalued amount, being its fair value at the date of the revaluation less
any subsequent accumulated depreciation and subsequent accumulated
impairment losses. Revaluations should be made with sufficient regularity
to ensure that the carrying amount does not differ materially from that
which would be determined using fair value at the reporting date. The
accounting treatment for revaluations is set out in paragraphs 53 to 55.

45. The fair value of items of property, plant and equipment is usually
determined from market-based evidence by appraisal in a manner set out in the
Appendix by a person holding a recognised and relevant professional qualification
195
Compendium of ASLBs

for valuation. For many assets, the fair value will be readily ascertainable by
reference to quoted prices in an active and liquid market. For example, current
market prices can usually be obtained for land, non-specialised buildings, motor
vehicles and many types of plant and equipment.

46. For some assets, it may be difficult to establish their market value because
of the absence of market transactions for these assets. Some entities may have
significant holdings of such assets. Guidelines for determination of fair value of
such assets are given in Appendix.

47-48. [Refer to Appendix 1]

49. The frequency of revaluations depends upon the changes in the fair
values of the items of property, plant and equipment being revalued. When the
fair value of a revalued asset differs materially from its carrying amount, a
further revaluation is necessary. Some items of property, plant and equipment
experience significant and volatile changes in fair value, thus necessitating
annual revaluation. Such frequent revaluations are unnecessary for items of
property, plant and equipment with only insignificant changes in fair value.
Instead, it may be necessary to revalue the item only every three or five years.

50. When an item of property, plant and equipment is revalued, any
accumulated depreciation at the date of the revaluation is treated in one of the
following ways:

(a) Restated proportionately with the change in the gross carrying
amount of the asset so that the carrying amount of the asset after
revaluation equals its revalued amount. This method is often used
when an asset is revalued by means of applying an index to its
depreciated replacement cost.

(b) Eliminated against the gross carrying amount of the asset and the
net amount restated to the revalued amount of the asset. This
method is often used for buildings.

The amount of the adjustment arising on the restatement or elimination of
accumulated depreciation forms part of the increase or decrease in carrying
amount that is accounted for in accordance with paragraphs 54 and 55.

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Property, Plant and Equipment

51. If an item of property, plant and equipment is revalued, the entire
class of property, plant and equipment to which that asset belongs should
be revalued.

52. A class of property, plant and equipment is a grouping of assets of a
similar nature or function in an entity’s operations. The following are examples
of separate classes:

(a) Land;

(b) Parks and Play Grounds;

(i) Commercial buildings such as office complexes, markets;
and

(ii) Non–commercial buildings such as administrative buildings,
community centers, schools, health centers;

(d) Roads;

(e) Machinery;

(f) Electricity transmission networks;

(g) Pipelines;

(h) Drains;

(i) Bridges;

(j) Motor vehicles;

(k) Furniture and fixtures;

(l) Office equipment; and

(m) Heritage assets.
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Compendium of ASLBs

53. The items within a class of property, plant and equipment are revalued
simultaneously in order to avoid selective revaluation of assets and the reporting
of amounts in the financial statements that are a mixture of costs and values as
at different dates. However, a class of assets may be revalued on a rolling basis
provided revaluation of the class of assets is completed within a short period
say the relevant financial year and provided the revaluations are kept up to
date.

54. If the carrying amount of a class of assets is increased as a result of
a revaluation, the increase should be credited directly to revaluation surplus.
However, the increase should be recognised in the statement of income
and expenditure to the extent that it reverses a revaluation decrease of the
same class of assets previously recognised in statement of income and
expenditure.

55. If the carrying amount of a class of assets is decreased as a result
of a revaluation, the decrease should be recognised in statement of income
and expenditure. However, the decrease should be debited directly to
revaluation surplus to the extent of any credit balance existing in the
revaluation surplus in respect of that class of assets.

56. Revaluation increases and decreases relating to individual assets
within a class of property, plant and equipment must be offset against one
another within that class but must not be offset in respect of assets in
different classes.

57. Some or all of the revaluation surplus included in net assets/equity in
respect of property, plant and equipment may be transferred directly to
accumulated surpluses or deficits when the assets are derecognised. This may
involve transferring some or the whole of the surplus when the assets within the
class of property, plant and equipment to which the surplus relates are retired or
disposed of. However, some of the surplus may be transferred as the assets
are used by the entity. In such a case, the amount of the surplus transferred
would be the difference between depreciation based on the revalued carrying
amount of the assets and depreciation based on the assets’ original cost.
Transfers from revaluation surplus to accumulated surpluses or deficits are not
made through statement of income and expenditure.

58. [Refer to Appendix 1]
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Property, Plant and Equipment

Depreciation

59. Each part of an item of property, plant and equipment with a cost
that is significant in relation to the total cost of the item should be
depreciated separately.

60. An entity allocates the amount initially recognised in respect of an item of
property, plant and equipment to its significant parts and depreciates separately
each such part. For example, in most cases, it would be required to depreciate
separately the pavements, formation, curbs and channels, footpaths, bridges
and lighting within a road system.

61. A significant part of an item of property, plant and equipment may have a
useful life and a depreciation method that are the same as the useful life and
the depreciation method of another significant part of that same item. Such
parts may be grouped in determining the depreciation charge.

62. To the extent that an entity depreciates separately some parts of an item
of property, plant and equipment, it also depreciates separately the remainder
of the item. The remainder consists of the parts of the item that are individually
not significant. If an entity has varying expectations for these parts, approximation
techniques may be necessary to depreciate the remainder in a manner that
faithfully represents the consumption pattern and/or useful life of its parts.

63. An entity may choose to depreciate separately the parts of an item that
do not have a cost that is significant in relation to the total cost of the item.

64. The depreciation charge for each period should be recognised in the
statement of income and expenditure unless it is included in the carrying
amount of another asset.

65. The depreciation charge for a period is usually recognised in statement
of income and expenditure. However, sometimes, the future economic benefits
or service potential embodied in an asset is absorbed in producing other assets.
In this case, the depreciation charge constitutes part of the cost of the other
asset and is included in its carrying amount. For example, the depreciation of a
concrete mixer used in the construction of a building is included in the cost of
the building.

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Compendium of ASLBs

Depreciation Amount and Depreciation Period

66. The depreciable amount of an asset should be allocated on a
systematic basis over its useful life.

67. The residual value and the useful life of an asset should be reviewed
at least at each annual reporting date and, if expectations differ from
previous estimates, the change(s) should be accounted for as a change in
an accounting estimate in accordance with ASLB 3, ‘Accounting Policies,
Changes in Accounting Estimates and Errors’.

68. Depreciation is recognised even if the fair value of the assets exceeds its
carrying amount, as long as the asset’s residual value does not exceed its
carrying amount. Repair and maintenance of an asset does not negate the need
to depreciate it. Conversely, some assets may be poorly maintained or
maintenance may be deferred indefinitely because of budgetary constraints.
Where asset management policies exacerbate the wear and tear of an asset, its
useful life should be reassessed and adjusted accordingly.

69. The depreciable amount of an asset is determined after deducting its
residual value. In practice, the residual value of an asset is often insignificant
and therefore immaterial in the calculation of the depreciable amount.

70. The residual value of an asset may increase to an amount equal to or
greater than the asset’s carrying amount. If it does, the asset’s depreciation
charge is zero unless and until its residual value subsequently decreases to an
amount below the asset’s carrying amount.

71. Depreciation of an asset begins when it is available for use, i.e. when it is
in the location and condition necessary for it to be capable of operating in the
manner intended by management. Depreciation of an asset ceases when the
asset is derecognised. Therefore, depreciation does not cease when the asset
becomes idle or is retired from active use and held for disposal unless the asset
is fully depreciated. However, under usage methods of depreciation the
depreciation charge can be zero while there is no production.

72. The future economic benefits or service potential embodied in an item of
property, plant and equipment are consumed by the entity principally through
the use of the asset. However, other factors such as technical or commercial
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Property, Plant and Equipment

obsolescence and wear and tear while an asset remains idle often result in the
diminution of the economic benefits or service potential that might have been
obtained from the asset. Consequently, all the following factors are considered
in determining the useful life of an asset:

(a) Expected usage of the asset. Usage is assessed by reference to
the asset’s expected capacity or physical output.

(b) Expected physical wear and tear, which depends on operational
factors such as the number of shifts for which the asset is to be
used and the repair and maintenance programme, and the care
and maintenance of the asset while idle.

(c) Technical or commercial obsolescence arising from changes or
improvements in production, or from a change in the market demand
for the product or service output of the asset.

(d) Legal or similar limits on the use of the asset, such as the expiry
dates of related leases.

73. The useful life of an asset is defined in terms of the asset’s expected
utility to the entity. The asset management policy of an entity may involve the
disposal of assets after a specified time or after consumption of a specified
proportion of the future economic benefits or service potential embodied in the
asset. Therefore, the useful life of asset may be shorter than its economic life.
The estimation of the useful life of the asset is a matter of judgment based on
the experience of the entity with similar assets.

74. Land and buildings are separable assets and are accounted for separately,
even when they are acquired together. With some exceptions, such as quarries
and sites used for landfill, land has an unlimited useful life and therefore is not
depreciated. Buildings have a limited useful life and therefore are depreciable
assets. An increase in the value of the land on which a building stands does not
affect the determination of the depreciable amount of the building.

75. If the cost of land includes the cost of site dismantlement, removal and
restoration, that portion of the land asset is depreciated over the period of
benefits or service potential obtained by incurring those costs. In some cases,

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Compendium of ASLBs

the land itself may have a limited useful life, in which case it is depreciated in a
manner that reflects the benefits or service potential to be derived from it.

Depreciation Method

76. The depreciation method should reflect the pattern in which the
asset’s future economic benefits or service potential is expected to be
consumed by the entity.

77. The depreciation method applied to an asset should be reviewed at
least at each annual reporting date and, if there has been a significant
change in the expected pattern of the consumption of the future economic
benefits or service potential embodied in the asset, the method should be
changed to reflect the changed pattern. Such a change should be accounted
for as a change in an accounting estimate in accordance with ASLB 3,
‘Accounting Policies, Changes in Accounting Estimates and Errors’.

78. A variety of depreciation methods can be used to allocate the depreciable
amount of an asset on a systematic basis over its useful life. These methods
include the straight-line method, the diminishing balance method and the units
of production method. Straight-line depreciation results in a constant charge
over the useful life if the asset’s residual value does not change. The diminishing
balance method results in a decreasing charge over the useful life. The units of
production method results in a charge based on the expected use or output.
The entity selects the method that most closely reflects the expected pattern of
consumption of the future economic benefits or service potential embodied in
the asset. That method is applied consistently from period to period unless
there is a change in the expected pattern of consumption of those future economic
benefits or service potential.

79. [Refer to Appendix 1]

Compensation for impairment or losses

80. Compensation from third parties for items of property, plant and
equipment that were impaired, lost or given up should be included in
statement of income and expenditure when the compensation becomes
receivable.

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Property, Plant and Equipment

81. Impairments or losses of items of property, plant and equipment, related
claims for or payments of compensation from third parties and any subsequent
purchase or construction of replacement assets are separate economic events
and are accounted for separately as follows:

(a) Impairments or losses of items of property, plant and equipment
are recognised;

(b) Derecognition of items of property, plant and equipment retired or
disposed of is determined in accordance with this Standard;

(c) Compensation from third parties for items of property, plant and
equipment that were impaired, lost or given up is included in
determining surplus or deficit when it becomes receivable; and

(d) The cost of items of property, plant and equipment restored,
purchased or constructed as replacement determined in accordance
with this Standard.

Derecognition

82. The carrying amount of an item of property, plant and equipment
should be derecognised:

(a) On disposal; or

(b) When no future economic benefits or service potential is
expected from its use or disposal.

83. The gain or loss arising from the derecognition of an item of property,
plant and equipment should be included in the statement of income and
expenditure when the item is derecognised (unless ASLB on ‘Leases’
requires otherwise on a sale and leaseback). Gains should not be classified
as revenue.

84. The disposal of an item of property, plant and equipment may occur in a
variety ways (e.g. by sale, by entering into a finance lease or by donation). In
determining the date of disposal of an item, an entity applies the criteria in

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Compendium of ASLBs

ASLB 9, ‘Revenue from Exchange Transactions’ for recognising revenue from
the sale of goods. ASLB on ‘Leases’ applies to disposal by a sale and leaseback.

85. If, under the recognition principle in paragraph 14, an entity recognises in
the carrying amount of an item of property, plant and equipment the cost of a
replacement for part of the item, then it derecognises the carrying amount of the
replaced part regardless of whether the replaced part had been depreciated
separately. If it is not practicable for an entity to determine the carrying amount
of the replaced part, it may use the cost of the replacement as an indication of
what the cost of the replaced part was at the time it was acquired or constructed.

86. The gain or loss arising from the derecognition of an item of property,
plant and equipment should be determined as the difference between the
net disposal proceeds, if any, and the carrying amount of the item.

87. The consideration receivable on disposal of an item of property, plant
and equipment is recognised initially at its fair value. If payment for the item is
deferred, the consideration received is recognised initially at the cash price
equivalent. The difference between the nominal amount of the consideration
and the cash price equivalent is recognised as interest revenue in accordance
with ASLB 9 reflecting the effective yield on the receivable.

Disclosure
88. The financial statements should disclose, for each class of property,
plant and equipment recognised in the financial statements:

(a) The measurement bases (i.e., cost model or revaluation model)
used for determining the gross carrying amount;

(b) The depreciation methods used;

(d) The gross carrying amount and the accumulated depreciation
(aggregated with accumulated impairment losses) at the
beginning and end of the period; and

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Property, Plant and Equipment

(e) A reconciliation of the carrying amount at the beginning and
end of the period showing:

(i) Additions;

(ii) Disposals;

(iii) Acquisitions through entity combinations;

(iv) Increases or resulting from revaluations under
paragraphs 44, 54 and 55 and from impairment losses (if
any) recognised or reversed directly in net assets/equity;

(v) Impairment losses recognised in the statement of income
and expenditure;

(vi) Impairment losses reversed in the statement of income
and expenditure;

(vii) Depreciation; and

(viii) other changes.

89. The financial statements should also disclose for each class of
property, plant and equipment recognised in the financial statements:

(a) The existence and amounts of restrictions on title, and property,
plant and equipment pledged as securities for liabilities;

(b) The amount of expenditures recognised in the carrying amount
of an item of property, plant and equipment in the course of its
construction;

(d) If it is not disclosed separately on the face of the statement of
income and expenditure, the amount of compensation from
third parties for items of property, plant and equipment that
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Compendium of ASLBs

were impaired, lost or given up that is included in the statement
of income and expenditure.

90. Selection of the depreciation method and the estimation of the useful life
of the assets are matters of judgment. Therefore, disclosure of the methods
adopted and the estimated useful lives or depreciation rates provides users of
financial statements with information that allows them to review the policies
selected by management and enables comparisons to be made with other
entities. For similar reasons, it is necessary to disclose:

(a) Depreciation, whether recognised in the statement of income and
expenditure or as a part of the cost of other assets, during a period;
and

(b) Accumulated depreciation at the end of the period.

91. In accordance with ASLB 3, ‘Accounting Policies, Changes in Accounting
Estimates and Errors’ an entity discloses nature and effect of a change in an
accounting estimate that has an effect in the current period or is expected to
have an effect in subsequent periods. For property, plant and equipment, such
disclosure may arise from changes in estimates with respect to:

(a) Residual values;

(b) The estimated costs of dismantling, removing or restoring items of
property, plant and equipment;

(d) Depreciation methods.

92. If a class of property, plant and equipment is stated at revalued
amounts, the following should be disclosed:

(a) The effective date of the revaluation;

(b) Whether an independent valuer was involved;

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Property, Plant and Equipment

(d) The extent to which the assets’ fair values were determined
directly by reference to observable prices in an active market
or recent market transactions on arm’s length terms or were
estimated using other valuation techniques;

(e) The revaluation surplus, indicating the change for the period
and any restrictions on the distribution of the balance to
owners;

(f) The sum of all revaluation surpluses for individual items of
property, plant and equipment within that class; and

(g) The sum of all revaluation deficits for individual items of
property, plant and equipment within that class.

93. [Refer to Appendix 1]

94. Users of financial statements may also find the following information
relevant to their needs:

(a) The carrying amount of temporarily idle property, plant and
equipment;

(b) The gross carrying amount of any fully depreciated property, plant
and equipment that is still in use;

(d) When the cost model is used, the fair value of property, plant
and equipment when this is materially different from the carrying
amount.

Therefore, entities are encouraged to disclose these amounts.

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Compendium of ASLBs

Transitional Provisions
95. [Refer to Appendix 1]

96. An entity that adopts accrual accounting for the first time in
accordance with Accounting Standards for Local Bodies should initially
recognise property, plant and equipment at cost or fair value. For items of
property, plant and equipment that were acquired at no cost, or for a
nominal cost, cost is the item’s fair value as at the date of acquisition. The
same principle will apply for items of property, plant and equipment which
exists at the time when accrual accounting is adopted for the first time but
recognised in subsequent years after the adoption of accrual accounting
for the first time.

97. The entity should recognise the effect of the initial recognition of
property, plant and equipment as an adjustment to the opening balance of
accumulated surpluses or deficits for the period in which the property,
plant and equipment is initially recognised.

98. Prior to first application of this Standard, an entity may recognise its
property, plant and equipment on a basis other than cost or fair value as defined
in this Standard, or may control assets that it has not recognised. This Standard
requires entities to initially recognise items of property, plant and equipment at
cost or, fair value as at the date of initial recognition in accordance with this
Standard. Where assets are initially recognised at cost and were acquired at no
cost, or for a nominal cost, cost will be determined by reference to the asset’s
fair value as at the date of acquisition. Where the cost of acquisition of an asset
is not known, its cost may be estimated by reference to its fair value as at the
date of acquisition.

99. When an entity initially recognises an item of property, plant and equipment
at cost in accordance with this Standard, it should also recognise any accumulated
depreciation and any accumulated impairment losses that relate to that item, as
if it had always applied those accounting policies.

100-103. [Refer to Appendix 1]

104. When an entity takes advantage of the transitional provisions in
paragraphs 96 that fact should be disclosed. When an entity takes advantage
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Property, Plant and Equipment

of the transitional provisions for a second or subsequent reporting period,
details of the assets or classes of asset that were not recognised at the
previous reporting date but that are now recognised should be disclosed.

105-106. [Refer to Appendix 1]

107-109. [Refer to Appendix 1]

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Compendium of ASLBs

Appendix A

Implementation Guidance 1 – Determination of Fair Value of
Property, Plant and Equipment by Appraisal

This guidance accompanies, but not a part of, ASLB 17.

1. If no evidence is available to determine the market value in an active and
liquid market of an item of property, plant and equipment, the fair value of the
item may be established by reference to other items with similar characteristics,
in similar circumstances and location. For example, the fair value of vacant land
that has been held for a long period during which time there have been few
transactions may be estimated by reference to the market value of land with
similar features and topography in a similar location for which market evidence
is available. In the case of specialised buildings and other man made structures,
fair value may be determined by a valuer using depreciated replacement cost,
or the restoration cost or service units approaches. In many cases, the
depreciated replacement cost of an asset can be established by reference to
the buying price of a similar asset with similar remaining service potential in an
active and liquid market. In some cases, an asset’s reproduction cost will be the
best indicator of its replacement cost. For example, in the event of loss, a
building belongs to a Local Body may be reproduced rather than replaced with
alternative accommodation because of its significance to the community.

2. If there is no market-based evidence of fair value because of the
specialised nature of the item of property, plant and equipment, an entity may
need to estimate fair value using, for example, reproduction cost, depreciated
replacement cost, or the restoration cost or service units approaches. The
depreciated replacement cost of an item of property, plant or equipment may be
established by reference to the market buying price of components used to
produce the asset or the indexed price for the same or a similar asset based on
a price for a previous period. When the indexed price method is used, judgment
is required to determine whether production technology has changed significantly
over the period, and whether the capacity of the reference asset is the same as
that of the asset being valued.

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Property, Plant and Equipment

Implementation Guidance 2 – Frequency of Revaluation of
Property, Plant and Equipment

This guidance accompanies, but is not part of, ASLB 17.

1. Paragraph 44 of ASLB 17 requires entities that adopt the revaluation
model to measure its assets at a revaluated amount does not differ significantly
from that which would be determined using fair value at the reporting date.
Paragraph 49 of ASLB 17 specifies that the frequency of revaluations depends
upon the changes in the fair values of the items of property, plant and equipment
being revalued. When the fair value of a revalued asset differs materially from
its carrying amount, a further revaluation is necessary. The purpose of this
guidance is to assist entities that adopt the revaluation model to determine
whether carrying amounts differ materially from the fair value as at reporting
date.

2. An entity assesses at each reporting date whether there is any indication
that a revalued asset’s carrying amount may differ materially from that which
would be determined if the asset were revalued at the reporting date. If any
such indication exists, the entity determines the asset’s fair value and revalues
the asset to that amount.

3. In assessing whether there is any indication that a revalued asset’s carrying
amount may differ materially from that which would be determined if the asset
were revalued at the reporting date, an entity considers, as a minimum, the
following indications:

External sources of information

(a) Significant changes affecting the entity have taken place during
the period, or will take place in the near future, in the technological,
market, economic or legal environment in which the entity operates
or in the market to which the asset is dedicated;

(b) Where market exists for the assets of the entity, market values are
different from their carrying amounts;

Internal sources of information

(d) Evidence is available of obsolescence or physical damage of an
asset;

(e) Significant changes affecting the entity have taken place during
the period, or are expected to take place in the near future, in the
extent to which, or manner in which, an asset is used or is expected
to be used. Adverse changes include the asset becoming idle, or
plans to dispose of an asset before the previously expected date,
and reassessing the useful life of an asset as finite rather than
indefinite. Favourable changes include capital expenditure incurred
during the period to improve or enhance an asset in excess of its
standard of performance assessed immediately before the
expenditure is made; and

(f) Evidence is available from internal reporting that indicates that the
economic performance of an asset is, or will be, worse or better
than expected.

4. The list in paragraph 3 is not exhaustive. An entity may identify other
indications that a revalued asset’s carrying amount may differ materially from
that which would be determined if the asset were revalued at the reporting date.
The existence of these additional indicators would also indicate that the entity
should revalue the asset to its current fair value as at the reporting date.

Implementation Guidance 3 – Illustrative Disclosures
Examples

This guidance accompanies, but is not part of, ASLB 17.

A Local Body controls a wide range of property, plant and equipment and is
responsible for replacement and maintenance of the property. The following are
extracts from the notes to its Balance Sheet as at 31 March 20X1 and illustrate
the principal disclosures required in accordance with this Standard.

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Property, Plant and Equipment

Notes

1. Land

(a) Land consists of five thousand hectares at various locations. Land
is valued at fair value as at 31 March 20X1, as determined by an
authorised independent valuer.

(b) Restrictions on Titles:

Five hundred hectares of land (carried at Rs 62 lakh) is designated
as public interest land and may not be sold without the approval of
the state legislature. Two hundred hectares (carried at Rs 25 lakh)
of the public interest land and a further two thousand hectares
(carried at Rs. 250 lakh) of other land are subject to title claims by
former owners in jurisdictional High Court and the Court has ordered
that the land may not be disposed of until the claim is decided; the
Local Body recognises the jurisdiction of the Court to hear these
cases.

2. Buildings

(a) Buildings consist of administrative buildings and commercial
buildings at various locations.

(b) Buildings are initially recognised at cost, but are subject to
revaluation to fair value on an ongoing basis. An authorised valuer
from a panel of recognised valuers determines fair value. All
revaluations within a class of assets is completed within the financial
year. Revaluations are kept up to date.

(c) Depreciation is calculated on a straight-line basis over the useful
life of the building. Administrative buildings have a useful life of
twenty-five years, and commercial buildings have a useful life of
fifteen years.

(d) The Local Body has entered into five contracts for the construction
of new buildings; total contract costs are Rs. 250 lakh.

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Compendium of ASLBs

3. Machinery

(a) Machinery is measured at cost less depreciation.

(b) Depreciation is calculated on a straight-line basis over the useful
life of the machine.

(d) The Local Body has entered into a contract to replace the cranes it
uses to clean and maintain the buildings – the contracted cost is
Rs. 100 lakh.

4. Furniture and Fixtures

(a) Furniture and fixtures are measured at cost less depreciation.

(b) Depreciation is calculated on a straight-line basis over the useful
life of the furniture and fixtures.

5. Infrastructure Assets

(a) Infrastructure assets are shown at cost less depreciation.

(b) Useful lives of various categories of infrastructure assets:
Flyovers: 25years
Water supply net work: 30 years
Storm water drains: 25 years

214
Reconciliations
(Amount in Rs. Lakh)
Gross Block Depreciation Net Block
Opening Additions Dispo- Revalu- Closing Opening Depre- Depre- Closing At the At the
balance during sals ations balance balance ciation ciation balance end of beginning
the year (net) during written the of the
the year back year year
Land 25,000 1,500 100 1,000 27,400 19,150 2,397 12 21,535 5,865 5,850
Buildings 10,000 600 200 10,800 5,850 475 - 6,325 4,475 4,150
Plant &

215
Machinery 3,000 150 25 - 3,125 1,250 103 3 1,350 1,775 1,750
Infrastructure
assets 65,000 15,000 - (1,500) 78,500 44,500 1,425 - 45,925 32,575 20,500
Vehicles 150 50 - - 200 25 20 - 45 155 125
Office
equipments 250 30 - - 280 52 13 - 65 215 198
Other assets 7,500 150 100 7,550 4,500 295 45 4,750 2,800 3,000
Total 1,10,900 17,480 225 (300) 1,27,855 75,327 4,728 60 79,995 47,860 35,573
Property, Plant and Equipment
Compendium of ASLBs

Appendix 1

Note: This Appendix is not a part of the Accounting Standard for Local bodies.
The purpose of this appendix is only to bring out the major differences between
this Accounting Standard for Local Bodies (ASLB) and the corresponding
International Public Sector Accounting Standard (IPSAS) 17, ‘Property, Plant
and Equipment’.

Comparison with IPSAS 17, ‘Property, Plant and Equipment’

Definition

1. IPSAS 17 defines the terms ‘Entity Specific Value’, ‘Exchange
Transactions’, ‘Non-exchange Transactions’, ‘Impairment Loss of Cash
Generating Assets’, ‘Impairment Loss of Non-cash Generating Assets’,
‘Recoverable Amount’ and ‘Recoverable Service Amount’. ASLB 17, ‘Property,
Plant and Equipment’ does not define these terms for the reasons given below:

(a) ‘Entity Specific Value’: This term is defined in the context of
determining commercial substance of an exchange transaction.
The concept of commercial substance is not used in ASLB 17 for
measuring fair value of assets acquired in exchange for a non-
monetary asset(s) with a view to simplify the requirements in this
regard as the accrual accounting in Local Bodies in India is at its
inception stage.

(b) ‘Exchange Transactions’ and ‘Non-exchange Transactions’: For
accounting for items of property, plant and equipment acquired
without incurring any obligation, ASLB 17 uses the terms ‘Nil’ and
‘nominal consideration’ in paragraph 27 in place of the term ‘non-
exchange transactions’. Accordingly, neither the term ‘Non-
exchange Transactions’ nor the term ‘Exchange Transactions’ has
been used. The aforesaid terms are not used because, these have
different connotations in the ASLB 9, ‘Revenue from Exchange
Transactions’.

(c) ‘Impairment Loss of Non-cash Generating Assets’ and ‘Recoverable
Service Amount’: The concept of impairment loss of non-cash
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Property, Plant and Equipment

generating assets has not been dealt with keeping in view the
complexities involved in its application at the very early stage of
adoption of accrual basis of accounting in Local Bodies in India.

(d) ‘Impairment Loss of Cash Generating Assets’ and ‘Recoverable
Amount’: Since, at present, there is no ASLB on the above subject
and reference has been made for guidance to Accounting Standard
(AS) 28, ‘Impairment of Assets’, till formulation of ASLB on this
subject, these terms have not been defined in ASLB 17.

Measurement of Cost

2. IPSAS 17 requires to measure a property, plant and equipment acquired
in exchange for non-monetary asset(s) or combination of non-monetary asset(s)
at fair value unless the exchange transaction lacks commercial substance or the
fair value of neither assets received nor the assets given up is reliably measurable.
IPSAS 17 gives detailed guidance on when an exchange transaction has
commercial substance. Under the ASLB 17, ‘Property, Plant and Equipment’, an
entity measures such acquired assets at fair value. The standard recognises an
alternative accounting treatment that is sometimes used for an exchange of
assets, particularly when the assets exchanged are similar, to record the asset
acquired at the net book value of the assets given up.

Since the Local Bodies are at early stage of adoption of accrual basis of
accounting, it would be difficult for Local Bodies to apply the complexity of
determining the exchange transactions that have commercial substance.

Transitional Provisions

3. IPSAS 17 contains a transitional provision providing relief from the
requirement to recognise all property, plant and equipment for five years following
the date of first adoption of accrual accounting. ASLB 17 does not provide for
the same. However, on the lines of other ASLBs, ASLB 17 also requires in the
introductory paragraph that the Standard will be recommendatory in nature in
initial years for use by local bodies and mandatory for local bodies in a State
from the date specified in this regard by the State Government concerned.

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Compendium of ASLBs

Terminology

4. ASLB 17 uses different terminology, in certain instances, from IPSAS 17.
For example, the use of the term ‘statement of income and expenditure’ in
ASLB 17. The equivalent terms in IPSAS 17 are ‘surplus or deficit’ and/or
‘statement of financial performance’, because in India, the Local Bodies do not,
at present, use these terms.

Paragraphs Deleted

5. As a consequence of the above changes, following paragraphs have
been deleted. However, their numbers have been retained in order to maintain
consistency with corresponding IPSAS.

Paragraph 12 : Deleted as it pertains to Government Business Enterprises
(GBEs).

Paragraph 20 : Not relevant for Local Bodies as it pertains to military equipments.

Paragraphs 39, 40, 47 & 48 : Deleted as a consequence of modification in
ASLB 17 mentioned at point no. (2) in respect of measurement of cost.

Paragraphs 58 : Refer to Standard on ‘Taxes’. Since there is no ASLB on the
subject, the paragraph has been deleted.

Paragraphs 79 & 93 : Paragraphs refering to treatments provided under IPSAS
on “Impairment of Cash Generating Assets" have been deleted as there is no
ASLB on the said subject at present.

Paragraphs 95, 100, 101, 102, 103, 105 & 106 : Deleted as a consequence of
modification mentioned at point no. (3) above relating to transitional provisions.

Paragraphs 107 to 108 : Paragraphs pertaining to effective date have been
deleted as the ASLBs would become mandatory for Local Bodies in a State
from the date specified by the State Government concerned.

218