1. Amendment to Companies ( Corporate Social Responsibility Policy) Rules
The Ministry of Corporate Affairs has notified the following amendment on 12th September, 2014 in the Companies (Corporate Social Responsibility Policy) Rules 2014. In Rule 4, in sub-Rule (6) after the words “but such expenditure” the words and comma “including expenditure on administrative overheads” shall be inserted. Consequently, the clarification (iv) in General Circular No. 21 of 2014 dated 18-06-2014 stands omitted.
2. Clarification regarding Accounting Standard – AS 10 – Capitalisation of Cost
The Ministry of Corporate Affairs has vide General Circular No. 35/2014, dated 27-08-2014, clarified issues with respect to the capitalisation of borrowing costs in Competitive Bid power projects:
1) As per Accounting Standards AS-10 & AS-16 issued by ICAI in consultation with ASB, borrowing and other costs incurred during extended delay in commencement of commercial production after the plant is otherwise ready, should not be capitalised as it does not increase the worth of the fixed assets.
2) As per AS 16, capitalisation of some part of the project which is capable of being used while construction continues for the other units should be capitalised once that part is ready for commercial production
3) it is further clarified that AS-10 & AS-16 are applicable irrespective of whether the power projects are ‘Cost Plus Projects’ or ‘Competitive Bid Projects.’
3. National Advisory Committee
The Ministry of Corporate Affairs has vide circular dated 18th September, 2014 constituted an Advisory Committee to be called the National Advisory Committee on Accounting Standards, consisting of the Mr. Amarjit Chopra, Dr. A. S. Durga Prasad, Shri R. Sridharan and CA K. Raghu and others, to advise the Central Government on the formulation and laying down of accounting policies and accounting standards for adoption by companies or class of companies under the said Act.
The Chairperson and members shall hold office for a period of one year from the date of publication of this notification in the Official Gazette or till the constitution of National Financial Reporting Authority u/s. 132 of the Companies Act, 2013 whichever is earlier. 4. U seful Life Of Asset The Ministry of Corporate Affairs has vide notification dated 29th August, 2014, substituted the following in Schedule II of Companies Act 2013 – Part A Para 3 (i), substituted;
(i) The useful life of an asset shall not ordinarily be different from the useful life specified in Part C and the residual value of an asset shall not be more than 5% of the original cost.
Provided that where a Company adopts a useful life different from what is specialised in Part C or uses a residual value different from the limit specified above, the financial statements shall disclose the difference and the justification supported by technical advice.’
In Part C under the heading Noted – the para 4 shall be substituted by:
4(a) Useful life specified in Part C of the Schedule is for the whole asset and where cost of a part of the asset is significant to total cost of the asset and useful life of that part is different from the useful life of the remaining asset, useful life of that significant part shall be determined separately.
(b) The requirement under sub-paragraph (a) shall be voluntary in respect of financial year commencing on or after 01-04-2014 and mandatory for financial years commencing after 01-04-2015.
(c) in para 7 (b) for the words ‘shall be recognised,’ the words ‘may be recognised’ are substituted.
