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February 2012

NTPC Ltd. (31-3-2011)

By Himanshu Kishnadwala
Chartered Accountant
Reading Time 2 mins
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From Significant Accounting Policies

Fixed assets
Capital expenditure on assets not owned by the company is reflected as a distinct item in Capital Work-in-Progress till the period of completion and thereafter in the Fixed Assets.

Depreciation
Capital expenditure on assets not owned by the company is amortised over a period of four years from the month in which the first unit of project concerned comes into commercial operation and thereafter from the month in which the relevant asset becomes available for use. However, similar expenditure for community development is charged off to revenue.

From Notes to Accounts
During the year the company has received an opinion from the Expert Advisory Committee of the Institute of Chartered Accountants of India on accounting treatment of capital expenditure on assets not owned by the company wherein it was opined that such expenditure are to the charged to the statement of Profit & Loss Account as and when incurred. The company has represented that such expenditure being essential for setting up of a project, the same be accounted in line with the existing accounting practice and sought a review. Pending receipt of communication regarding the review, existing treatment has been continued as per existing accounting policy.

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