Page 264 - Corporate Finance PDF Final new link

NPP

3.3

CONCEPT OF INVESTMENT ACCOUNTING
B§doñQ>‘|Q> AH$mC§qQ>J H$s AdYmaUm

Q.29. What are Investments? Explain its classification. /B§doñQ>‘|Q²>g ³¶m h¢? BgH$m dJr©H$aU g‘PmB¶o&
OR
Explain the concept of Investment. Show how is cost of Investment determined with an
example? / B§doñQ>‘|Q> H$s AdYmaUm g‘PmB¶o& CXmhaU g{hV Xem©B¶o {H$ B§doñQ>‘|Q> H$s bmJV H¡$go
{ZYm©[aV H$s OmVr h¡?

Introduction n[aM¶
Investments are made with the object of B§doñQ>‘|Q²>g dh am{e h¡ Omo Am¶ H$‘mZo Ho$ CÔoí¶ go
earning income. They are assets held by an en- {Zdoe H$s OmVr h¢& B§doñQ>‘|Q²>g {S>{dS>|S²>g, ã¶mO VWm
terprise for earning income by way of dividends, {H$am¶o Ho$ Ûmam Am¶ àmá H$aZo Ho$ {bE, H¡${nQ>b E{à{gEeZ
interest and rentals, for capital appreciation or Ho$ {bE ¶m {Zdoe H$aZo dmbo à{Vð>mZ H$mo Aݶ bm^m| Ho$
for other benefits to the investing enterprise. {bE EH$ à{Vð>mZ Ûmam aIr J¶r g§n{Îm¶m§ h¢& ñQ>m°H$-BZ-
Assets as stock-in-trade are not investments. Q´>oS> Ho$ ê$n ‘| aIo J¶o AgoQ²>g B§doñQ>‘|Q²>g Zht h¢&

Investments Classification B§doñQ>‘|Q²>g dJuH$aU
(a) Current Investment: A current invest- (a) H$a§Q> B§doñQ>‘|Q>: EH$ H$a§Q> B§doñQ>‘|Q> EH$ B§doñQ>‘|Q>
ment is intended to be held for not more than
h¡ Omo Eogo B§doñQ>‘|Q> Ho$ H«$¶ Ho$ {XZm§H$ go EH$ df© go H$‘ Ho$
one year from the date of purchase of such in-
{bE aIm OmVm h¡&
vestment.
The carrying amount for current invest- H$a§Q> B§doñQ>‘|Q> ‘| bJZo dmbr am{e bmJV ¶m ’o$¶a
ments is the lower of cost or fair value. d¡ë¶y go H$‘ hmoVr h¡&
Fair value is the amount which a knowl- ’o$¶a d¡ë¶y dh am{e h¡ {Ogo EH$ OmJê$H$ H«o$Vm EH$
edgeable buyer is willing to exchange for an OmJê$H$ {dH«o$Vm Ho$ gmW EH$ AgoQ> Ho$ {bE {d{Z‘¶ H$aZm
asset with a knowledgeable seller. i.e., the MmhVm h¡ AWm©V² {~b, ZmoQ>, ñQ>¡ån Am{X na {bñQ>oS> am{e
amount or value listed on bill, note, stamp, etc. ¶m ‘yë¶&
(b) Non-current investment: A non-current (b) Zm°Z-H$a§Q> B§doñQ>‘|Q>: EH$ Zm°Z-H$a§Q> B§doñQ>‘|Q>
investment is other than a current investment. EH$ H$a§Q> B§doñQ>‘|Q> Ho$ A{V[a³V EH$ B§doñQ>‘|Q> h¡&
Non-current investment is usually carried Zm°Z-H$a§Q> B§doñQ>‘|Q> àm¶… bmJV na g§nÝZ {H$¶o
at cost. However, when there is a decline other OmVo h¢& ¶Ú{n O~ EH$ Zm°Z-H$a§Q> H$s d¡ë¶y ‘| AñWm¶r Ho$
than temporary (i.e. permanent), in the value of
a non-current investment, the carrying amount A{V[a³V (AWm©V² ñWm¶r) {JamdQ> hmoVr h¡ Vmo H¡$[a¨J A‘mC§Q>
is reduced to the amount of declined value. {S>³bmB§S> d¡ë¶y Ho$ A‘mC§Q> VH$ KQ> OmVm h¡&

[264]