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Valuation of Fixed Assets

In: Business and Management

Submitted By cocoabutter1212
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Comment on valuation of Fixed Assets, Depreciation and Inventories of Asian Paints and Berger Paints:

To comment on these we require the internal and external audit reports and the system and procedures adopted by the company to maintain its records. As per the Annual report given, both the companies are reasonably following all the accounting practices, physical verification and no qualifying remarks by the Auditors on these three items.

Fixed Assets:

Asian Paints: The Company is increasing Fixed Assets base on year on year basis. Net FA is increased from 707 crores to 2012 crores in five year term. The company wants to increase the capacity further in their Haryana Plant. So FA is likely to increase in a phased manner. Replacement of old assets with energy efficient equipment will further increase FA base.

There is no revaluation of fixed assets during the period under review.

Fixed assets of which values are below Rs.5000 are charged to revenue as per income tax guidelines.

Research and Development assets can be debited to revenue according to Income tax provisions where as the company has chosen to capitalize and provide depreciation according to company law.

Impairment assets provision in Profit and Loss account to the tune of about 15.30 crores is again a matter for dispute.

Otherwise Fixed assets are valued as per norms, cost plus taxes and other erection charges and the other permissible expenses.

Berger Paints: The company is also in to expansion spree and the FA base is increasing year on year.
Research and Development assets are charged to Profit and Loss which is acceptable practice only.

Revaluation of some Land and Free Hold building assets has been done during the period under review and the purpose for revaluation is not mentioned in the annual report.

The difference in depreciation due to revaluation is…...

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