Final - Asset Accounting Procedure

Asset Accounting Procedure Manual (I)
Bajaj Energy Private Limited 1

Bajaj Energy Private Limited
MODULE ! (I)
A""E# A$$OU%#I%& P'O$EDU'E
MA%UAL
#a(le o) $ontents*
!+, Introduction++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++-
!+,+1 $lassi.cation o) ./ed assets++++++++++++++++++++++++++++++++++++++++++++++++++0
!+,+! $om1onents o) cost o) an asset++++++++++++++++++++++++++++++++++++++++++++++0
!+,+- Determination o) cost o) an asset under certain circumstances 2
!+,+0 #reatment o) s1eci.c e/1enditure incurred during construction3
!+,+2 $a1itali4ation o) assets++++++++++++++++++++++++++++++++++++++++++++++++++++++++++5
!+,+3 De1reciation++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++6
!+17 Esta(lis8ment o) Asset $ontrol aut8orities+++++++++++++++++++++++++++++++17
!+17+1 #8e asset control aut8orities )or t8e various categories o)
assets* 17
!+11 Allotting Asset Identi.cation %um(er+++++++++++++++++++++++++++++++++++++++11
!+11+1 AI% structure+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++11
!+1! $a1italisation o) assets++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++1-
!+1!+1 $a1italisation++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++1-
!+1- IED$ and ID$+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++15
!+1-+1 IED$ (identi.cation 9 Allocation)++++++++++++++++++++++++++++++++++++++++++15
!+10 $a1italisation o) (oug8t out assets++++++++++++++++++++++++++++++++++++++++++!1
!+10+1 $om1onents o) cost+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++!1
!+12 De1reciation Accounting++++++++++++++++++++++++++++++++++++++++++++++++++++++++++!-
!+12+1 #8e (asis )or com1uting de1reciation under t8e various Acts* !-
!+13 #rans)er o) Assets++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++!3
!+13+1 Procedure to (e )ollo:ed )or trans)er o) assets+++++++++++++++++++++!3
!+15 Dis1osal o) Assets+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++!6
!+15+1 Assets dis1osal 1rocedure++++++++++++++++++++++++++++++++++++++++++++++++++++!6
!+16 Maintenance o) ;i/ed Asset 'egister (;A')+++++++++++++++++++++++++++++++!,
!+16+1 #8e ;A' is to (e maintained and u1dated (y t8e ;9A
De1artment++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++!,
!+1, P8ysical veri.cation o) ./ed assets++++++++++++++++++++++++++++++++++++++++++-7
!+1,+1 #8e ./ed assets s8ould (e 18ysically veri.ed 1eriodically+++++-7
!+, Introduction
Bajaj Energy Private Limited !
!+,+1 $lassi.cation o) ./ed assets
2.9.1.1 Fixed assets should be classifed in the following categories:
i) Land Freehold and leasehold
ii) Buildings Factory Building and ther than Factory Building
iii) !lant " #achinery
i$) %ailway &idings " Light %ailways
$) 'eighbridge
$i) Furniture " Fixture
$ii)(ce )*ui+,ent
$iii) -o,+uter .ardware
ix) #otor -ar/ Light 0ehicle " .ea$y 0ehicle
x) 1ir -raft
xii) 2ntangible 1ssets

!+,+! $om1onents o) cost o) an asset
2.9.2.1 3he cost of an ite, of fxed asset should co,+rise of its +urchase4
contract +rice/ including i,+ort duties and other non5refundable taxes or
le$ies and any directly attributable cost of bringing the asset to its wor6ing
condition or for its intended use. 3rade discounts and rebates/ if any/ should
be deducted in arri$ing at the +urchase +rice. 7irectly attributable costs
include the following ite,s:
i) &ite +re+aration
ii) 2nitial deli$ery and handling costs
iii) 2nstallation costs/ such as s+ecial foundations for +lant
i$) !rofessional fees 8fees to architects/ engineers/ etc.)
Bajaj Energy Private Limited -
!+,+- Determination o) cost o) an asset under certain circumstances
Assets ac<uired )or a consolidated 1rice
2.9.9.1 2n case of se$eral fxed assets +urchased for a consolidated +rice/ the total
consideration should be a++ortioned to the $arious assets on a fair basis 8as
deter,ined by co,+etent $aluers)
Assets ac<uired )or consideration ot8er t8an cas8
2.9.9.2 3he cost of the fxed assets ac*uired in exchange for another asset is
usually deter,ined by reference to the fair ,ar6et $alue of the
consideration gi$en. 3he fair ,ar6et $alue of the asset ac*uired ,ay be
considered if that is ,ore clearly e$ident.
2.9.9.9 Fixed assets ac*uired in exchange of shares or other securities in the
enter+rise should be recorded at its fair ,ar6et $alue or the fair ,ar6et
$alue of the securities issued whiche$er is ,ore clearly e$ident+
Assets ac<uired on 8ire 1urc8ase
2.9.9.: Fixed assets ac*uired on hire +urchase should be recorded at their cash
$alue/ which/ if not readily a$ailable/ should be calculated by assu,ing an
a++ro+riate rate of interest. 3hese assets should be shown in the balance
sheet with an a++ro+riate narration to indicate that the enter+rise does not
ha$e the full ownershi+ thereof.
Assets 8eld jointly :it8 ot8ers
2.9.9.; 'here an asset is held <ointly with others/ +ro+ortionate $alue of the
original cost/ accu,ulated de+reciation and net boo6 $alue of the asset are
to be stated in the balance sheet. 1lternati$ely/ the +ro5rata cost of such
<ointly owned assets can be grou+ed together with si,ilar fully owned
assets. 7etails of such <ointly owned assets should be indicated se+arately
in the fxed assets register.
$onstruction o) several assets )or a lum1 sum consideration
2.9.9.= 2n res+ect of +ro<ects under turn6ey contracts $arious assets are
constructed for a lu,+ su, contract $alue. 3he +olicies to be followed in
this res+ect are as under:
2.9.9.> 3he fxed assets should be ca+itali?ed as +er the account heads gi$en in
the -hart of 1ccounts. 3he total contract $alue should be bro6en u+ into the
$arious assets that are being constructed under the contract.
2.9.9.@ 3he brea65u+ of the cost of the contract into the $arious ite,s of assets
being constructed should be obtained fro, the contractor4 su++lier at the
ti,e of fnali?ation of the Letter of award.
2.9.9.9 2n circu,stances where the syste,5wise brea65u+ of the contract $alue is
not a$ailable/ the total cost is to be a++ortioned to the $arious syste,s on
the basis of technical esti,ates 6ee+ing in $iew the +ro<ect cost as
a++ro$ed by the A2 as well as +ast ex+erience of actual cost incurred in
res+ect of the $arious syste,s in si,ilar +ro<ects.
2.9.9.1B 2n case of other contracts co,,on to ,ore than one syste, also the
total contract $alue should be bro6en into the syste,s co$ered under the
contract 8on a si,ilar basis as ,entioned abo$e).
$a1ital e/1enditure not re1resented (y assets
2.9.9.11 2n res+ect of ca+ital ex+enditure incurred/ which is not re+resented
by assets 8e.g. a++roach roads/ di$ersion of roads/ etc)/ the ex+enditure
should be a,orti?ed o$er a +eriod of : years and the sa,e should also be
disclosed as such in the fnancial state,ents.
$om1ensation= re8a(ilitation and ot8er e/1enses relata(le to
land
2.9.9.12 1ny de+osits/ +ay,ents4 liabilities ,ade towards co,+ensation/
rehabilitation and other ex+enses relatable to land in +ossession should be
treated as cost of land.
2.9.9.19 &ite le$eling and grading ex+enditure 8ex+enditure on landsca+ing)
should be added to the cost of the building4 structures built u+ on such land
and should not be added to the cost of the land.
Adjustment to t8e cost o) t8e assets
2.9.9.1: 3he cost of an asset ,ay be subse*uently ad<usted due to any of the
following:
i) 1d<ust,ents arising on +assing of bills 4 ad<ust,ent of bills
ii) C+ward or downward re$ision due to exchange $ariation on loans4
foreign currency liabilities for ac*uiring 4 construction of assets
iii) 2ncidental 4 additional ex+enditure due to reno$ation and
,oderni?ation
2.9.9.1; 3he accounting treat,ent in res+ect of each of the abo$e ite,s has
been discussed subse*uently.
!+,+0 #reatment o) s1eci.c e/1enditure incurred during construction
"urvey and Investigation e/1enses
2.9.:.1 3he ex+enses as incurred for sur$ey and in$estigation i.e. on account of
+ro<ect re+orts/ feasibility studies/ sur$eys/ etc. should be accounted for as
D#iscellaneous ex+ensesD till such ti,e as the ad,inistrati$e a++ro$al of the
+ro<ect is obtained fro, A2. n recei+t of the a++ro$al fro, A2 the
balance on this account should be transferred to the -'2! account and
thereafter ca+itali?ed on co,,issioning of the +lant.
2.9.:.2 3he ex+enses incurred in res+ect of a++ro$ed +ro<ects should be
accounted for as -'2! and subse*uently the closing balance in the -'2!
account should be allocated to the $arious syste,s on a +ro5rata basis.
2.9.:.9 2n case a +ro<ect is abandoned/ the ex+enditure should be written oE in
the year in which the +ro<ect is abandoned.
#ec8nical consultancy
2.9.:.: 3he co,,on costs as incurred on technical consultancy should be
allocated on the syste,s falling within these categories on the basis of the
technical nor,s as +ro$ided by the concerned )2-.
;inancial e/1enses
2.9.:.; 3he fnancing costs relating to deferred credits or to borrowed funds
attributable to construction or ac*uisition of fxed assets for the +eriod u+ to
the co,+letion of construction or ac*uisition of fxed assets are to be
ca+itali?ed along with the asset to which they relate.
2.9.:.= 3he total interest cost incurred during a year 8in the construction +hase)
should be a++ortioned to the -'2! on the basis of the a$erage balance of
-'2! for the year.
$ommissioning e/1enses
2.9.:.> 3he ex+enditure incurred on start5u+ and co,,issioning of the +ro<ect/
including the ex+enditure on trial runs should be ca+itali?ed. 3he sales
re$enue during the +eriod should be deducted fro, the co,,issioning
ex+enses and the net ex+enses should be ca+itali?ed.
2.9.:.@ 3he costs identifable to an asset should be ca+itali?ed with that asset and
the co,,on costs should be allocated on a +ro5rata basis to the $arious
syste,s.
#raining and 'ecruitment and '9D e/1enses
2.9.:.9 )x+enses incurred in res+ect of training and recruit,ent and %"7 should
be charged oE to re$enue.
Administration and ot8er general over8ead e/1enses during
construction 18ase
2.9.:.1B )x+enditure incurred during the construction +eriod should be
ca+itali?ed on a +ro5rata basis to the $arious syste,s in the ratio of
accretion to the -'2!.
2.9.:.11 2n case of +ro<ects which are both under o+eration and construction
+hases/ these ex+enses should be allocated between ca+ital and re$enue in
the ratio of accretion to -'2! and sales 8including electricity duty).
!+,+2 $a1itali4ation o) assets
2.9.;.1 1n asset is to be ca+itali?ed when it is ready to be +ut to use.
2.9.;.2 -a+itali?ation of an asset should be done on the basis of an asset5
co,,issioning certifcate issued by the co,+etent authority.
2.9.;.9 1ll ca+ital ex+enditure 8in res+ect of assets constructed) should be
accounted for through -'2! accounts. n co,,issioning of the assets the
ex+enditure should be transferred to the a++ro+riate fxed assets account.
.owe$er/ bought out assets should be ca+itali?ed directly i.e. without
routing through the -'2! account.
$a1itali4ation o) common assets>systems
2.9.;.: 2n res+ect of the syste,s that are co,,on to ,ore than one generating
unit 8e.g. chi,ney/ cooling towers/ etc) the sa,e should be ca+itali?ed on
the basis of the engineering esti,ates4 assess,ents. 3he co,,on syste,s
are to be co,,issioned with the frst unit.
2.9.;.; in case of any ca+ital ex+enditure incurred subse*uent to the
co,,issioning 8as re*uired for the subse*uent units)/ these ex+enditures
are to be treated as ca+ital additions in the year in which they are
co,,issioned.
2.9.;.= 3he total cost incurred on these syste,s during the diEerent +hases is to
be identifed to the units on the basis of the technical esti,ates
2.9.;.> 3here are a few syste,s which are co,,issioned during the construction
+eriod itself such as townshi+/ te,+orary water su++ly/ +ower su++ly/ o(ce
buildings. 3hese can be ca+itali?ed as and when such syste,s are +ut to
use.
#reatment )or mandatory s1ares
2.9.;.@ #achinery s+ares which are used only in connection with an ite, of fxed
asset and whose use is ex+ected to be irregular should be ca+itali?ed with
the ,ain e*ui+,ent irres+ecti$e of the fact whether such s+ares ha$e been
+rocured initially with the ,ain e*ui+,ent or subse*uently and whether
they ha$e actually been +ut to use or not.
2.9.;.9 2n case these s+are ite,s are +rocured initially the sa,e are to be
ca+itali?ed with eEect fro, the date of ca+itali?ation of the concerned ,ain
e*ui+,ent.
2.9.;.1B 2n case where the s+are ite,s are +rocured subse*uently these
should be ca+itali?ed and a,orti?ed o$er the balance useful life of the ,ain
e*ui+,ent concerned.
Materials used )or construction
2.9.;.11 3he cost incurred for ,aterials +rocured for construction should be
treated as -onstruction stores. 1fter co,,issioning of the concerned asset
the ,aterial in hand should be transferred fro, the -onstruction &tores
account to the 2n$entory account.
!+,+3 De1reciation
2.9.=.1 7e+reciation should be +ro$ided for in the boo6s at the rates as
+rescribed.
2.9.=.2 2n addition to the abo$e/ de+reciation should also be co,+uted at the
rates +rescribed in the -o,+anies 1ct/ 19;= for the +ur+oses of disclosure
in the fnancial state,ents and as +er the 2nco,e5tax 1ct/ 19=1for the
+ur+oses of taxation.
Ot8er 1olicies
2.9.=.9 7e+reciation on assets ac*uired during the year is to be +ro$ided on a
+ro+ortionate basis
2.9.=.: Fo de+reciation is to be +ro$ided on the assets fro, the date of sold4
scra++ed4 declared obsolete during the year.
2.9.=.; 7e+reciation on the additions to fxed assets in the nature of eEect of
foreign exchange Guctuations and rotational4 ca+ital s+ares4 unit asse,blies
is to be +ro$ided +ros+ecti$ely o$er the residual life deter,ined on the basis
of the rate of de+reciation.
2.9.=.= 7e+reciation on the fxed assets during the construction +hase is to be
ca+itali?ed.
'etirement and dis1osal o) assets
2.9.=.> 2te,s of fxed assets that ha$e been retired fro, acti$e use and are held
for dis+osal should be stated in the fnancial state,ents at the lower of their
net boo6 $alue and net reali?able $alue. 1ny ex+ected loss should be
recogni?ed i,,ediately in the +roft and loss state,ent.
2.9.=.@ Fixed assets dis+osed oE should be re,o$ed fro, the fnancial
state,ents. 3he gains or losses arising on the dis+osal are to be recogni?ed
in the +roft and loss account.
&overnment &rants
2.9.=.9 1ny grants recei$ed fro, the go$ern,ent should be initially treated as
-a+ital %eser$e and subse*uently ad<usted as inco,e in the sa,e
+ro+ortion as the de+reciation written oE on the assets ac*uired out of the
grants.
P8ysical veri.cation and maintenance o) ;i/ed Asset 'egister
(;A')
2.9.=.1B 1ll fxed assets +rocured4 constructed should be recorded in the F1%
,aintained for this +ur+ose. 3he F1% should be +eriodically reconciled with
the boo6s of account.
2.9.=.11 3he F1% should contain the +articulars of the asset/ location/ rate of
de+reciation/ and the accu,ulated de+reciation.
2.9.=.12 Fixed assets should be $erifed at regular inter$als and the
discre+ancies obser$ed on such $erifcation should be ad<usted in the boo6s
of account.
Disclosure re<uirements
2.9.=.19 3he following disclosures are to be ,ade in res+ect of fxed assets in
the fnancial state,ents:
Bajaj Energy Private Limited ,
2.9.=.1: Aross and net boo6 $alue of fxed assets at the beginning and end of
the accounting +eriod showing additions/ deletions and other ,o$e,ents of
assets.
2.9.=.1; )x+enditure incurred on account of fxed assets in the course of
construction or ac*uisition
2.9.=.1= 3he a,ount of exchange diEerences ad<usted in the carrying a,ount
of fxed assets during the accounting +eriod.
2.9.=.1> 3he accounting +olicy ado+ted for go$ern,ent grants.
2.9.=.1@ 3he nature and extent of go$ern,ent grants recogni?ed in the
fnancial state,ents/ including grants of non5,onetary assets gi$en at a
concessional rate or free of cost.
2.9.=.19 3he total de+reciation for each class of assets and the related
accu,ulated de+reciation.
2.9.=.2B 3he de+reciation ,ethods used and the de+reciation rates or the
useful li$es of the assets/ if they are diEerent fro, the +rinci+al rates
s+ecifed in the statute go$erning the enter+rise
2.9.=.21 1ny change in the ,ethod of de+reciation ado+ted.
!+17 Esta(lis8ment o) Asset $ontrol aut8orities
For exercising control o$er the assets an asset control authority is to be
established for each category of assets.
!+17+1 #8e asset control aut8orities )or t8e various categories o) assets*
i) Land and Buildings5 .% de+art,ent
ii) Furniture and fxtures/ o(ce e*ui+,ent/ etc5 .% de+art,ent
iii) !lant and ,achinery 5 3echnical de+art,ents concerned
i$) Laboratory " 'or6sho+ e*ui+,ent5 7e+art,ents concerned
$) 0ehicles5 1utobase
$i) -onstruction e*ui+,ent5 1utobase4 3echnical de+art,ent concerned.
$ii)-o,,unication e*ui+,ent5 )7!
$iii) -o,+uters5 )7!4 .% de+art,ent.
ix) .os+ital e*ui+,ent5 -#
x) Auest house4 co,,unity centre4 canteen4 school e*ui+,ent .%
de+art,ent
xi) 7iscarded assets5 &tores
xii)#o$e,ent of any asset should be eEected with the a++ro$als of the
asset control authorities concerned.
2.1B.1.1 3he asset control authorities should ensure the following:
i) 3he asset identifcation nu,ber is +ainted4 indicated on all assets.
ii) 1ny ,o$e,ent/ obsolescence/ da,age/ loss due to theft/ fre or any
other reason/ sale or dis+osal of an asset 8within and outside the
+re,ises of the Cnit)/ are on the basis of duly a++ro$ed orders.
iii) 3he ,o$e,ent/ obsolescence/ da,age/ sale or dis+osal of an asset is
inti,ated to the F"1 7e+tt to u+date the F1%.
i$) 3he diEerences obser$ed/ if any/ on +hysical $erifcation of assets are
reconciled with the user de+art,ent concerned.
!+11 Allotting Asset Identi.cation %um(er
3his +rocess outlines the +rocedure to be followed for allotting an asset
identifcation nu,ber 812F) to ,o$eable assets4 #B1 ite,s. 3he 12F should be
recorded in the F1%.
!+11+1 12F structure
2.11.1.1 3he 12F should be a se$enteen digit al+ha5nu,eric code re+resenting
the following:
Accounting Unit #y1e o) assets Asst
$ontrol
Aut8orit
y
?ear o)
Ac<uisit
ion
"erial
%um(er
Main $ategory "u( $ategory
@@ @@ @@@ @@ @@@@ @@@@
(al18a) (al18a) (al18a) (al18a) (numeri
c)
(numeri
c)
2.11.1.2 n recei+t of #B1 ite,s/ the asset control authorities 81-1s) should
ensure that 12F is allotted to all the in$oiced ite,s and the sa,e is
indicated on the &%0. Finance should release +ay,ents for such ite,s only
after ensuring that 12F has been allotted.
2.11.1.9 3he asset control authorities should ensure the following:
i) 3he 12F is +ainted4 indicated on all assets.
ii) 1 de+art,ental asset control register is ,aintained and the details of
each asset are entered in the register indicating the location and the
na,e of the +erson to who, the asset has been issued.
iii) 2n case of any ,o$e,ent of an asset/ the de+art,ent asset register
is u+dated for change in location or any other change.
2.11.1.: Allocation o) AI%
"+
%
o
Activity Person
'es1onsi
(le
;re<uen
cy
'emar
As
1 %ecei$e the asset along with the
deli$ery docu,ents fro, the
su++lier.
&tores 1s and
when
2 )nter the details of the asset in the
syste,.
2nti,ate the 1-1 concerned of the
recei+t of the asset.
&tores &a,e
day
9 2ns+ect the asset and confr,
acce+tance of the sa,e to &tores.
C+date the 1sset -ontrol %egister.
12F will be generated by the syste,.
1rrange to +aint4indicate the 12F on
the asset.
1-1 &a,e
day
: Aenerate &%0 and forward the &%0
to the F"1 7e+art,ent
)nsure that the 12F is indicated on
the &%0
&tores &a,e
day
; %ecei$e the &%0 and u+date the F1%
)nsure that the 12F is indicated on
the &%0 before release of +ay,ent
as +er the ,anual on !rocure,ent
and &tores 1ccounting
F"1 7e+tt 1s and
when
= !re+are &20 for issue of an asset.
C+date the asset control register
with the details of the +erson to
who, issued and the location
thereof.
1sset
-ontrol
1uthority
1s "
'hen
Bajaj Energy Private Limited 1!
!+1! $a1italisation o) assets
3his +rocess lays down the +rocedure to be followed for ca+italisation of assets
8other than for bought out assets which has been co$ered in +rocess Fo: B;)
Bajaj Energy Private Limited 1-
!+1!+1 $a1italisation
2.12.1.1 3ownshi+ and other infrastructural facilities are to be ca+italised as
and when co,+leted and +ut into ser$ice. 3he assets associated with
generating units are to be ca+italised as and when the generating units
beco,e co,,ercially o+erati$e. 3he criteria for deter,ination of date of
-o,,ercial +eration are brought out at 1++endix 2.
2.12.1.2 3he fxed asset heads against which ca+italisations are to be eEected
ha$e a corres+onding -a+ital 'or65in5!rogress 1ccount code as detailed in
the -hart of accounts. 3he ,odus o+erandi and se*uence for ca+italisation
are set out below:5
"te1BI* Identi)y asset>1acAage cost
2.12.1.9 For constructed assets all direct costs associated with a +articular
+ac6age4 <ob should be identifed with s+ecifc asset and accounted for as
-'2! during construction stage. 1s the classifcation of -'2! in the -hart of
1ccounts is identical to the classifcation of fxed assets there would be no
di(culty in transferring the cost fro, -'2! to fxed assets at the ti,e of
ca+italisation. 3he a,ount to be boo6ed to -'2! shall consist of the
following:
i) 0alue of su++lies recei$ed and acce+ted at site.
ii) Freight insurance/ custo, duty/ rates and taxes.
iii) 0alue of +hysical +rogress of ci$il construction and erection.
i$) #aterial issued on free of cost basis/ to the extent it has been
consu,ed duly ad<usted for return of scra+.
$) -onsultancy fee etc.
2.12.1.: 2n case bills for ,aterials4ser$ices rendered by contractors ha$e not
been recei$ed/ the boo6ing to -'2! account should be ,ade +ro$isionally
on the basis of engineering esti,ates4 assess,ents.
2.12.1.; 2n res+ect of turn6ey contracts i.e. where a nu,ber of +ac6ages are
en$isaged to be executed for a lu,+ su, consideration/ the total contract
$alue should be segregated asset5wise to facilitate ca+italisation. For this
+ur+ose/ a detailed syste, wise brea65u+ of the total cost/ if not readily
a$ailable in the contract docu,ents should be obtained fro, the contractor.
2n circu,stances where the syste,5wise brea6 u+ is not a$ailable fro, the
contractor/ the total cost should be bro6en u+ syste, wise based on the
+ro<ect esti,ates and4or )ngineering esti,ates4assess,ents.
2.12.1.= 3he +rocedure to be ado+ted for obtaining the brea65u+ in such a
case should be as follows:
i) 2dentifcation of each ite, of bill of *uantity with diEerent
syste,s4sub5syste,s to the extent +ossible on actual4 technical
assess,ents and further lin6ed to $arious account codes as +er chart
of accounts.
ii) 2n case entire structural steel4ci$il wor6s4erection wor6s are awarded
on a lu,+ su, basis/ allocation between buildings and foundations
should be done on technical assess,ent. 3he foundation cost should
be further allocated to +lant and ,achinery heads on engineering
esti,ates.
iii) 3he taxes " duties and +rice ad<ust,ent should be allocated on
actual basis.
i$) Freight and insurance should be allocated as +er the +ro+ortion of
freight to the contract cost.
"te1BII* $om1lete t8e :orABinB1rogress accounts
2.12.1.> 3he +ac6age5wise '2! accounts should be co,+leted by
allocation4a++ortion,ent of the following:5
A+ "ite levelling e/1enditure*
2.12.1.@ &ite le$elling ex+enditure 8other than cost of landsca+ing) should be
allocated to the cost of buildings and structures constructed on the land and
not added to the cost of the land. 3he ex+enditure on le$elling/ grading
should be directly related with and added to the cost of +articular buildings
or other structure which stand on each +articular +iece of land. 2n case the
abo$e is not +ractical/ the cost of le$elling ,ay be a++ortioned a,ong the
diEerent buildings and structures standing on the land in the ratio of the
areas of the buildings4structures.
B+ IED$ allocation to :orABinB1rogress+
2.12.1.9 1llocation of 2)7- has been discussed in !rocess no. :.
$+ #ec8nical consultancyBunallocated c8arges
2.12.1.1B 3echnical consultancy charges are being allocated to +ac6ages to the
extent such charges directly relate to a +articular +ac6age. 2t is considered
a++ro+riate to classify the unallocated charges i.e. charges which re,ain to
be allocated after direct identifcation of ex+enses to diEerent +ac6ages/
into the following broad categories and to allocate the sa,e to indi$idual
syste,s falling within each category on the basis of technical nor,s to be
furnished by )ngineers5in5charge :5
$ategories*
i) -i$il wor6s
ii) )lectrical 'or6s
iii) #echanical 'or6s
i$) Aeneral 2te,s
D+ "urvey and investigation e/1enses
2.12.1.11 &"2 ex+enditure of una++ro$ed +ro<ects shall be accounted for and
retained by the unit 8%.H/ 3"-- o(ces/ +ro<ect/ stations) incurring the
ex+enditure and should be accounted for as I&"2 of new +ro<ectsJ. n
a++ro$al of the +ro<ect the cu,ulati$e ex+enditure incurred on this account
should be transferred by the units concerned to the a++ro$ed +ro<ect
through inter unit ad$ices.
2.12.1.12 2n case the +ro<ect is not ta6en u+ then the total ex+enditure should
be transferred to -- through 2C1 by the unit concerned and the sa,e
should be written oE by -- after obtaining a++ro$al of the co,+etent
authority.
2.12.1.19 3hese ex+enses together with further ex+enditure on this account
during +ro<ect execution ha$e to be allocated to $arious syste,s +ro5rata to
closing balance in -'2! 1ccounts.
E+ $ommissioning e/1enses
2.12.1.1: -o,,issioning ex+enses 8net of inco,e fro, sales) are to be shown
in the accounts as a se+arate ite, in the -'2! schedule. .owe$er/ it is
necessary to identify these ex+enses as far as +ossible with the syste,s
and units to which they relate so as to ensure ,axi,u, accuracy in
classifcation of ex+enditure. For exa,+le/ ex+enses directly incurred for
co,,issioning -oal .andling syste,s should be ca+italised with coal
handling +lant and si,ilarly ex+enses directly incurred for co,,issioning of
boiler such as hydraulic testing/ initial fring of boiler etc. should be
classifed with the boiler cost. 1n analysis of the co,,issioning ex+enses
should/ therefore/ be eEected to classify the ex+enses with the indi$idual
+ac6age4units and accordingly costs should be transferred to indi$idual
+ac6age and units. 1ny balance ex+enditure that is not susce+tible to
identifcation should be allocated to $arious syste,s/ +ac6ages and units
+ro5rata to directly identifed co,,issioning ex+enses. 2t should/ howe$er/
be ensured that co,,issioning costs reco$erable fro, contractors/ such as
initial fll of che,icals/ s+ares etc.as +er contract/ are not included in
co,,issioning ex+enses.
2.12.1.1; 'here co,,issioning ex+enses for syste,s other than &A and 3A
are considered negligible/ such ex+enses ,ay be allocated to &A and 3A
+rorata to the ca+ital cost.
;+ Interest during construction (ID$)
2.12.1.1= 1llocation of 27- has been discussed in !rocess no. :
&+ 'eallocation o) costs o) common systems suc8 as 1iling and
)oundation= station
1i1ing= control and 1o:er ca(les to main systems to :8ic8 t8ey
relate+
2.12.1.1> 3here are also co,,on syste,s/ which are either in the nature of
associated ci$il wor6s or e*ui+,ent/ which for,s an integral +art of syste,s
for +ur+ose of classifcation of assets and de+reciation. 3he ob$ious
exa,+les are +iling and foundation/ which are +artly in the nature of
associated ci$il wor6s for &A/ 3A etc.and +artly in the nature of foundation
for su+erstructure of buildings. &i,ilarly/ station +i+ing/ control and +ower
cables are also to be identifed with other o+erating units or syste,s for the
+ur+ose of classifcation of cost in fxed assets account. 2t is necessary to
eEect direct identifcation of costs with indi$idual units or syste,s where$er
+ossible and in other cases cost should be allocated on the basis of
technical esti,ate to be certifed by )ngineer5in5charge.
2.12.1.1@ !lant and ,achinery su+erstructure should be ca+itali?ed as +lant
along with boiler or 3A or other e*ui+,ent with which such structure is
associated. ther structures/ which contain or house +lant and ,achinery/
should be added to the cost of +lant buildings.
2.12.1.19 "te1BIII: nce the +ac6age5wise costs are fnalised then the sa,e
should be allocated to the generating units. 1nalyse the actual cost of the
+ac6age as reGected in -'2! account to identify actual cost of:
i) 2ndi$idual generating units.
ii) &yste,s associated4co,,issioned exclusi$ely with a s+ecifc
generating unit.
iii) -o,,on syste,s initially co,,issioned with the frst generating
unit/ which/ later on/ cater to ,ore than one generating unit. 2n these
cases/ there ,ay be ca+ital additions eEected fro, ti,e to ti,e to
ta6e care of additional re*uire,ents of generating units
co,,issioned subse*uently.
i$) 2f data are not a$ailable for unit5wise identifcation of cost/ it ,ay be
a++ro+riate to ado+t the following ste+s for unit5wise analysis of
$arious ele,ents of costs:
A+ Main E<ui1ment
i) )*ui+,ent cost excluding escalation 8Basic -ost)
-a+itali?ation is to be eEected unit5wise +rorata on tonnage basis.
ii) )rection charges excluding escalation: 3he +ay,ents for erection
wor6 are eEected in ,any cases on tonnage basis and in a few cases
by ,eans of stage +ay,ents. 2n this case also/ it is felt that unit5wise
analysis ,ay be aEected +referably on the basis of actuals. .owe$er/
if this course is not +racticable/ -a+itali?ation should be done on the
basis of erection +rice 8basic +rice) +er tonne unit as s+ecifed in the
contract.
iii) Freight/ 2nsurance and .andling -harges: &ince the *uantu, of cost
,ay not be substantial/ it ,ay not be +racticable to identify the sa,e
unit5wise withing the +ac6age/ this cost should be allocated +rorata
on tonnage basis
i$) )scalation costs and taxes and duties: 3hese costs as recorded in the
ca+ital wor65in5+rogress account4<ob cost cards and are to be
allocated on actual basis.
B+ $ommon systems>E<ui1ments
2.12.1.2B 2n the case of co,,on e*ui+,ent included in indi$idual +ac6age 8i.e.
e*ui+,ents co,,on to ,ore than one generating unit/ for exa,+le oE5line
syste, included in 71&)/ ca+italisation is to be eEected with indi$idual units
to the extent the co,,on e*ui+,ent is co,,issioned with such unit. 3he
balance of e*ui+,ents which are lin6ed with other generating units should
be treated as a ca+ital additions and dealt with as such in the accounting
year in which the indi$idual units concerned are co,,issioned.
2.12.1.21 -osts ha$e to be allocated on the basis of technical nor,s 6ee+ing in
$iew $alue of wor6 done and co,,issioned as included in the wor65in5
+rogress account. 3hough technical nor,s ,ay be the basis for ascertaining
the cost of the +art syste, co,,issioned with indi$idual units/ the ulti,ate
cost of the syste, on co,+letion of +ro<ect has to necessarily reGect the
actual cost as +er boo6s of accounts.
$+ Associated $ivil CorA $ost (e+g+ 1iling9 )oundation)
2.12.1.22 3he cost should be allocated unit5wise +referably on the basis of
actual *uantities 8actual no. of +iles) where$er a$ailable or on the basis of
technical nor,s to be certifed by )ngineer5in5-harge.
!+1- IED$ and ID$
3his +rocess lays down the +rocedure to be followed for identifcation of 2)7-/ 27-
and their allocation to $arious +ro<ects.
!+1-+1 IED$ (identi.cation 9 Allocation)
At $$
2.19.1.1 3he ex+enditure4inco,e of %egional .Hs/ 3"-- (ces/ ins+ection
o(ces and ser$ice units li6e -&)& #uradnagar should be absorbed and
,erged in -or+orate -entre ex+enses. 1s far as +ossible/ the total
ex+enditure4inco,e at -or+orate -entre should be directly identifed with
construction or re$enue acti$ities. For exa,+le/ generation incenti$e
ex+enditure and %"7 ex+enditure are not at all related to any construction
acti$ity and should be directly identifed with re$enue. &i,ilarly construction
incenti$e is directly related to construction of +ro<ects and should in its
entirety for, +art of 2)7-. 3he ex+enses4inco,e/ which cannot be directly
identifed/ should be treated as co,,on ex+enses4inco,e and allocated
between re$enue and ca+ital in the ratio of sales including electricity duty
and annual ca+ital outlay as +er the accounting +olicy. 3he su, of directly
identifed and co,,on ex+enses would be the -- 2)7- for the year/ which
should be allocated to a++ro$ed +ro<ects which are not fully under
o+eration/ +rorata to their annual ca+ital outlay.
At 1rojects
2.19.1.2 2n case of all a++ro$ed +ro<ects/ which are not fully under o+eration/
all site ex+enditure4inco,e should be identifed with construction4 re$enue
acti$ities on the sa,e lines as detailed abo$e/ exce+t for the fact that
co,,on ex+enses should be allocated between re$enue and ca+ital in the
ratio of sales including electricity duty/ and accretions to -'2!. 3he total
ex+enditure which is identifed for ca+itali?ation fro, the sites as well as
ex+enditure allocated fro, -- should be allocated to $arious -'2!
+ac6ages +rorata to +ositi$e accretions to the -'2! during the year. Fo
+ortion of ex+enditure4 inco,e should be ca+itali?ed in the year in which all
the units at a +ro<ect are co,,ercial as at the beginning of the year.
2.19.1.9 2t ,ay be ,entioned that segregation of ex+enses/ which cannot be
directly identifed with construction or re$enue acti$ities/ u+to the date of
ca+itali?ation would be a $ery di(cult exercise which ,ay not be $ery
+ractical also in $iew of the fact that se$eral units ,ay be getting
ca+itali?ed in a year at diEerent +oints of ti,e. #oreo$er the ,ethod of
allocation based on accretion to -'2! and sales itself gi$es weight age to
the +eriod ele,ent both in res+ect of co,,issioned units and -'2! ite,s
while dealing with co,,on ex+enses. 2n $iew of these considerations/
allocation of co,,on ex+enses should be dealt with only on annual basis.
E/1ansion o) Projects
2.19.1.: 'hen a station undergoes ex+ansion/ only the ex+enditure directly
identifed with construction of new units4 ex+ansion acti$ities should be
ca+itali?ed. 2n such units care should be ta6en that no +art of incidental
ex+enditure which would ha$e been incurred e$en if the ex+ansion had not
ta6en +lace gets identifed as 2)7-.
Bajaj Energy Private Limited 1,
Accounting o) IED$
2.19.1.; 3he +ortion of ex+enditure inco,e identifed for ca+italisation should
be debited to account head for 2)7- for the year by credit4debit to account
codes for ex+enditure4 inco,e during construction. -are should be ta6en
that the gross ex+enditure for the year a++earing in the natural heads is not
disturbed so that the sa,e can be shown in its entirety in the !"L account.
3he credit4 debit to ex+enditure4inco,e during construction should be
shown as a deduction fro, the gross ex+enditure4inco,e for the +ortion
identifed for ca+itali?ation. 3he allocation to $arious -'2! +ac6ages should
be routed through 2)7- allocated to -'2! account.
Borro:ing costs
2.19.1.= Borrowing costs are interest and other costs incurred in connection
with the borrowing and include the following:
i) 2nterest
ii) -o,,it,ent charges/ ,anagerJs fee/ arrangerJs fee/ u+front charges
etc.
2.19.1.> 'here a loan has been ta6en for construction4 ac*uisition of a s+ecifc
+ro<ect4asset/ the borrowing cost relating to the +eriod till the asset is ready
for use should be ca+italised as a +art of the cost of the asset. 'here
borrowings ha$e been ,ade which are not related to any s+ecifc
+ro<ect4asset/ the borrowing cost eligible for ca+itali?ation should be
deter,ined by a++lying a ca+italisation rate e*ual to the weighted a$erage
rate of borrowings to the ca+ital ex+enditure on those +ro<ects4assets. 1n
illustration of calculation of interest4borrowing cost to be ca+itali?ed is gi$en
in 1++endix 22.
2.19.1.@ 3he borrowing cost identifed for ca+italisation should be allocated to
$arious -'2! +ac6ages on a yearly basis +rorata to a$erage balance
a++earing in the +ac6ages during the year.
E/c8ange 'ate Dariation (E'D)
Bajaj Energy Private Limited !7
2.19.1.9 )xchange rate $ariation 8)%0) arises as a result of settle,ent during
the year4 translation at the end of the year at closing rates of the
recei$ables4 +ayables in foreign currencies. 3he exchange rate $ariation
relating to ac*uisition of ca+ital assets should be ad<usted in the historical
cost of such assets while that relating to current assets is to be recogni?ed
as an inco,e4ex+enditure in the !roft " Loss account.
2.19.1.1B 1t +ro<ects/ debits for )%0 on borrowings are being recei$ed fro, --
in addition to that arising in their own boo6s as a result of
+ay,ent4translation of liabilities. 3he entire )%0 whether transferred fro,
-- or resulting fro, settle,ent4translation at year5end/ in stationsJ boo6s/
should be initially accounted for in the I)xchange rate $ariation controlK
account.
2.19.1.11 3he +ortion of )%0 identifed for ca+itali?ation should be debited to
the related asset4-'2! account by credit to I)%0 ad<ust,ent 8-a+ital)
accountK while the +ortion relating to !"L account should be debited4
credited to res+ecti$e re$enue heads by credit4 debit to I)%0 ad<ust,ent
8%e$enue)K account. 3he balance a++earing at the year5end in the )%0
ad<ust,ent accounts should be used for disclosure +ur+oses as +er the
re*uire,ent of 1& 11.

2.19.1.12 Accounting Entries*
;or 1ortion identi.ed )or ca1itali4ation
)x+enses4inco,e chargeable to 2)7- 7r
2nco,e during construction 7r
)x+enditure during construction -r
;or allocation o) IED$ to $CIP
2dentifed -'2! +ac6ages 7r
2)7- allocated to -'2! -r
2.19.1.19 %ote: 3he codes for inco,e during construction in B9 series
corres+ond to the codes for inco,e in B series while the codes for
ex+enditure during construction in 9 series corres+onds to the ex+enditure
series in 1 series. .owe$er/ as the ex+enditure to be ca+itali?ed is reduced
fro, the gross ex+enditure/ the ex+enditure during construction will be a
credit balance. 3he inco,e during construction will be debit balance on the
sa,e lines.
!+10 $a1italisation o) (oug8t out assets
3his +rocess lays down the +rocedure to be followed for ca+italisation of bought
out fxed assets.
!+10+1 $om1onents o) cost
2.1:.1.1 3he assets should be ca+italised based on the ac*uisition +rice and
the other costs incurred for bringing the asset in a +osition that it is ready to
use. 2t should be ensured that all the rele$ant costs ha$e been included in
the cost of the asset as +er the accounting +olicy. For instance/
2.1:.1.2 3he cost for land includes the following ele,ents:
i) !urchase +rice of land.
ii) -o,+ensation for ac*uisition of land including structure/ cro+ and
tree.
iii) Legal charges/ sta,+ duty/ etc. incurred for securing title.
i$) -ost of ,easuring land/ in$estigating its titles/ land sur$eys/ land
ac*uisition unit ex+enses/ etc.
$) -osts of de,olition of unwanted structures.
$i) 1ny de+osit4ad$ance for land in res+ect of which either +hysical
+ossession or legal ownershi+ has been obtained.
$ii)%esettle,ent " %e5habilitation and -o,,unity de$elo+,ent
ex+enses directly related to ac*uisition of land.
2.1:.1.9 -ost for building +urchased includes the following ele,ents:
i) !urchase +rice
ii) Legal charges/ sta,+ duty/ etc. incurred for securing a title.
iii) 1ny +ay,ents to tenants 8to cancel the tenancy rights) at the ti,e of
ac*uisition.
i$) %e+airs/ alterations and i,+ro$e,ents to +ut the building in usable
condition.
Bajaj Energy Private Limited !!
$) 1rchitects fees for re5,odelling/ alterations/ and i,+ro$e,ents
before the building is frst +ut to use.
2.1:.1.: 2n case a building is +urchased along with the land at consolidated
+rice/ the +urchase cost should be bifurcated between the land and
building. 2n case the brea6u+ $alue is not readily a$ailable the cost should
be allocated to land and buildings based u+on technical and co,,ercial
a++raisal.
2.1:.1.; 1s the rate of de+reciation on internal electrifcation of buildings is
diEerent fro, the rate of de+reciation on buildings/ the cost of internal
electrifcation of buildings should be accounted for segregated and
accounted for se+arately as furniture " fxtures inline with the co,+anyJs
accounting +olicy.
2.1:.1.= -ost for other ,o$eable assets ac*uired includes the +urchase +rice
and all other costs incurred for ,a6ing the asset ready for use 8e.g.
trans+ortation costs/ installation/ etc.)
Provisional ca1italisation
2.1:.1.> 1t the year5end/ in case assets ha$e been recei$ed but the su++lierJs
bills ha$e not been recei$ed then the asset should be +ro$isionally
ca+italised on the basis of the +urchase order raised for the ite,/ and other
incidental ex+enditure on esti,ated basis.
2.1:.1.@ 1fter recei+t and +rocessing of the su++lierJs bills the necessary
ad<ust,ents should be ,ade to the ca+italised $alue of the asset.
2.1:.1.9 $a1italisation o) (oug8t out assets
"+
%o
Activity Person
'es1onsi
(le
;re<uen
cy
'emarA
s
1 %ecei$e the &%0. )nsure that the
12F is indicated on the &%0.
!rocess the &%0 5 as +er the
,anuals on !rocure,ent "
&tores 1ccounting.
F"1 7e+tt 1s and
when
2 Aenerate a L0 to account for the
assets recei$ed.
F"1 7e+tt &a,e
day
2.1:.1.1B Accounting Entries*
-'2!5Fixed 1ssets 7r
A%42% -%
A%42% 7r
&u++lierJs +ayable 14c -r
Freight +ayable 14c -r
ther charges 14c8s) -r
2nco,e 3ax +ayable/ if a++licable -r
Fixed 1ssets 7r
-'2! -r
Bajaj Energy Private Limited !-
!+12 De1reciation Accounting
3his +rocess lays down the +rocedure to be followed in res+ect of de+reciation.
7e+reciation should be co,+uted as +er the following:
i) )lectricity 8&u++ly) 1ct/ 19:@ 5 for +ro$iding de+reciation in the boo6s
of account
ii) -o,+anies 1ct/ 19;= for disclosure in the boo6s
iii) 2nco,e tax 1ct/ 19=1 5 for inco,e tax +ur+oses
i$) 1ny change in the rates4 ,ethod of co,+uting de+reciation is to be
inti,ated by -or+orate -entre to all the units.
$) 7e+reciation is to be +ro$ided in the boo6s of account at *uarter
ends. 3he de+reciation as +ro$ided in the *uarter5end is to be
re$ersed at the beginning of the next *uarter. 3he de+reciation for
the year shall be calculated at the year5end and +ro$ided for in the
boo6s of account.
!+12+1 #8e (asis )or com1uting de1reciation under t8e various Acts*
Electricity ("u11ly) Act= 1,06
2.1;.1.1 7e+reciation is charged on the straight5line ,ethod to write oE 9BM
of the cost of the asset as +er the rates +rescribed under the 1ct.
2.1;.1.2 2n res+ect of the assets where the rates ha$e not been +rescribed/
de+reciation is to be +ro$ided on straight line ,ethod at the corres+onding
rates as +ro$ided in the 2nco,e 3ax 1ct/ 19=1.
$om1anies Act= 1,23
2.1;.1.9 7e+reciation under the -o,+anies 1ct is +ro$ided on straight5line
,ethod to write oE 9;M of the cost of the asset at the rates as +rescribed in
the 1ct.
2.1;.1.: 2n res+ect of the extra shift allowance/ calculations are to be ,ade for
double4tri+le shift wor6ing in the +ro+ortion in which the nu,ber of days in
the year for which the concerned asset actually wor6s double4tri+le shift/
bears to the nu,ber of days for which the station actually wor6ed during
the year or 2:B days whiche$er is greater.
Income ta/ Act= 1,31
2.1;.1.; 7e+reciation is calculated on the di,inishing balance ,ethod as +er
the rates +rescribed in the 1ct.
De1reciation on s1eci.c items
'enovated and moderni4ed assets
2.1;.1.= 2n case of ex+enditure incurred on %eno$ation and #odernisation
8%"#) the following treat,ent should be followed:
2.1;.1.> 2n case the %"# is li6ely to result in an increase in the life of the
asset/ the useful residual life of the asset should be technically assessed
and de+reciation should be charged +ros+ecti$ely at a rate so that 9BM of
the re$ised gross bloc6 is de+reciated o$er its re$ised useful life. .owe$er/ it
,ust be ensured that the rate so deri$ed is not less than the statutory rate
under the )& 1ct4 rate deri$ed fro, the 23 1ct/ as ,ay be a++licable.
2.1;.1.@ 2n case the %"# ex+enditure results in an increase in the e(ciency of
the asset without aEecting the useful life of the asset/ then the de+reciation
should be charged on a +ros+ecti$e basis on the re$ised gross bloc6 o$er
the re,aining life.
$a1ital s1ares
2.1;.1.9 #achinery s+ares which can be used only in connection with an ite,
of fxed assets and whose use is ex+ected to be regular should be
ca+italised with the fxed asset concerned. 'here the ca+ital s+ares ha$e
been +rocured subse*uent to the ca+italisation of the ,ain e*ui+,ent/ the
cost of such s+ares should be a,ortised o$er the useful residual life of the
related ,ain e*ui+,ent.
$onstruction e<ui1ment
2.1;.1.1B 7e+reciation on the construction e*ui+,ent during the construction
+hase should be ca+italised as a +art of incidental ex+enditure during
construction. 1fter the co,,ence,ent of co,,ercial o+erations of the frst
unit of the +ro<ect the gross bloc6 of such e*ui+,ent should be brought
down to itJs written down $alue i.e. after ad<usting the de+reciation a,ount
+ro$ided during the +eriod of construction. .owe$er/ de+reciation on such
assets should be +ro$ided on the historical $alue of the asset till 9B +ercent
of the original historical cost is written oE.
De1recia(le Assets :8ose 8istorical cost undergoes c8anges
2.1;.1.11 'here the historical cost of a de+reciable asset has undergone a
change due to exchange Guctuations/ ca+italisation of borrowing costs/ +rice
ad<ust,ents/ changes in duties or si,ilar factors/ the un5a,ortised
de+reciable $alue should be a,ortised o$er the residual useful life of the
asset.
Items o) small value
2.1;.1.12 2te,s of +lant and ,achinery with a written down $alue of %s ;/BBB45
or less at the beginning of the year or ite,s of +lant of ,achinery costing
%s. ;/BBB45 or less ac*uired during the year are to be fully de+reciated.
Assets used during construction 1eriod
2.1;.1.19 7e+reciation should be charged in res+ect of assets used during the
construction +eriod 8including construction e*ui+,ent) at the +rescribed
rates.
2.1;.1.1: 3he de+reciation charged during the construction +eriod would also
be ca+italised as a +art of incidental ex+enditure during construction.
!+13 #rans)er o) Assets
!+13+1 Procedure to (e )ollo:ed )or trans)er o) assets+
2.1=.1.1 1ssets of a unit ,ay be transferred within the unit or ,ay be
transferred to other units. 'here an asset is transferred within the unit/ the
1-1 should u+date the 1sset -ontrol %egister with the details of change in
location4 +erson to who, the asset is issued. n recei+t of the re+aired
asset/ F"1 de+art,ent should be inti,ated of the recei+t for u+dation of
the F1%.
2.1=.1.2 3ransfer of an asset outside the unit ,ay ta6e +lace on account of
des+atch to the wor6s of ,anufacturer for re+airs4rectifcation4re+lace,ent
or on account of inter unit transfer on loan or +er,anent basis. 3ransfer of
an asset for re+air +ur+oses is recorded in the 1sset -ontrol %egister by way
of recording the change in location and inti,ation to F"1 de+art,ent.
2.1=.1.9 2nter unit transfer of an asset is aEected through 1sset 3ransfer Fote
813F) and it should be ensured that:
i) the transfer of the asset is a++ro$ed by the co,+etent authority.
ii) all asset transfers are su++orted by an 1sset 3ransfer Fote 813F).
iii) the 13F is forwarded to the transferee unit along with an extract of
the F1% of the asset transferred.
i$) co+y of the 13F is forwarded to F"1 de+art,ent for u+dating the F1%.
$) de+reciation for the year is +ro$ided in the boo6s of the transferee
unit.
$i) the assets transferred are disclosed by the transferor4 transferee
units in a se+arate colu,n 8i.e. 3ransfer in4out) in the Fixed 1sset
schedule annexed to the Final accounts of the concerned unit to
facilitate reconciliation.
E/1enses incurred on t8e dismantling and trans)er o) asset
2.1=.1.: 3he dis,antling charges/ as well as cost of ci$il wor6s and erection
charge for the initial erection on the asset transferred should be written oE
to the re$enue account by the transferor unit
2.1=.1.; 3he erection and trans+ortation charge incurred by the transferee
unit should be ca+italised along with the cost of the asset.
De1reciation
2.1=.1.= 7e+reciation on the transferred asset should be +ro$ided on the
basis of +eriod of use for the whole year 8in which the asset has been
transferred) by the transferee unit irres+ecti$e of the +eriod for which such
asset was actually used by it.
De1artments> sections involved in t8e 1rocess
i) Finance and 1ccounts de+art,ent
ii) Boo6 section
iii) 1sset control authorities
2.1=.1.> #rans)er o) Assets to ot8er units
"+
%
o
Activity Person
'es1onsi
(le
;re<uen
cy
'emar
As
1 #rans)eror Unit
%ecei$e a re*uest for transfer of
assets. %e$iew the re*uest and
ensure that it is duly a++ro$ed.
Aenerate an 13F and forward the
re*uest and 13F for a++ro$als to the
co,+etent authority.
3ransferor
Cnit
-oncerned
1s and
when
2 %e$iew and a++ro$e the re*uest and
13F and forward the sa,e to the
F"1 7e+art,ent
-oncerned
o(cial as
+er 2'1
1s and
when
9 )nsure that the re*uest is duly
a++ro$ed and generate a L042C1.
C+date the F1% with the details of
the 2C1 and the 13F.
Follow the +rocedure as outlined in
the ,anual on Boo6 section for
+re+aration and authorisation of
L042C1
Boo6
&ection/
F"1 7e+tt
&a,e
day
: #rans)eree Unit
%ecei$e the asset fro, -"#
de+art,ent along with the co+ies of
the 13F.
-hec6 that the assets recei$ed are
as +er the 13F.
1sset
control
authority
concerned
1s "
when
; Forward a co+y of the recei+ted 13F
to the F"1 de+art,ent
1sset
control
authority
concerned
1fter
necessar
y
ins+ectio
n
= %ecei$e the following:
recei+ted co+y of the 13F
fro, the asset controlling
authority
a co+y of the 13F with L042C1
and the extract of the F1%
fro, the F " 1 7e+tt of the
transferor unit.
-hec6 that the 13F is duly a++ro$ed.
1ccount for the 2C1 and u+date the
F1% with the rele$ant details. N N
F"1
7e+art,e
nt 5 Boo6
&ection
1s "
when
&a,e
day
> Aenerate a re+ort on assets
transferred out on re+airs not yet
recei$ed bac6 for follow u+ with the
1-1 concerned.
F"1
7e+art,e
nt 5 Boo6s
&ection
Huarterly
Bajaj Energy Private Limited !,
!+15 Dis1osal o) Assets
!+15+1 Assets dis1osal 1rocedure
2.1>.1.1 1ssets should be dis+osed oE only after the necessary a++ro$als ha$e
been obtained fro, the co,+etent authority. 3he ,anner of dis+osal of an
asset should be as +er the guidelines +rescribed in this res+ect.
2.1>.1.2 'here ,aterial ite,s ha$e retired fro, acti$e use and are held for
dis+osal then such ite,s should be stated at the lower of their net boo6
$alue and net reali?able $alue and shown se+arately in the fnancial
state,ents.
2.1>.1.9 1ssets ,ay be dis+osed oE through auction4tendering/ draw of lots
a,ong e,+loyees/ sale to retired e,+loyees/ re+lace,ents through buy
bac6 sche,es etc. !re$alent guidelines as a++licable for each such ,ethod
of dis+osal should be followed.
2.1>.1.: n dis+osal of an asset F1% should be u+dated.
2.1>.1.; Accounting Entries*
i) On Dis1osal )or cas8
-ash4Ban6 7r
1ccu,ulated de+reciation 7r
Loss on dis+osal of fxed assets 7r
!roft on dis+osal of fxed assets -r
Aross Bloc6 -r
ii) On dis1osal t8roug8 (uy (acA sc8emes
Aross Bloc6 8new asset) 7r
1ccu,ulated de+reciation 8dis+osed asset) 7r
Loss on dis+osal of fxed assets 7r
!roft on dis+osal of fxed assets -r
Aross Bloc6 8dis+osed asset) -r
-ash4Ban6 8net diEerence to be +aid) -r
Bajaj Energy Private Limited -7
!+16 Maintenance o) ;i/ed Asset 'egister (;A')
!+16+1 #8e ;A' is to (e maintained and u1dated (y t8e ;9A De1artment+
2.1@.1.1 3he F1% should be ,aintained in a for,at to contain the infor,ation
as re*uired under the -o,+anies 1ct/ 19;=.
2.1@.1.2 3he F1% should be ,aintained asset category5wise and ite, wise.
2.1@.1.9 3he balances 8gross bloc6 and de+reciation) as a++earing in the F1%
should be reconciled on a *uarterly basis with the balances in the Aeneral
Ledger.
2.1@.1.: 3he F1% should be u+dated on:
i) ac*uisition4 co,,issioning of new asset
ii) transfer of an asset based on 1sset 3ransfer Fote 813F)
iii) on retire,ent fro, acti$e use
i$) dis+osal of the asset
$) recei+t of the +hysical $erifcation re+ort
!+1, P8ysical veri.cation o) ./ed assets
!+1,+1 #8e ./ed assets s8ould (e 18ysically veri.ed 1eriodically
2.19.1.1 3he fxed assets should be +hysically $erifed +eriodically and the
discre+ancies noticed therein should be ad<usted in the boo6s of account.
3he F1% should be accordingly u+dated. 2t should be ensured that the fxed
assets at all the locations are $erifed at least once e$ery three years.
2.19.1.2 1 +rogra,,e for carrying out the +hysical $erifcation should be
drawn s+ecifying the category of fxed asset/ the dates and the tea, for
carrying out the $erifcation/ etc. 2t should be ensured that an o(cial/
inde+endent of the asset control authorities concerned should also for, a
+art of the +hysical $erifcation tea,.
2.19.1.9 1++endix 2 +rescribe the +rogra,,e and the authority +rescribed for
su+er$ision of the +hysical $erifcation for $arious asset categories.
2.19.1.: n conclusion of the +hysical $erifcation of the fxed asset a re+ort
should be +re+ared on the discre+ancies obser$ed on the +hysical
$erifcation. 3he re+ort should be sub,itted to the asset control authority
concerned for in$estigation and action.
2.19.1.; 2n res+ect of the assets located at the residential o(ces/ a certifcate
should be obtained fro, the o(cial concerned that the assets are located at
his residential o(ce and are in good wor6ing condition.
2.19.1.= P8ysical veri.cation o) ./ed assets
"+
%
o
Activity Person
'es1onsi
(le
;re<ue
ncy
'emar
As
1 2ssue a circular to all the asset control
authorities for carrying out the
+hysical $erifcation as +er the
schedule. 3he circular should +ro$ide
the following +articulars for the
$erifcation:
O Location
O !ersons res+onsible for carrying out
the $erifcation
O 3he for,at for +re+aration of the
re+ort on +hysical $erifcation
O 7ates and authorities for
sub,ission of the re+orts
O ther docu,ents that also need to
be $erifed i.e. title deeds for land/
registration boo6s of $ehicles etc.
Boo6
&ection
1nnuall
y
2 -arry out the +hysical $erifcation and
+re+are the re+ort as +er the for,at
+ro$ided.
-onsolidate all the +hysical
$erifcation
re+orts and $erify with res+ect to the
0erifcatio
n tea,
1-1
concerned
1nnuall
y
Bajaj Energy Private Limited -!
1sset -ontrol %egister.
!re+are a re+ort on the discre+ancies
obser$ed.
Forward the +hysical $erifcation
re+ort and discre+ancy re+ort duly
co,+leted to the Boo6s &ection.
9 %ecei$e +hysical $erifcation re+ort
and discre+ancy re+ort fro, 1-1s.
!re+are a consolidated state,ent of
the discre+ancies on +hysical
$erifcation.
Forward the re+ort to the co,+etent
authority for a++ro$als for ad<usting
the discre+ancies in fxed assets.
Boo6s
&ection
'ithin
a wee6
of
recei+t
of
re+orts
: Aenerate a L0 for +ro$iding for the
discre+ancies on +hysical $erifcation
after obtaining a++ro$als of the
co,+etent authority.
C+date the F1% with the ad<ust,ents
,ade to the fxed assets.
Boo6s
&ection
'ithin
2 days
$'I#E'IA ;O' DE$LA'I%& $OMME'$IAL OPE'A#IO%
Bajaj Energy Private Limited --
3he criteria for declaring co,,ercial o+eration of a +lant for coal and gas based
units is +ro$ided below:
$oal (ased units
1ll ,ain e*ui+,ent and auxiliary syste,s including fuel oil +lant/ coal handling
+lant/ water treat,ent +lant/ ash dis+osal syste,/ #A% has been co,,issioned to
gi$e ade*uate ca+acity to o+erate the unit.
1ll safety ,easures including segregating units in o+eration fro, units in
construction and fre +rotection syste, ha$e been +ut in to ser$ice.
1ll +er,anent electrical su++ly syste,s including e,ergency su++lies and
instru,entation/ control and +rotection syste,s for o+erating the unit ha$e been
+ut into ser$ice.
3rial o+eration of the unit has been +erfor,ed with the contractor and the trial
o+eration re+ort has been <ointly +re+ared with the contractor and signed without
absol$ing the contractor of his obligations under the contract. 3rial o+eration of the
unit shall be considered successful if a unit has o+erated continuously for 1: days
out of which at least >2 hours should be at full load.
3he unit has been in o+eration for a +eriod of at least 1BBB hours gi$ing
generation of not less than 2;BB P'.4P'4Qear and shall co$er the whole range of
o+eration including full load for a ,ini,u, +eriod of >2 hours.
2n case so,e ,a<or shortco,ings ha$e been noticed because of which it had not
been +ossible to carry out the trial o+erations of the unit as gi$en abo$e or to run
the unit on stable load in $iew of force ,a<eure conditions such as non5a$ailability
of coal/ non5co,+letion of #A% or other sub5syste,s/ lac6 of syste, de,and and
reduction in generation i,+osed by %)BJs/ etc. the +eriod of Isix ,onths fro, the
date of synchronising or four ,onths fro, the date of synchroni?ing after bearing
ins+ection whiche$er is earlierK could be extended.
)xtension shall be granted by the -#7 on initiation of +ro+osal by the A# 8!ro<ect)
before six ,onths after unit synchronisation.
&as (ased units
2nitial o+eration wherein the co,+lete e*ui+,ent has o+erated together with sub5
syste,s and su++orting e*ui+,ent as a co,+lete +lant has been carried out.
1ll +er,anent electric su++ly including e,ergency su++lies and instru,entation/
control and +rotection syste,s for o+erating the unit has been +ut into ser$ice.
1ll safety ,easures including segregating units in o+eration fro, units under
construction and fre +rotection syste, ha$e been +ut in to ser$ice.
3rial o+eration of the unit has been +erfor,ed with the contractor and trial
o+eration re+ort has been <ointly +re+ared with the contractor and signed without
absol$ing the contractor of his obligations under the contract. 3rial o+eration of the
unit shall be considered successful if a unit has o+erated for 1: days continuously
out of which >2 hours shall be continuous o+eration in full load.
1fter successful o+eration of trial o+eration/ a ti,e +eriod not ,ore than 9B days
for gas turbine shall be granted to co,+lete the ,inor left o$er <obs and to +er,it
ade*uate debugging of teething +roble,s and unit shall be declared co,,ercial
i,,ediately after the +roble,s are attended to.
)$en if it had not been +ossible to fulfll the conditions as ,entioned abo$e/ the
unit shall be dee,ed to ha$e been +laced under co,,ercial o+eration after a
+eriod not exceeding 2 ,onths fro, the date of synchroni?ation.
2n case so,e ,a<or shortco,ings ha$e been noticed because of which it has not
been +ossible to carry out the trial o+eration of the unit as gi$en abo$e to run the
unit on a sustained basis in $iew of force ,a<eure conditions such as non5
a$ailability of gas/ lac6 of syste, de,and and reduction in generation as i,+osed
by %)Bs/ etc. the +eriod as ,entioned abo$e could be extended. )xtension shall
be granted by the -#7 on initiation of the +ro+osal by the A# 8!ro<ect) before 2
,onths after unit synchronisation.
For stea, turbines of co,bined cycle/ the +rocedures for declaring co,,ercial
o+eration shall be sa,e as ,entioned abo$e for coal stations/ to the extent
a++licable.
"+
%
o
$ategory Program )or veri.cation
1 Land
0erify land title deeds e$ery year.
-arry out a sur$ey to identify the +hysical
boundaries of the land with reference to
sur$ey nu,bers and ,a+ +lans and $erify
the a++roxi,ate area of land.
)nsure that +hysical +ossession of the land is with
F3!-. 2n case of ad$erse +ossession/ *uantify such
land.
2 Building 0erify the
N !hysical existence
N 3itle deeds
9 !lant "
,achinery
)nsure that the +lant " ,achinery are in use and
in wor6ing order
: Furniture "
fxtures
)nsure
N the +hysical existence of the assets
N assets are in use and in good wor6ing condition
; (ce e*ui+,ent )nsure
N the +hysical existence of the assets
N assets are in use and in good wor6ing condition
= 0ehicles
)nsure the +hysical existence of the $ehicles
-hec6 the registration boo6s of all the
$ehicles for clean title.
> -a+italised
s+ares
)nsure the +hysical existence
s+ares are in good wor6ing condition
@ -onstruction
)*ui+,ent
assets are in use and in good wor6ing
condition
9 -o,,unication
)*ui+,ent
condition
1B -o,+uters )nsure the +hysical existence
condition
11 .os+ital
e*ui+,ent
condition
12 3ownshi+4 guest
house4
co,,unity
centre4 canteen4
school
e*ui+,ent
condition
Asset $ontrol 'egisterB A$A Cise
-ategory4 &ub5 -ategory
&l
.
F
o.
12F &20
%eference
1sset 7etails Locatio
n
!erson to who,
issued
1sset
return
details
Fo. 7at
e
7escri+ti
on
&u++lie
r
),+loy
ee Fo.
Fa,e
;I@ED A""E# 'E&I"#E'B LA%D
!
ar
ti
c
ul
er
s
Qe
ar
&ur$
ey
no.
7ate
of
1c*ui
sition -ost 8%s)
1ddition to
$alue
1,ortisation %
e
,
ar
6s
2niti
al
de+
osit
Le
ga
l
Fe
es
&ur$e
y
Fees
t
h
e
r
s
3ot
al
Qe
ar
1,ou
nt
8%s)
Fo
.
of
ye
ar
s
of
le
as
e
Qe
ar
1
,
ou
nt
8%
s)
'
7
0
8
%
s)
'e1ort on P8ysical Deri.cation
1-1
7ate
7etails of
1ssets
Huantity as +er 7iscre+anc
y
F1%
%eferen
ce
Location %e,ar6
s
7escri+t
ion
12F F1% !hysical
$erifcatio
n
1s
+er
F1%
1s
+er
!.0
(cial carrying out the $erifcation
8Fa,e " &ignature)
7ate of $erifcation
1++ro$ed by:

Final - Asset Accounting Procedure

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Final - Asset Accounting Procedure

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Asset Accounting Procedure Manual (I)

Bajaj Energy Private Limited 1

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