This AS deals with classification, determination of cost, disposal and valuation of investment in financial statements.
It refers to the assets held for earning income by way of dividend, interest and rentals, for capital appreciation, or for other benefits.
It does not apply to operating and financing lease, investment under retirement benefit plans, investment in mutual fund and banks and investment held as stock.
Investment is classified as current investment (intended for resale within one year) and long term investment (not intended for resale within one year).
Cost of investment includes purchase price, brokerage, and fee.
Current investment should be valued at lower of cost or fair value and long term as cost.
The disposal of investment difference (profit or loss) is transferred to profit and loss account.
There should be disclosure of the accounting policy for valuation, disposal and reclassification.
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