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Nupath Foods

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Question; Discuss accounting for investment, clearly indicating the IAS for the disclosure of investment.

Accounting for Investments
Introduction
* This Standard deals with accounting for investments in the financial statements of enterprises and related disclosure requirements.1

This Standard does not deal with:

(a) The bases for recognition of interest, dividends and rentals earned on investments which are covered by Accounting Standard 9 on revenue recognition;

(b) Operating or finance leases;

(c) Investments of retirement benefit plans and life insurance enterprises;

(d) Mutual funds and venture capital funds and/or the related asset management companies, banks and public financial institutions formed under a Central or State Government Act or so declared under the Companies Act, 1956.

Definitions

The following terms are used in this Standard with the meanings assigned:

* Investments are assets held by an enterprise for earning income by way of dividends, interest, and rentals, for capital appreciation, or for other benefits to the investing enterprise. Assets held as stock-in-trade are not ‘investments’.

* A current investment is an investment that is by its nature readily realizable and is intended to be held for not more than one year from the date on which such investment is made.

* A long term investment is an investment other than a current investment.

* An investment property is an investment in land or buildings that are not intended to be occupied substantially for use by, or in the operations of, the investing enterprise.

* Fair value is the amount for which an asset could be exchanged between a knowledgeable, willing buyer and a knowledgeable, willing seller in an arm’s length transaction. Under appropriate circumstances, market value or net realizable value provides an evidence of fair value.

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