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NOTICE INVITING COMMENTS ON THE DRAFT COMPANIES (COST RECORDS AND AUDIT) AMENDMENT RULES, 2017

NOTICE INVITING COMMENTS ON THE DRAFT COMPANIES (COST RECORDS AND AUDIT) AMENDMENT RULES, 2017 - News and Press Release - Dated:- 12-8-2017 - Government of India Ministry of Corporate Affairs NOTICE INVITING COMMENTS ON THE DRAFT COMPANIES (COST RECORDS AND AUDIT) AMENDMENT RULES, 2017 Dated: 11th August, 2017 Pursuant to implementation of IndAS, the Companies (Cost Records and Audit) Rules, 2014 are to be amended to bring parity between financial records and cost records. Accordingly, the Draft .....

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ggestions/comments Name, contact number, email address and postal address of stakeholder Suggestions/comments as under Serial Number Rule/para/clause/ subclause Suggestion/ comments Justification ****** Summary of changes as per Draft Companies (Cost Records and Audit) Amendment Rules, 2017 FORM CRA-1 (Pursuant to rule 5(1) of the Companies (Cost Records and Audit) Rules, 2014) Particulars relating to the Items of Costs to be included in the Books of Accounts Para Existing Revised 1 Material Cos .....

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spares or insurance spares, whether procured with the equipment or subsequently, shall be amortised over a period, not exceeding the useful life of the equipment. In case of companies to which Indian Accounting Standards apply, items such as spare parts, stand-by equipment and servicing equipment are recognised as property, plant and equipment when they meet the definition of property, plant and equipment and depreciated accordingly. Otherwise, such items are classified as inventory. (j) Subsidy .....

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income shall be reduced from the cost of materials in the financial year when such deferred income is recognised as income. 2 Employee Cost (b) Employee Cost shall be ascertained taking into account the gross pay including all allowances payable along with the cost to the employer of all the benefits. Employee Cost shall be ascertained taking into account the gross pay including all allowances payable along with the cost to the employer of all the benefits, including the cost of retirement bene .....

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ment received or receivable with respect to any Employee cost shall be reduced for ascertainment of cost of the cost object to which such amounts are related. In case of companies to which Indian Accounting Standards apply, any such Grants recognized as deferred income shall be reduced from the employee cost in the financial year when such deferred income is recognised as income. 3 Utilities (l) Any Subsidy or Grant or Incentive or any such payment received or receivable with respect to any cost .....

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ised as income. 4 Direct Expenses (h) Any Subsidy or Grant or Incentive or any such payment received or receivable with respect to any Direct Expenses shall be reduced for ascertainment of the cost object to which such amounts are related. Any Subsidy or Grant or Incentive or any such payment received or receivable with respect to any Direct Expenses shall be reduced for ascertainment of the cost object to which such amounts are related. In case of companies to which Indian Accounting Standards .....

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st of reconditioning the spare. The difference between the total of the cost of the new spare and the reconditioning cost and the value of the reconditioned spare should be treated as repairs and maintenance cost. Deleted (o) Subsidy or Grant or Incentive or amount of similar nature received or receivable with respect to repairs and maintenance activity, if any, shall be reduced for ascertainment of the cost object to which such amounts are related. Subsidy or Grant or Incentive or amount of sim .....

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equate records shall be maintained for assets used for production of goods or rendering of services under reference in respect of which depreciation has to be provided for. These records shall, inter-alia, indicate grouping of assets under each good or service, the cost of acquisition of each item of asset including installation charges, date of acquisition and rate of depreciation. Proper and adequate records shall be maintained for assets used for production of goods or rendering of services u .....

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tment by a third party to purchase the asset at the end of its useful life; or ii) there is an active market for the asset and: a) residual value can be determined by reference to that market; and b) it is probable that such a market will exist at the end of the asset s useful life. c) The residual value of a fixed asset shall be considered as zero if the entity is unable to estimate the same with reasonable accuracy. The Depreciation and Amortisation shall be measured as per provisions containe .....

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following factors: i) Expected physical wear and tear; ii) Obsolescence; and iii) Legal or other limits on the use of the asset. Deleted (f) The useful life of an intangible asset that arises from contractual or other legal rights shall not exceed the period of the contractual or other legal rights, but may be shorter depending on the period over which the entity expects to use the asset. Deleted (g) If the contractual or other legal rights are conveyed for a limited term that can be renewed, t .....

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ilable for use. Deleted (i) Depreciation shall be considered from the time when a depreciable asset is first put into use. An asset which is used only when the need arises but is always held ready for use. Example: fire extinguisher, stand by generator, safety equipment shall be considered to be an asset in use. Depreciable assets shall be considered to be put into use when commercial production of goods and services commences. Deleted (k) Depreciation of any addition or extension to an existing .....

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sets shall be excluded from cost of production/service. (o) The method of depreciation used shall reflect the pattern in which the asset s future economic benefits are expected to be consumed by the entity. Deleted (p) An entity can use any of the methods of depreciation to assign depreciable amount of an asset on a systematic basis over its useful life, namely, Straight-line method; Diminishing balance method; and Units of production method etc. Deleted (q) The method of amortisation of intangi .....

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asset was retired or use of that asset was discontinued, shall form part of that asset. The depreciable amount of such spares shall be allocated over the useful life of the asset. Spares purchased specifically for a particular asset, or class of assets, and which would become redundant if that asset or class of asset was retired or use of that asset was discontinued, shall form part of that asset. The depreciable amount of such spares shall be allocated over the useful life of the asset. In case .....

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e considered in case cumulative depreciation exceeds the original cost of the asset, net of residual value. Deleted (v) Where depreciation for an addition of an asset is measured on the basis of the number of days for which the asset was used for the preparation and presentation of financial statements, depreciation of the asset for assigning to cost of object shall be measured in relation to the period, the asset actually utilized. Deleted 7 Overheads (h) Any subsidy or Grant or Incentive or am .....

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erhead cost in the financial year when such deferred income is recognised as income. 8 Administrative Overheads (e) Any Subsidy or Grant or Incentive or any amount of similar nature received or receivable with respect to any Administrative overheads shall be reduced for ascertainment of the cost object to which such amounts are related. Any Subsidy or Grant or Incentive or any amount of similar nature received or receivable with respect to any Administrative overheads shall be reduced for ascert .....

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re the amount of royalty and technical know- how fee. Any Subsidy or Grant or Incentive or any such payment received or receivable with respect to amount of Royalty and Technical Know-how fee shall be reduced to measure the amount of royalty and technical know- how fee. In case of companies to which Indian Accounting Standards apply, any such Grants recognized as deferred income shall be reduced from the royalty and technical know-how fee in the financial year when such deferred income is recogn .....

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anies to which Indian Accounting Standards apply, any such Grants recognized as deferred income shall be reduced from the research and development cost in the financial year when such deferred income is recognised as income. 12 Quality Control Expenses (g) Any Subsidy or Grant or Incentive or any such payment received or receivable with respect to any Quality Control cost shall be reduced for ascertainment of the cost object to which such amounts are related. Any Subsidy or Grant or Incentive or .....

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ed or receivable with respect to Pollution Control activity, if any, shall be reduced for ascertainment of the cost of the cost object to which such amounts are related. Subsidy or Grant or Incentive or amount of similar nature received or receivable with respect to Pollution Control activity, if any, shall be reduced for ascertainment of the cost of the cost object to which such amounts are related. In case of companies to which Indian Accounting Standards apply, any such Grants recognized as d .....

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uced for ascertainment of the cost to which such amounts are related. In case of companies to which Indian Accounting Standards apply, any such Grants recognized as deferred income shall be reduced from the service departmnt cost in the financial year when such deferred income is recognised as income. 15 Packing Expenses (h) Any Subsidy or Grant or Incentive or any such payment received or receivable with respect to packing material shall be reduced for ascertainment of the cost to which such am .....

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ncing charges are costs incurred by an enterprise in connection with the borrowing of fund or other costs which in effect represent payment for the use of non- equity fund. Interest and Financing Charges are interest and other costs incurred by an entity in connection with the financing arrangements which shall be measured in accordance with the provisions contained in Companies Act, 2013 and Rules made thereunder. (e) Subsidy or Grant or Incentive or amount of similar nature received or receiva .....

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t in the financial year when such deferred income is recognised as income. 18 Capacity Determination (a) Capacity shall be determined in terms of units of production or equivalent machine or man hours. Capacity shall be determined in terms of units of production or services or equivalent machine or man hours. 21 By-Products and Joint Products (b) Proper records shall be maintained The cost up to the point of separation of products or services shall be apportioned to joint products or services on .....

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pplied consistently. The basis on which such joint costs are apportioned to different products or services arising from the process shall be indicated in the cost records. Proper records shall be maintained in respect of credits or recoveries from the disposal of joint products or services. Form CRA-3 [Pursuant to Rule 6(4) of the Companies (Cost Records and Audit) Rules, 2014] FORM OF THE COST AUDIT REPORT Annexure to the Cost Audit Report Part-A General Information Level of rounding used in co .....

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her Comprehensive Income, if any Note: Explain the difference, if any, between Turnover as per Annual Accounts and Turnover as per Excise/Service Tax Records. Note: Explain the difference, if any, between Turnover as per Financial Accounts and Turnover as per Excise/Service Tax Records. In case of companies to which Indian Accounting Standards apply, the revenue shall be net of taxes & duties. Part-D PROFIT RECONCILIATION (for the company as a whole) Profit or Loss as per Financial Accounts .....

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