TMI BlogForm in which Cost Records shall be maintainedX X X X Extracts X X X X X X X X Extracts X X X X ..... duction but excluding share of other administrative overheads, finance cost and marketing overheads. (e) Spare parts shall be recognised as property, plant and equipment when they meet the definition of property, plant and equipment and depreciated accordingly. Otherwise, such items shall be classified as inventory. (f) Normal loss or spoilage of material prior to reaching the factory or at places where the services are provided shall be absorbed in the cost of balance materials net of amounts recoverable from suppliers, insurers, carriers or recoveries from disposal. (g) Losses due to shrinkage or evaporation and gain due to elongation or absorption of moisture etc., before the material is received shall be absorbed in material cost to the extent they are normal, with corresponding adjustment in the quantity. (h) The forex component of imported material cost shall be converted at the rate on the date of the transaction. Any subsequent change in the exchange rate till payment or otherwise shall not form part of the material cost. (i) Any demurrage or detention charges, or penalty levied by transport or other authorities shall not form part of the cost of materials. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses and assigned directly to the cost object. (u) The cost of indirect materials shall be assigned to the various cost objects based on a suitable basis such as actual usage or technical norms or a similar identifiable measure. (v) The cost of materials like catalysts, dies, tools, moulds, patterns etc. which are relatable to production over a period of time shall be amortised over the production units benefited by such cost. (w) The cost of indirect material with life exceeding one year shall be included in cost over the useful life of the material. 2. Employee Cost.- (a) Proper records shall be maintained in respect of employee costs in such a manner as to enable the company to book these expenses cost centre wise or department wise with reference to goods or services under reference and to furnish necessary particulars. Where the employees work in such a manner that it is not possible to identify them with any specific cost centre or service centre or department, the employees cost shall be apportioned to the cost centre or service centres or departments on equitable and reasonable basis and applied consistently. (b) Employee Cost shall be ascertained ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the employee towards any benefit provided, namely, housing shall be reduced from the employee cost. (n) Any change in the cost accounting principles applied for the determination of the employee cost should be made only if it is required by law or a change would result in a more appropriate preparation or presentation of cost statements of an enterprise. (o) Where the employee services are traceable to a cost object, such employees' cost shall be assigned to the cost object on the basis such as time consumed or number of employees engaged or other related basis or similar identifiable measure. (p) While determining whether a particular employee cost is chargeable to a separate cost object, the principle of materiality shall be adhered to. (q) Where the employee costs are not directly traceable to the cost object, the same shall be assigned on suitable basis like estimates of time based on time study. (r) The amortised separation costs related to voluntary retirement, retrenchment, and termination or other related matters for the period shall be treated as indirect cost and assigned to the cost objects in an appropriate manner provided that unamortised amount rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost of delivery of utilities up to the point of consumption. (j) Cost of utilities shall not include imputed costs. (k) Where cost of utilities is accounted at standard cost, the price variances related to utilities shall be treated as part of cost of utilities and the portion of usage variances due to normal reasons shall be treated as part of cost of utilities. Usage variances due to abnormal reasons shall be treated as part of abnormal cost. (l) Subsidy or grant or incentive and any such payment received or receivable with respect to any cost of utilities shall be reduced from cost of the cost object in the financial year when such subsidy or grant or incentive and any such payment is recognised as income. (m) The cost of production and distribution of utilities shall be determined based on the normal capacity or actual capacity utilisation whichever is higher and unabsorbed cost, if any, shall be treated as abnormal cost. Cost of a stand-by utility shall include the committed costs of maintaining such a utility. (n) Any abnormal cost where it is material and quantifiable shall not form part of the cost of utilities. (o) Penalties, damages paid to statutory aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (h) Subsidy or grant or incentive and any such payment received or receivable with respect to any direct expenses shall be reduced from cost of the cost object in the financial year when such subsidy or grant or incentive and any such payment is recognised as income. (i) Any abnormal portion of the direct expenses where it is material and quantifiable shall not form part of the direct expenses. (j) Penalties, damages paid to statutory authorities or other third parties shall not form part of the direct expenses. (k) Credits or recoveries relating to the direct expenses, material and quantifiable, shall be deducted to arrive at the net direct expenses. (l) Any change in the cost accounting principles applied for the measurement of the direct expenses should be made only if, it is required by law or a change would result in a more appropriate preparation or presentation of cost statements of an organisation. (m) Direct expenses that are directly traceable to the cost object shall be assigned to that cost object. 5. Repairs and Maintenance.- (a) Proper records showing the expenditure incurred by the workshop, tool room and on repairs and maintenance in the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lude imputed costs. (m) Price variances related to repairs and maintenance, where standard costs are in use, shall be treated as part of repairs and maintenance cost. The portion of usage variances attributable to normal reasons shall be treated as part of repairs and maintenance cost. Usage variances attributable to abnormal reasons shall be excluded from repairs and maintenance cost. (n) Subsidy or grant or incentive and any such payment received or receivable with respect to repairs and maintenance activity shall be reduced from cost of the cost object in the financial year when such subsidy or grant or incentive and any such payment is recognised as income. (o) Any repairs and maintenance cost resulting from some abnormal circumstances, namely, major fire, explosions, flood and similar events, if material and quantifiable, shall not form part of the repairs and maintenance cost. (p) Fines, penalties, damages and similar levies paid to statutory authorities or other third parties shall not form part of the repairs and maintenance cost. (q) Credits or recoveries relating to the repairs and maintenance activity, material and quantifiable, shall be deducted to arrive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment and depreciated accordingly. Otherwise, such items shall be classified as inventory. (f) Depreciation shall be traced to the cost object to the extent economically feasible. (g) Where the depreciation is not directly traceable to cost object, it shall be assigned based on either of the following two principles; namely:- i) Cause and Effect - Cause is the process or operation or activity and effect is the incurrence of cost and ii) Benefits received - overheads are to be apportioned to the various cost objects in proportion to the benefits received by them. 7. Overheads.- (a) Proper records shall be maintained for various items of indirect expenses comprising overheads pertaining to goods or services under reference. These expenses shall be analysed, classified and grouped according to functions. (b) Overheads representing procurement of resources shall be determined at invoice or agreed price including duties and taxes, and other expenditure directly attributable thereto net of discounts (other than cash discounts), taxes and duties refundable or to be credited. (c) Overheads other than those referred to above shall be determined on the basis of cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Effect - Cause is the process or operation or activity and effect is the incurrence of cost and (2) Benefits received overheads are to be apportioned to the various cost objects in proportion to the benefits received by them. (o) The variable production overheads shall be absorbed to products or services based on actual capacity utilisation. (p) The fixed production overheads shall be absorbed based on the normal capacity. 3 [ (q) In case of leased assets, if the lease is an operating lease, the entire rentals shall be included in the respective overheads. If the lease is a financial lease, the finance cost portion shall be segregated and treated as part of finance costs. (r) Selling and Distribution Overheads, the benefits of which are expected to be derived over a long period, shall be amortized on a rational Administrative Overheads basis. (s) Any demurrage or detention charges or penalty levied by the transportation or other authorities in respect of distribution activity shall not form part of Selling and Distribution Overheads. ] 8. 4 [ **** ] 9. Transportation Cost.- (a) Proper reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proper records for basis of apportionment shall be maintained. 5 [ (k) Records for transportation costs for exempted goods, taxable goods cleared for export shall be maintained separately. ] (l) Separate records of cost for mode of transportation other than road like ship or air are to be maintained, which shall be included in total cost of transportation. (m) Inward transportation costs shall form the part of the cost of procurement of materials which are to be identified for proper allocation or apportionment to the materials or products. (n) Outward transportation cost shall form the part of the cost of sale and shall be allocated or apportioned to the materials and goods on a suitable basis. (o) The following basis shall be used, in order of priority, for apportionment of outward transportation cost depending upon the nature of products, unit of measurement followed and type of transport used, namely . i) Weight; ii) Volume of goods; iii) Tonne-Km; iv) Unit or Equivalent unit; v) Value of goods; vi) Per cent. of usage of space. (p) Once a basis of apportionment is adopted, the same shall be followed consistently. (q) For de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les value. (i) The amount of royalty fee paid for mining rights shall form part of the cost of material. (j) The amount of royalty and technical know-how fee shall be assigned on the nature or purpose of such fee. The amount of royalty and technical know-how fee related to product or process know how shall be treated as cost of production; if it is related to trademarks or brands shall be treated as cost of sales. 11. Research and Development Expenses.- (a) Research and development costs shall include all the costs that are directly traceable to research or development activities or that can be assigned to research and development activities strictly on the basis of a) cause and effect or b) benefits received. Such costs shall include the following elements, namely:- i. The cost of materials and services consumed in research and development activities; ii. Cost of bought out materials and hired services as per invoice or agreed price including duties and taxes directly attributable thereto net of trade discounts, rebates, taxes and duties refundable or to be credited; iii. The salaries, wages and other related costs of personnel engaged in research and develo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inues for more than one accounting period, the cost of the same shall be accumulated and amortised over the estimated period of use of the improved process or estimated period over which the improved product will be produced by the entity after the commencement of commercial production, as the case may be, if the improved process or product is distinctly different from the existing process or product and the product is marketed as a new product. The amount allocated to a particular period shall be included in the cost of production of that period. If the expenditure is only to improve the quality of the existing product or minor modifications in attributes, the principle shall not be applied. (j) Development costs attributable to a saleable service namely; providing technical know-how to outside parties shall be accumulated separately and treated as cost of providing the service. 12. Quality Control Expenses.- (a) Adequate records shall be maintained to indicate the expenses incurred in respect of quality control department or cost centre or service centre for goods or services under reference. Where these services are also utilised for other goods or services of the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the various cost objects in proportion to the benefits received by them. 13. Pollution Control Expenses.- (a) Adequate records shall be maintained to indicate the expenses incurred in respect of pollution control. The basis of apportionment to goods or services under reference and to other goods or services shall be on equitable and reasonable basis and applied consistently. (b) Pollution Control costs shall be the aggregate of direct and indirect cost relating to Pollution Control activity. Direct cost shall include the cost of materials, consumable stores, spares, manpower, equipment usage, utilities, resources for testing and certification and other identifiable resources consumed in activities such as waste processing, disposal, remediation and others. Indirect cost shall include the cost of resources common to various pollution control activities such as pollution control registration and such like expenses. (c) Costs of pollution control which are internal to the entity should be accounted for when incurred. They should be measured at the historical cost of resources consumed. (d) Future remediation or disposal costs which are expected to be incurred with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of pollution control costs. (n) Pollution control costs shall not include imputed costs. (o) Price variances related to pollution control, where standard costs are in use, shall be treated as part of pollution control cost. The portion of usage variances attributable to normal reasons shall be treated as part of pollution control cost. Usage variances attributable to abnormal reasons shall be excluded from pollution control cost. (p) Subsidy or grant or incentive and any such payment received or receivable with respect to pollution control activity shall be reduced from cost of the cost object in the financial year when such subsidy or grant or incentive and any such payment is recognised as income. (q) Any pollution control cost resulting from abnormal circumstances, if material and quantifiable, shall not form part of the pollution control cost. (r) Fines, penalties, damages and similar levies paid to statutory authorities or other third parties shall not form part of the pollution control cost. (s) Credits or recoveries relating to the pollution control activity, material and quantifiable, shall be deducted to arrive at the net pollution control cost. (t) R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment usage, utilities, and other resources used in such service. (e) Cost of other resources shall include related overheads. (f) Cost of services rendered by contractors within the facilities of the entity shall include charges payable to the contractor and cost of materials, consumable stores, spares, manpower, equipment usage, utilities, and other resources provided to the contractors for such services. (g) Cost of services rendered by contractors at their premises shall be determined at invoice or agreed price including duties and taxes, and other expenditure directly attributable thereto net of discounts (other than cash discount), taxes and duties refundable or to be credited. This cost shall also include the cost of resources provided to the contractors. (h) Cost of services for the purpose of inter unit transfers shall also include distribution costs incurred for such transfers. (i) Cost of services for the purpose of inter-company transfers shall also include distribution cost incurred for such transfers and administrative overheads. (j) Cost of services rendered to outside parties shall also include distribution cost incurred for such transfers, administ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The parameter shall be equitable, reasonable and consistent. 15. Packing Expenses.- (a) Proper records shall be maintained separately for domestic and export packing showing the quantity and cost of various packing materials and other expenses incurred on primary or secondary packing indicating the basis of valuation. (b) The packing material receipts should be valued at purchase price including duties and taxes, freight inwards, insurance, and other expenditure directly attributable to procurement (net of trade discounts, rebates, taxes and duties refundable or to be credited) that can be quantified at the time of acquisition. (c) Finance costs directly incurred in connection with the acquisition of packing material shall not form part of packing material cost. (d) Self-manufactured packing materials shall be valued including direct material cost, direct employee cost, direct expenses, job charges, factory overheads including share of administrative overheads comprising factory management and administration and share of research and development cost incurred for development and improvement of existing process or product. (e) Normal loss or spoilage of packing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) The packing material cost of reusable packing shall be assigned to the cost object taking into account the number of times or the period over which it is expected to be reused. (s) Cost of primary packing materials shall form part of the cost of production. (t) Cost of secondary packing materials shall form part of distribution overheads. 16. Finance Costs.- (a) Finance costs are interest and other costs incurred by an entity in connection with the financing arrangements and shall be measured in accordance with the accounting standards applicable for the time being in force. (b) Finance costs incurred shall be identified for- i) acquisition or construction or production of qualifying assets including fixed assets; and ii) Other finance costs for production of goods or operations or services rendered which cannot be classified as qualifying assets. (c) Finance costs directly attributable to the acquisition or construction or production of a qualifying asset shall be included in the cost of the asset. (d) Finance costs shall not include imputed costs. (e) Subsidy or grant or incentive and any such payment received or receivable with respect to financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al capacity shall be determined vis-a-vis installed capacity after carrying out adjustments for: i) Holidays, normal shut down days and normal idle time; ii) Normal time lost in batch change over; iii) Time lost due to preventive maintenance and normal break downs of equipments; iv) Loss in efficiency due to ageing of the equipment; or v) Number of shifts (e) Capacity utilisation is the actual production measured as a per cent. of installed capacity. 19. Work-in-Progress and Finished Stock.- The method followed for determining the cost of work-in-progress and finished stock of the goods and for services under delivery or in-process shall be appropriate and shall be indicated in the cost records so as to reveal the cost element that have been taken into account in such computation. All conversion costs incurred in bringing the inventories to their present location and condition shall be taken into account while computing the cost of work-in-progress and finished stock. The method adopted for determining the cost of work-in progress and finished goods shall be followed consistently. 20. Captive Consumption.- If the goods or services under reference a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny. The variations, if any, shall be clearly indicated and explained. 24. Related Party Transactions.- (a) Related party means related party as defined under clause 76 of section 2 of the Companies Act, 2013 (18 of 2013). (b) Normal price means price charged for comparable and similar products in the ordinary course of trade and commerce where the price charged is the sole consideration of sale and such sale is not made to a related party. Normal price can be construed to be a price at which two unrelated and non-desperate parties would agree to a transaction and where such transaction is not clouded due to the proximity of the parties to the transaction and free from influence though the parties may have shared interest. (c) The basis adopted to determine normal price shall be classified as under: i) Comparable uncontrolled price method; ii) Resale price method; iii) Cost plus method; iv) Profit split method; v) Transactional net margin method; or vi) Any other method, to be specified. (d) In respect of related party transactions or supplies made or services rendered by a company to a company termed related party relationship and vice-a-ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer. In case of services, details of domestic delivery or sales at control price, domestic delivery or sales at market price, export delivery or sales under advance license, export delivery or sales under other obligations, export delivery or sales under market price, and delivery or sales to related party or inter unit transfer. Such details shall be maintained separately for each plant or unit wise or service centre wise for total as well as per unit sales realisation. 28. Cost Statements.- 6 [ (a) Cost statements (monthly, quarterly and annually) showing quantitative information in respect of each goods or service under reference shall be prepared showing details of available capacity, actual production, production as per excise records, production as per GST records, capacity utilisation (in-house), stock purchased for trading, stock and other adjustments, quantity available for sale, wastage and actual sale, total quantity of outward supplies as per cost records and total outward supplies as per GST records during current financial year and previous year. ] (b) Such statements shall also include details in respect of all major items of costs cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch as raw material, process materials, packing materials, consumables, stores, machinery spares, chemicals, fuels, finished goods and fixed assets etc. Reasons for shortages or surplus arising out of such verifications and the method followed for adjusting the same in the cost of the goods or services shall be indicated in the records;] 2 [ 31. Unit of Measurement (UOM). The Unit of Measurement (UOM) for each Customs Tariff Act Heading, wherever applicable, shall be the same as provided for in the Customs Tariff Act, 1975 (51 of 1975) corresponding to that particular Customs Tariff Act Heading. ] ******************** Notes:- 1. Substituted vide F. No. 1/40/2013-CL-V - Dated 07-12-2017, before it was read as, Form CRA-1 [Pursuant to Rule 5(1) of the companies (cost records and audit) rules, 2014] Form in which Cost Records shall be maintained PARTICULARS RELATING TO THE ITEMS OF COSTS TO BE INCLUDED IN THE BOOKS OF ACCOUNTS: 1. INPUT MATERIAL(S)/SERVICE(S): (1) Proper records shall be maintained showing separately all receipts, issues and balances both in quantities and cost of each item of raw material/input serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctured, bought out components/ bought out services, sub-assemblies, accessories, semi-finished goods, consumable stores, spares and other indirect materials/services shall be identified with the process wise production of goods/rendering of services. (5) Proper records shall be maintained indicating the quantity as well as value of recoveries at different stages/processes having significant value in relation to cost of material/service. In case the recoveries are not reused in the process and are sold/rendered or disposed of without further processing/rendering, the realisation from such sales shall be recorded and adjusted against the process concerned. In case further processing/augmentation is necessary to make the recoveries usable or saleable, as the case may be, proper records of the cost involved for such further processing/augmentation shall be maintained. If such processing/augmentation is done by any outside agency, proper records to show the quantity sent for processing/augmentation, quantity received back after processing/augmentation and cost incurred thereon shall be maintained. The net realization, if any, shall be adjusted against the major process relating to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other benefits of the nature of CENVAT/Service Tax credit, are available on any item of material/service, the cost of such material/service shall be shown after adjusting such credit or benefits. (11) If any of the input materials/services is processed through an outside party, proper records shall be maintained for the quantity sent for processing, quantity received after processing, balance quantity of material/service, losses and wastage of material/service during processing, by-products recovered, if any, and the cost involved in processing/rendering of service. 2. SALARIES AND WAGES: (1) Proper records shall be maintained to show the attendance and earnings of all employees assigned to the cost centres or departments and the work on which they are employed. The records shall also indicate the following separately for each cost centre or department: (a) piece rate wages (wherever applicable); (b) incentive wages, either individually or collectively as production bonus or under any other scheme based on output; (c) overtime wages; (d) earnings of casual or contractual labour; (e) bonus or gratuity, statutory as well as other; (f) contribution to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s purchased, proper records showing the delivered cost including all direct charges shall be maintained for the quantity and value of each utility purchased. (3) Where a utility is produced and supplied by any other unit of the company or any related party, proper records shall be maintained to assess cost and the quantity of the utility so procured. (4) The cost of utility, if any, supplied to any other unit(s) of the company or any related party, shall be calculated on equitable and reasonable basis and applied consistently. (5) The cost of utility allocated/apportioned to the cost centers and further to the individual goods/services shall be on equitable and reasonable basis and applied consistently. (6) Where any utility is one of the major inputs to the raw material used in production or manufacture of any of the goods/services under reference, such direct utility shall be included in the cost of such raw material/input service and shown accordingly. (7) Proper records indicating any subsidy, grant/incentive, credits, recoveries, abnormal costs, penalties or damages paid etc. in respect of utilities shall be maintained. (8) The records shall also indicate the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from which benefit is likely to accrue for more than one financial year shall be shown separately and absorbed in the cost over the period for which such benefits are expected to accrue on equitable and reasonable basis and applied consistently. Method of accounting along with the basis of allocation of such costs shall also be clearly indicated in cost records. 6. FIXED ASSETS, DEPRECIATION AND LEASE CHARGES: (1) Proper and adequate records shall be maintained for assets used for production of goods/rendering of services under reference in respect of which depreciation has to be provided for. These records shall, interalia, indicate grouping of assets under each good/service, the cost of acquisition of each item of asset including installation charges, date of acquisition and rate of depreciation. (2) Those records which enable to identify and/or allocate gross fixed assets, accumulated depreciation up to the year and net fixed assets under the heads; land and building, plant and machinery, furniture and fixtures etc. employed for goods/services under reference shall be maintained. The basis of apportionment of common assets to the goods/services under reference shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses shall be first segregated and charged to the relevant goods/services in the first instance and thereafter the residual expenses under the above categories of overheads shall be apportioned on equitable and reasonable basis and applied consistently. The overheads chargeable to capital works shall be indicated separately in the cost records. The basis of apportionment or absorption of overheads to the cost centres or departments and the goods/services shall be indicated in the cost records. The records shall be maintained in such a manner as to indicate the details of works, administration, selling and distribution overheads, H.O. expenses etc. 8. ROYALTY AND TECHNICAL KNOW-HOW FEE: Adequate records shall be maintained showing royalty and/or technical know-how fee including other recurring or non-recurring payments of similar nature, if any, made for the goods/services under reference to collaborators or technology suppliers in terms of agreements entered into with them. Such records shall be kept separately in respect of each such agreement or arrangement. The basis of charging such amount, including lump sum payment and its treatment shall be indicated in the cost rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of such expenses relating to resources received from or supplied to the related party, incurred in foreign exchange and any subsidy, grant, incentive, credits/recoveries, unabsorbed overheads and any abnormal portion etc. 11. WORK-IN-PROGRESS AND FINISHED STOCK: The method followed for determining the cost of work-in-progress and finished stock of the goods and for services under delivery or in-process shall be appropriate and shall be indicated in the cost records so as to reveal the cost element that have been taken into account in such computation. All conversion costs incurred in bringing the inventories to their present location and condition shall be taken into account while computing the cost of work-in-progress and finished stock. The method adopted for determining the cost of work-inprogress and finished goods shall be followed consistently. 12. CAPTIVE CONSUMPTION: If the goods/services under reference are used for captive consumption, proper records shall be maintained showing the quantity and cost of each such goods/services transferred to other departments or cost centres or units of the company for self-consumption and sold to outside parties separa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e equitable and reasonable and applied consistently. The basis of such allocation or apportionment shall be spelt out clearly in the cost records. (2) Net interest and other borrowing costs incurred for project under execution shall be capitalized for the period up to the date the project is commissioned. (3) Proper records shall be maintained in respect of such expenses paid/payable to the related party, incurred in foreign exchange and any subsidy, grant, incentive and any amount of similar nature received/receivable, payment of penal interest or fine/damages paid. (4) Proper records shall be maintained in respect of such expenses incurred relating to prior periods and taken to reconciliation directly. 17. EXPENSES OR INCENTIVES ON EXPORTS: (1) Proper records showing the expenses incurred on the export sales, if any, of the goods/services under reference shall be separately maintained so that the cost of export sales can be determined correctly. Separate cost statements shall be prepared for goods/services exported giving details of export expenses incurred or incentive earned. (2) Proper records shall be maintained giving the details of export commitments lic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VARIANCES: Where the company maintains cost records on any basis other than actual such as standard costing, the records shall indicate the procedure followed by the company in working out the cost of the goods/services under such system. The cost variances shall be shown against separate heads and analyzed into material, labour, overheads and further segregated into quantity, price and efficiency variances. The method followed for adjusting the cost variances in determining the actual cost of the goods/services shall be indicated clearly in the cost records. The reasons for the variances shall be duly explained in the cost records and statements. 23. COST STATEMENTS: (1) Cost statements (quarterly and annually) showing quantitative information in respect of each good/service under reference shall be prepared showing details of available capacity, actual production, production as per excise records, capacity utilization (in-house), stock purchased for trading, stock and other adjustments, quantity available for sale, wastage and actual sale etc. during current financial year and previous year. (2) Such statements shall also include details in respect of all major ite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... separately identifiable. Non-identifiable items shall be allocated on a suitable and reasonable basis to different goods/services. Fresh investments on fixed assets for production of goods/rendering of services under reference that have not contributed to the production of goods/rendering of services during the relevant period/year shall be indicated in the cost records. The records shall, in addition, show assets added as replacement and those added for increasing existing capacity. 26. RECORDS OF PHYSICAL VERIFICATION: Records of physical verification may be maintained in respect of all items held in the stock such as rawmaterials, process materials, packing materials, consumables stores, machinery spares, chemicals, fuels, finished goods and fixed assets etc. Reasons for shortages/surplus arising out of such verifications and the method followed for adjusting the same in the cost of the goods/services shall be indicated in the records. 27. RELATED PARTY TRANSACTIONS: (1) In respect of related party transactions or supplies made or services rendered by a company to a company termed related party relationship and vice-a-versa, records shall be maintained showing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be determined at invoice or agreed price including duties and taxes, and other expenditure directly attributable thereto net of discounts (other than cash discount), taxes and duties refundable or to be credited. (e) Subsidy or grant or incentive and any such payment received or receivable with respect to any administrative overheads shall be reduced from cost of the cost object in the financial year when such subsidy or grant or incentive and any such payment is recognised as income. (f) Administrative overheads shall not include any abnormal administrative cost. (g) Fines, penalties, damages and similar levies paid to statutory authorities or other third parties shall not form part of the administrative overheads. (h) Credits or recoveries relating to the administrative overheads including those rendered without any consideration, material and quantifiable, shall be deducted to arrive at the net administrative overheads. (i) Any change in the cost accounting principles applied for the measurement of the administrative overheads should be made only if it is required by law or a change would result in a more appropriate preparation or presentation of cost stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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