Cogs Competent Person

Palam Vihar, Gurugram, Haryana

Recently component accounting has become part of indian rules and regulations by taking place in companies act 2013 and in ind as. The component approach is already allowed under current as 10, paragraph 8.3. Under as 10, there seems to be a choice in this matter; however, the companies act, 2013 requires application of component accounting mandatorily when relevant and material. Definitionas per note 4 schedule ii to the companies act, 2013 -useful life specified in part c of the schedule is for whole of the asset. Where cost of a part of the asset is significant to total cost of the asset and useful life of that part is different from the useful life of the remaining asset, useful life of that significant part shall be determined separately. as per the amendment dated august 29, 2014 notified by the mca, the said requirement shall be voluntary in respect for the financial year commencing on or after the april 1, 2104 and mandatory for financial statements in respect of financial years commencing on or after april 1, 2015. under component accounting, companies will need to identify and depreciate significant components with different useful lives separately. the component approach is already allowed under current as 10, paragraph 8.3. Under as 10, there seems to be a choice in this matter; however, the schedule ii requires application of component accounting mandatorily when relevant and material. determination of cost the determination as to whether a part of an asset is significant requires a careful assessment of the facts and circumstances. This assessment would include at a minimum: comparison of the cost allocated to the item to the total cost of the aggregated property, plant and equipment; and consideration of potential impact of componentisation on the depreciation expense.