National Municipal Asset Valuation Manual

MODEL NATIONAL MUNICIPAL ASSET
VALUATION METHODOLOGY MANUAL

Government of India
Ministry of Urban Development

January 2009

Ministry of Urban Development
Government of India

Supported by

Office of the Comptroller & Auditor General of India
National Institute of Urban Affairs (NIUA) and Indo-USAID FIRE-D Project

Committee to oversee the development of the Manual

Joint Secretary (UD), Ministry of Urban Development, GoI - Chairman
Director (LB), Office of the Comptroller & Auditor General of India - Member
Director, Ministry of Urban Development, GoI- Member
Dr. Mukesh Mathur - Member
Professor & Coordinator, Indo-USAID FIRE-D Project, NIUA
Dr. Debjani Ghosh-Member
Senior Research Officer, NIUA
Mr. Alok Shiromany-Member
Senior Financial Management Specialist
Indo-USAID FIRE-D Project
Mr. Naveen Mathur- Convener of the Committee, NIUA

Consultant
Infrastructure Professional Enterprise [P] Ltd.
ModelNationalMunicipalAssetValuationManual
i
CONTENTS
Chapter I: Using this Manual ............................................................................................... 1
Purpose of the Manual ........................................................................................................ 1
Methodology........................................................................................................................ 1
Structure of the Manual ....................................................................................................... 2
Use by ULBs ....................................................................................................................... 2
Chapter II: Definition and Categorization of Assets .......................................................... 3
Definition of Fixed Assets.................................................................................................... 3
Concept of Control .............................................................................................................. 3
Accounting Standards for Assets ........................................................................................ 4
Classification of Assets ....................................................................................................... 4
Infrastructure Assets ........................................................................................................... 5
Existing classification by ULBs............................................................................................ 5
Asset Classification as per NMAM...................................................................................... 5
Issues in classification......................................................................................................... 8
Capital Work in Progress..................................................................................................... 9
Suggested coding of Assets................................................................................................ 9
Chapter III: Valuation of Assets General Principles ..................................................... 12
Cost Model ........................................................................................................................ 12
Revaluation Model............................................................................................................. 12
Accounting Principles for Fixed Assets ............................................................................. 12
Choice of Model ................................................................................................................ 13
Recognition of Fixed Assets.............................................................................................. 13
Historical Cost................................................................................................................... 14
Self constructed assets ..................................................................................................... 15
Assets acquired under exchange...................................................................................... 15
Borrowing Cost.................................................................................................................. 15
Depreciation...................................................................................................................... 16
Process of Valuation......................................................................................................... 17
ii
Chapter IV: Valuation of Assets for Opening Balance Sheet.......................................... 18
Process for Preparation of Opening Balance Sheet.......................................................... 18
Basic Premises.................................................................................................................. 18
Valuation principles ........................................................................................................... 19
Flowchart of valuation....................................................................................................... 20
Asset received as a gift..................................................................................................... 22
Historical Cost Based........................................................................................................ 22
Current Standard Cost Method......................................................................................... 23
Estimated CSC Method..................................................................................................... 24
Case by Case determination............................................................................................. 26
Issues in using CSC.......................................................................................................... 26
Valuing Capital Work in Progress...................................................................................... 27
Chapter V Valuation Of Assets - Ongoing ..................................................................... 28
Depreciation of Assets ...................................................................................................... 28
Accounting Principles........................................................................................................ 28
Rate of Depreciation.......................................................................................................... 29
Closing Book Value........................................................................................................... 29
Amortization...................................................................................................................... 30
Impairment of Assets......................................................................................................... 30
Creation / purchase of new assets.................................................................................... 30
Ongoing Lifetime costs...................................................................................................... 31
Disposal of Assets............................................................................................................. 33
Revaluation of Assets........................................................................................................ 33
Chapter VI: Asset Management ......................................................................................... 34
Asset Life-cycle................................................................................................................. 34
Record Keeping - Fixed Asset Register ............................................................................ 35
Asset Life-cycle management strategy............................................................................. 35
Asset Management Unit (AMU)......................................................................................... 35
Functions of AMU.............................................................................................................. 36
iii
Using IT for asset management........................................................................................ 38
Chapter VII: Issues in Valuation ........................................................................................ 39
Freehold Land................................................................................................................... 39
Buildings............................................................................................................................ 39
Art and Historical items ..................................................................................................... 40
Value of land under Roads................................................................................................ 40
Pipe networks.................................................................................................................... 41
Assets under Hire Purchase / Finance Lease................................................................... 41
Intangible Assets............................................................................................................... 41
Annex 1 - Classification and Codification of Assets for Fixed Asset Register ............. 43
Annex 2 -Current Standard Cost (CSC) for Valuing Assets............................................ 50
Annex 3 - Estimated Useful Life and Depreciation rates................................................. 61
Annex 4 - Inflation Index .................................................................................................... 65
Annex 5 Flow Chart for Maintenance of Fixed Asset Register .................................... 67
Annex 6 Format of Fixed Asset Register ....................................................................... 68

1
CHAPTERI:USINGTHISMANUAL
PurposeoftheManual
1. ThisModelNationalMunicipalAssetValuationMethodologyManual(henceforthreferredtoas
Manual)hasbeendesignedforusebythestaffofurbanlocalbodies(ULBs)tofacilitate
bringingonrecordthevalueofmunicipalassetsdeterminedduringthecourseofpreparationof
OpeningBalanceSheet.Inparticular,itwillhelpto:
i. determinetheappropriatevalue,usefullifeanddepreciationofmunicipalfixedassets
andtheirreportinginthefinancialstatements;
ii. increasetheeffectivenessofcontrolovermunicipalfixedassets;and
iii. assistULBstowhichtheybelongtopresentitstrueandfairfinancialposition,facilitate
budgetaryplanningandcontroloverresources.
Methodology
2. TheManualhasbeendevelopedbasedontheAccountingPrinciplesFrameworkprovidedbythe
ModelNationalMunicipalAccountingManual(NMAM)releasedbytheGovernmentofIndiaand
AccountingStandardsissuedbyInstituteofCharteredAccountantsofIndia(ICAI).Itseeksto
complementtheNMAMbyprovidingspecificguidanceintheareaoffixedassetvaluation,
treatmentandreporting.Inparticular,itproposestoaddress(i)valuationofassetsforthe
purposeofOpeningBalanceSheetand(ii)thedeterminationofdepreciationratesforannual
depreciation.
3. Theproposedmethodologyhasbeenpreparedafter:
i. reviewandanalysisofexistingmethodologiesandbasesusedacrossIndiafor
determiningthevalueofmunicipalassets
1
;
ii. reviewandanalysisofthevaluationmethodologyandbasisrecommendedbythe
InternationalValuationStandardsdevelopedbytheInternationalValuationStandards
Committee(IVSC);
iii. reviewandanalysisofcurrentbestpracticesingoodassetmanagementandasset
lifecyclemanagement,includingthemaintenanceofassetregisters;
iv. reviewandanalysisoftheavailableinformationontypologyofmunicipalassets(suchas
buildings,land,plantandmachinery,sewerlines,etc.)usedindifferentsize/classesof
ULBs;and
v. reviewandanalysisofexistingformsandformatsandotherdocumentationregarding
assetidentification,locationanduse,etc.
1
Inthiscontext,methodologyusedbytheIncomeTaxDepartment,CentralPublicWorksdepartmentfor
buildings,andthevaluationmethodologyusedbytheMunicipalCorporationofDelhi,KolkataMunicipal
CorporationandstatepoliciesforWestBengal,TamilNaduandKarnatakahavebeenconsidered.
2
4. AdraftversionofthemanualwassharedwithNIUAandotherstakeholdersinJuly2008.This
versiontakesintoconsiderationthefeedbackandsuggestionsreceivedontheearlierdocument.
StructureoftheManual
5. ThereareseveralimportantstepsinfixedassetsmanagementsofarasULBsareconcerned.The
firststepisidentificationandcategorization,thesecondstepislocation,thethirdstepis
valuation,thefourthstepisrecording,thefifth,updating,thesixth,accounting,andthe
seventh,presentation.
6. ThisManualisstructuredaccordingtothesesteps.Additionalguidancehasbeenprovidedto
helpmunicipalstafftodealwithsomeoftheverycommonproblemsofMunicipalities.Such
problemsmaycommonlyinclude:
i. thenonavailabilityofrecordspertainingtothevariousfixedassetsincluding
sometimestheiroriginalcost,dateofacquisitionorconstructionetc.;
ii. thedifficultyoflocatingafixedassetforinstance,aroadrollerwhichhadbeen
purchasedandappearsonthebooks,butwasphysicallyscrappedalongtimeagoand
norecordofitsdisposalremains;and
iii. thelackofdataoncurrentconditionandremainingusefullife.
7. TheseproblemsarenotnecessarilytypicaltoULBsonly,butsofarasULBsareconcerned,given
thatthereisnowamandatetochangeovertotheaccrualsystemofaccounting,itisimportant
toaddresstheseproblemsandtoputinplaceaFixedAssetsManagementSystemthatwill
becomemoreandmoreaccurateoveraperiodoftime.
UsebyULBs
8. UsersofthisManualwillfinditusefultofirststudythewholeManualandperhapsundergoa
familiarizationprogramwithrespecttothisManual.Oncethesystemisinplace,specific
chaptersoftheManualcanbereferredtofordealingwithspecifickindsofproblems.
9. Itshouldberememberedthatnomanualcanbyitselfeitheranticipateorpresumetoanswerall
possiblequestionsthatmayariseinpractice.Forthatpurpose,itisusefultorefertoexternal
guidance,includingreferralstoexpertsaswellastoauthoritativetexts.
10. LiketheNMAM,thisisaModelValuationManual.Hence,itlaysdownthepolicylevelguidance
inrespectofassetvaluation.Statesarefreetoadaptthismanualtosuittheirneedsinlinewith
theiraccountingmanualandULBrequirements.
3
CHAPTERII:DEFINITIONANDCATEGORIZATIONOFASSETS
DefinitionofFixedAssets
11. Thereareseveraldefinitionsofassetsthatarecommonlyusedinvariouspartsoftheworld,as
differentaccountingandstandardsexistindifferentcountries.AccountingStandard10on
`AccountingforFixedAssets,promulgatedbytheInstituteofCharteredAccountantsofIndia
(ICAI),definesafixedassetas:
Anassetheldwiththeintentionofbeingusedforthepurposeofproducingandproviding
goodsorservicesandisnotheldforsaleinthenormalcourseofbusiness.
12. ThecontextofUrbanLocalBodiesisdifferentfromcommercialbodestowhomthese
accountingstandardsgenerallyapply.Hence,asetofAccountingStandardsforPublicSector
BodieshavebeendevelopedbytheInternationalPublicSectorAccountingStandardsBoard
(IPSASB),aconstituentoftheInternationalFederationofAccountants(IFAC).TheIPSASB
considerstheInternationalFinancialReportingStandards(IFRS)releasedbytheInternational
AccountingStandardsBoard(IASB)andfollowingadueprocessofconsultation,adaptsthemto
thepublicsectorcontextforusebygovernment.
2
13. ThedefinitionofAssetsaspertheIPSASBis:
Assetsareresourcescontrolledbyanentityasaresultofpasteventsandfromwhichfuture
economicbenefitsorservicepotentialareexpectedtoflowtotheentity.
3
ConceptofControl
14. Theconceptofcontrolofanassetseconomicbenefitisakeyissueindeterminingwhetherthat
asset should be reported in the financial statements of a ULB. This concept of control is what
leads to nonowned assets like Hire Purchase assets, Leasehold property to be recognized as
assets. This concept is important because governments are required to maintain control over
public property in a fiduciary capacity and hence any loss of control is not only a financial but
alsoafiduciaryloss.
15. TodeterminewhetheraULBshouldbereportinganasset,itisnecessarytolooktothe
indicatorsofcontrol.AccordingtoAS26,controlisidentifiedwhentheenterprisehasthe
powertoobtainfutureeconomicbenefitsflowingfromtheunderlyingresourceandalsocan
restricttheaccessofotherstothosebenefits.
16. Wherethecontroloftheassethasbeenaffected,saywheremunicipallandhasbeen
encroached,theTechnicalGuideforAccountingbyULBsissuedbyICAIprovidesthata
2
InIndia,theICAIhassetupaCommitteeonAccountingStandardsforLocalBodiestoprescribestandards
forlocalbodies.Adherencetothesestandardswouldbeneededonetheyaredevelopedandacceptedbythe
Government.
3
InternationalPublicSectorAccountingStandard(IPSAS)1PresentationOfFinancialStatements;Para7
Definitions
4
provisionequaltovirtuallytheentirecarryingamountoflandshallbeprovided.Eveninsuch
cases,therighttotakepossessionremainswiththeULB.
AccountingStandardsforAssets
17. TheIndianaccountingstandardsissuedbytheICAIwhichhaveabearingforthepurposeof
accountingandvaluationofassetsare:
i. AccountingStandard10FixedAssets
ii. AccountingStandard6Depreciation
iii. AccountingStandard16BorrowingCosts
iv. AccountingStandard28ImpairmentofAssets
v. AccountingStandard19Leases
18. AlthoughtheydonotapplyintheIndiancontext,theIPSASareausefulsourceofinformation
forpublicsectoraccounting.ThemajorIPSASforFixedAssetsinclude:
i. IPSAS17Property,Plant&Equipment
ii. IPSAS16InvestmentProperty
iii. IPSAS13Leases
iv. IPSAS5BorrowingCosts
v. IPSAS21ImpairmentofNonCashGeneratingAssets
vi. IPSAS26ImpairmentofCashGeneratingAssets
19. TheothersourceistheStatementsissuedbytheGovernmentalAccountingStandardsBoard
(GASB)ofUSA.Specifically,GASBStatementNo.34dealswiththeaccounting,valuationand
treatmentofFixedAssetsinLocalBodiesofUSA.However,exceptforDelhi,Bangaloreand
someotherULBs,theGASBmodelishardlyusedinIndia.
ClassificationofAssets
20. Theclassificationoffixedassetscanbedoneinseveralwaysfunctionwiseforexamplewater
worksandsewerageanddrainageornaturewisesuchasplantandmachineryetc.TheNMAM
providesastructureforfixedassetsclassificationbasedonamixoffunctionandnatureroles.
21. SincethismanualintendstosupplementNMAM,weproposethattheNMAMclassificationof
assetsshouldbeextendedforuseinthismanual.WherestateshavemodifiedtheNMAMheads
oraddedfurtherdetailcodes,themodifiedheadsshouldbeused.
5
InfrastructureAssets
22. TheNMAMprescribesfixedassetstobedividedintotwomaincategories
4
:
i. InfrastructureAssets;and
ii. OtherAssets
23. Infrastructureassetsarelonglivedcapitalassetsassociatedwithgovernmentalactivitiesthat
normallyarestationaryinnatureandcanbepreservedforasignificantlygreaternumberof
yearsthanmostcapitalassets(e.g.,roads,bridges,tunnels,drainagesystems,waterandsewer
systems,dams,andlightingsystems)
5
.Buildingsareexcludedfromthedefinitionof
infrastructureassetsunlesstheyareanancillarypartofanetworkofinfrastructure.
24. AsperIPSAS,infrastructureassetsusuallydisplaysomeorallofthefollowingcharacteristics:
i. Theyarepartofasystemornetwork;
ii. Theyarespecializedinnatureanddonothavealternativeuses;
iii. Theyareimmovable;and
iv. Theymaybesubjecttoconstraintsondisposal.
ExistingclassificationbyULBs
25. Apartfromthis,severalULBsmayhavetheirownclassificationsystemsbasedonlocallaws
(accountingrules)orpractices.Insomecases,themaintenanceoffixedassetregistersisdoneas
pertheseclassificationsi.e.ToolsRegister,Plant&EquipmentRegisteretc.
AssetClassificationasperNMAM
26. However,theaccountcodingstructureprescribedinNMAMdoesnotmaintainthisdistinction
andclassifiesassetsinto11majorgroups,allundertheBroadheadofFixedAssets
6
:Thechoice
ofminorheadsislefttostates.TheproposedclassificationofFixedAssetasperNMAMcodeof
accounts(Appendix2ofNMAM CodificationStructure&ChartofAccounts)isinto11categories
asfollows:
i. Land
ii. Buildings
iii. Roads&Bridges
iv. SewerageandDrainage
v. WaterWorks
4
NationalMunicipalAccountingManual,2005,GovernmentofIndia,Chapter21FixedAssets(Para21.5)
5
SimilardefinitionhasbeenusedintheUnitedKingdominthecontextofresourceaccounting.
6
NationalMunicipalAccountingManual,2005,GovernmentofIndia,AppendixChartofAccountsListing
Assets
6
vi. PublicLighting
vii. Plant&Machinery
viii. Vehicles
ix. Furniture,Fixtures,FittingsandElectricalAppliances
x. Office&OtherEquipments
xi. OtherFixedAssets
27. Amongthese,items(iii),(iv),(v)and(vi)canbeclassifiedasinfrastructureassets.
28. .Inanotherplace,theNMAMhasclassifiedAssetsintoMovableandNonmovablecategory
7
.
Thisdistinctionisespeciallyusefulwhentheobjectiveistophysicallyverifytheassets,aswas
thepurposeinthatchapter.
Land
29. Landincludesparks,playgrounds,agriculturalland,Dhobighat,Dumpingground,Tonga,
rickshaw,taxi(otherthanundergroundtaxistands)andcyclestand,parkingplaces(otherthan
thosewhicharecovered)andanyvacantsiteonwhichnoconstructionhastakenplace.Where
assetssuchasbuildings,roads,bridgesetc.areconstructedonland,allland(includingcovered
land)shouldbeshownasunderthishead.
Buildings(includingStructures)
30. BuildingsincludeOfficeBuildings,SchoolBuildings,Publicconveniences,Hospitals,
Dispensaries,MaternityandChildwelfarecenters,Shoppingcomplex,TownHallBuilding,
CommunityCenters,StaffQuarters,Resthouse,MilkDairy,WorkshopBuildings,Firestations,
StoresBuilding,Coveredtaxistands,Coveredparkingareas,LavatoryBlocks,Urinals,Dhalaos
andDustbinsandgarbagevats,etc.
31. Structuresincludepublicfountainsandotherswhichcannotbeclassifiedasbuildingsbutare
neverthelessofapermanentnature.
32. LandunderbuildingsshouldbeseparatedandshowndistinctlyunderLand.
Roads&Bridges
33. ThisincludesseveraltypesofassetsincludingRoads,pavements,footpaths,bridges,subways,
overbridges,Flyovers,culverts,andcauseways.
SewerageandDrainage
34. Thisincludesitemslikeroadsidedrains,undergrounddrains,seweragenetworketc.Plantand
Machineryforstationsincludingpumpsetc.wouldbeclassifiedunderthishead.Notethatland
7
IbidGuidelinesForPreparationOfOpeningBalanceSheetpara34.3
7
andbuildingsforseweragewouldbealreadyclassifiedunderLandandBuildingearlier,and
shouldnotbeincludedhere.
WaterWorks
35. Thisincludesallitemsrelatedtowaterworkssuchasborewells,treatmentplants,reservoir,
overheadtanks,pipelines,plantandmachineryforwaterworksetc.Notethatlandandbuildings
forseweragewouldbealreadyclassifiedunderLandandBuildingabove,andshouldnotbe
shownhere.
PublicLighting
36. Thiscoversallassetsrelatedtolightingandincludeselectricalinstallationsliketransformers,
cablesetc,lampsandfittingsandpoles.Anyelectricalinstallationsotherthanforpubliclighting
wouldbecoveredundersubsequentheadofFurniture,Fixture,Fittings&ElectricalAppliances.
PlantandMachinery
37. Plantandmachineryincludeallengineeringequipmentslikeroadrollers,bulldozersetc.,
medicalequipmentsusedinhospitals,dispensariesandmaternitycenters,scientificequipments,
generators,clocktoweretc.Thiswillnotincludeplantandmachineryusedspecificallyin
waterworks,pumpingstations,seweragetreatmentplantetc.whicharealreadyclassifiedunder
thoseheads.However,plantandmachineryusedforotherpurposesshouldbeincludedunder
thishead.
Vehicles
38. Vehiclesincludealltypesoftrucks,watertankers,buses,jeeps,cars,twowheelers,three
wheelersandloaders,etc.MobilemachinerysuchasRoadRollersandBulldozerswouldnotbe
classifiedasvehiclesastheirprimarypurposeisnottransportation.
Office&OtherEquipments
39. Allitemsofofficeusesuchascomputers,peripherals,photocopymachines,typewriters,
communicationandtelecomequipmentswouldberecordedunderthishead.Otherequipment
(whichmaynotbeusedinoffice)shouldalsoberecordedunderthishead.
Furniture,Fixture,Fittings&ElectricalAppliances
40. Theyincludemetalaswellaswoodenchairs,tables,racks,cupboards,watercoolers,fans,air
conditioners,refrigerators,TVetc.ItemswhichcanbeclassifiedasOfficeandOtherEquipment
shouldbefirstclassifiedunderthathead.Else,shouldbeincludedhere.
41. ItwouldalsoincludealltypesofInstallationcables,lampposts,mercuryvaporlamps,sodium
vaporlamps,lightfittings,powerpoints,etc.,usedinthebuildingsandotherpremisesusedby
theULB(otherthanthoseusedforstreetlightingastheyareincludedundertheheadingPublic
Lighting).
8
OtherFixedAssets
42. Thiswillincludeallotherassetsnotspecificallycoveredinanyoftheearlierheads.Itwillinclude
forinstance,intangibleassetssuchassoftware,rightsetc.
43. Specificassetswithdifferentvaluationorreusenorms(suchasHeritageassets,worksofarts
etc.)mayalsobeclassifiedasseparatesubgroupsunderthishead.
Issuesinclassification
44. Thereareafewfixedassetswhereclassification,attimes,mayleadtoconfusion.Thefollowing
maybeadoptedforsuchassets:
Trafficsignals
45. Trafficsignals,ifany,aretobeclassifiedaspartofOtherFixedAssets.
Networkofpipes
46. Thereissometimesaquestionofwhetherthenetworkofpipeswithinthetotallandofawater
worksistobetakenaspartofSewerage&Drainage,oraspartofWaterworks.Whatever
fallswithintheidentifiedareaofthewaterworksistobetakenasapartofit.
Fountainsanddecorativestructures
47. TobetakenunderBuildingswhichincludesallcivilstructures.
Roadoverbridge
48. TobetakenunderRoadsandBridges
Mobilegenerators
49. ShouldbetakenaspartofPlant&Machinery.
Earthmovingequipments
50. ShouldbeincludedunderPlant&Machinery.
StatuesandMonuments
51. Wherethevaluationandreusepolicyissubstantiallydifferentfromotherbuildings,thisshould
beshownasaseparatesubgroupunderOtherAssets.
WorksofArtandHistory
52. Assetslikepaintings,manuscriptsetc.shouldbetakenunderOtherAssets.HeritageBuildings
andstructures,ifverydifferentinnaturefromBuildingsmayalsobeclassifiedinOtherAssets.
MinorMovableAssets
53. Likeofficephone,calculators,toolsetc.Ifthesearebelowthethresholdforcapitalizationasper
theaccountingpolicies(seenextchapter),theyshouldnotbecapitalized.Iftheyarebeyondthe
9
threshold,theyshouldbegroupsappropriatelyunderOfficeEquipment,Plant&Machineryor
OtherAssetsasappropriate.
Standbyequipmentandservicingequipment
54. Machineryspareswhicharenotspecifictoaparticularitemoffixedassetbutcanbeused
generallyforvariousitemsoffixedassetsshouldbetreatedasinventoriesforthepurposeofAS
2andsuchmachinerysparesshouldbechargedtothestatementofprofitandlossasandwhen
issuedforconsumptionintheordinarycourseofoperations;otherwiseitshallbecapitalizedas
perAS10.Standbyequipmentsuchasgeneratororawaterpumpisafixedassetbyitselfand
shouldbetreatedassuch.
MajorSpareParts
55. AS10statesthatifsomesparepartscanbeusedonlyinconnectionwithaspecificitemoffixed
assetsandtheiruseisexpectedtobeirregularthen,theyshouldbecapitalizedseparatelyatthe
timeoftheirpurchase.Sofarasclassificationisconcerned,suchinsurancesparesshouldbe
taggedtotheitemofequipmenttowhichtheyrefer.
CapitalWorkinProgress
56. Inadditiontotheabovecategories,onemorecategoryisimportantCapitalWorksinProgress.
Thisincludescostsofconstructingfixedassetsbeforeconstructionissubstantiallycomplete.The
identificationofanitemsofconstructionasCapitalWorkinProgressmeansthattheitemis
intendedtobecapitalizedonceitiscomplete/putintouse.
57. CapitalWorkinProgress(CWIP)isincludedintheFixedAssetsgroupofassetsbutisonlyan
interimaccount,untiltheassetisputintouse.Inparticular
a. CWIPisnotrecordedinanyoftheassetregisters.Instead,aseparateCWIPRegisteris
maintainedtorecordprogressivebillsforconstruction;
b. Anyamountpaidforpurchase/constructionofanassetwhichhasnotbeencompleted
/puttouseshouldbeshownasCWIPandrecordedinCWIPRegister;
c. NodepreciationischargedonCWIPsincetheassethasnotbeenputtouse;
d. TheassetshouldbetransferredfromCWIPtoFixedAssetRegisterwhenitisputinto
use.Hence,CWIPregistershouldbereviewedregularlyforsuchitems.
SuggestedcodingofAssets
58. Aproperclassificationoffixedassetsshouldemployacodeforeachasset.Byusingthecode,a
ULBbecomesreadyforcomputerizationofitsFixedAssetsManagementSystem.Further,with
suchacode,itiseasytocrossclassifydataandtorollupcategoriestohavethepossibilityof
makingawidevarietyofreports.Theprimaryclassificationcodeisforthemajorgroup:
10
PrimaryGroup Code
8
i. Land 10
ii. Buildings 20
iii. Roads&Bridges 30
iv. Sewerageanddrainage 31
v. WaterWorks 32
vi. PublicLighting 33
vii. PlantandMachinery 40
viii. Vehicles 50
ix. Office&otherequipments 60
x. Furniture,fixtures,fittingsandElectricalappliances 70
xi. OtherFixedAssets 80
59. FurtherclassificationtogroupheadscanbemadebasedontheneedoftheULB,andshouldbe
alignedtotheaccountingmanualandFixedAssetRegisters.Thesuggestedstructureofcodingis
asfollows
9
:
i. PrimaryGroupCode XX
ii. SecondaryGroupCode XX
iii. TertiaryGroupCode XX
iv. WardLocationCode XXX
v. SerialNumberCode XXXX
60. Thesecondarygroupcodegivesfurthersubclassificationoftheprimaryhead.Thethirdlevel
detailssubtypesofthesecondarysubgrouptypes,thefourthleveldetailsthelocation(Ward
wise)andthefifthlevelistheserialnumberoftheasset.
61. AnillustrativelistofcodesforAssetsisgiveninAnnex1.
Example1:CodingSystemGarbageVat
AgarbagevatlocatedinWardNo.13oftheCity,willhavetheCode2006150130001.Thefirst`20
referstoBuilding;thenext`06referstoSolidWasteTransferStation;thethird`15refersto
garbagevatandthelastfourdigitsrefertotheserialnumberofthegarbagevat.
8
ThisclassificationandcodingisaspertheminorheadcodesprescribedinChartofAccountsunderNMAM.
9
WhereULBshavealreadydeterminedaminoranddetailscodelistofassets(fortheaccountingmanual),
thatclassificationcanbeuseddirectly.
11
Example2:CodingSystemOfficeBuilding
AnofficebuildingisownedbythemunicipalityinWardNo.11.Thebuildingfacestheroadand
thereareadjoiningbuildingsonthesideandaservicelaneatthebackofthebuilding.Thecodefor
thiswillbe2001010110002.Thefirst`20referstoBuilding,thenext`01referstotheappurtenant
landlessthan50%ofgroundcoveredarea,thenext01referstotheOfficeBuilding.`011refersto
theserialnumberofthewardandthelastfourdigitsrefertotheserialnumberofbuilding.
Example3:CodingSystemRoadRoller
AroadrollerwhichisgaragedintheWardOfficeofWardNo.9willhavethecode4004010090003.
Thefirst`40referstoPlant&Machinery,thenext`01referstoEngineeringEquipment,`01refers
toRoadRollers,`09referstoserialnumberoftheWard,andthenextfourdigitsrefertoserial
numberoftheroadroller.
62. FixedAssetcodificationisessentiallyacontroltoolforULBlevelmanagement.Hencethe
structureoftheFixedAssetCodeshouldbesuchthatitenablestheULBtoknowenoughdetails
andmaintainsufficientcontroloveritsassets.Forexample,somelargecitiesmayfeeltheneed
toaddmorecodestofurtherdetailthelocation.
63. ULBshavethefreedomtoaddorsubtractfromthislisttosuittheirspecificrequirements.Itis
importanttorememberthatnocodingstructurecanfullydescribeagivenasset.Forexample,
whileitiscertainlypossibletohavemorecodesindicating,forexample,howmanyfloorsa
buildinghas,thiswillmakethecodemuchmorecumbersome.
64. Thepurposeofthecodingsystemistogrouptheassetssothatthetotalvalueofthegroupcan
becalculated,wherenecessary,agewiseanalysisofitemswithinagroupcanbedoneandhigh
valueandlowvalueassetswithinagroupcanbeidentifiedforassetmanagementpurposes.
12
CHAPTERIII:VALUATIONOFASSETSGENERALPRINCIPLES
65. Ingeneral,therearetwomodelsforvaluationoffixedassets:
TheCostModel;and
TheRevaluationModel
CostModel
66. TheCostModelrequiresthat:
Afterrecognitionasanasset,anitemofproperty,plantandequipmentshallbecarriedat
itscostlessanyaccumulateddepreciationandanyaccumulatedimpairmentlosses.
10
67. Thisisthetraditionalhistoricalcostmodelbasedonwhichassetsaregenerallyvaluedfor
financialreportingpurposesinIndia.
RevaluationModel
68. Undertherevaluationmodel,thevaluationofassetsiscontinuallyreviewedtoreflectthefair
marketvalueasmuchaspossible.Themodelisdescribedbelow:
Afterrecognitionasanasset,anitemofproperty,plantandequipmentwhosefairvalue
canbemeasuredreliablyshallbecarriedatarevaluedamount,beingitsfairvalueatthe
dateoftherevaluationlessanysubsequentaccumulateddepreciationandsubsequent
accumulatedimpairmentlosses.
11
69. Thefairvalueofitemsofassetsisusuallydeterminedfrommarketbasedevidencebyappraisal.
However,manyULBshaveassetsforwhichitmaybedifficulttoestablishmarketvaluebecause
oftheabsenceofmarketfortheseassets.Insuchcases,thefairvalueoftheitemmaybe
establishedbyreferencetootheritemswithsimilarcharacteristics,insimilarcircumstancesand
location.
AccountingPrinciplesforFixedAssets
70. UndertheNMAM,principlesforfixedassetaccounting/valuationare
12
:
a. AllFixedAssetsshallbecarriedatcostlessaccumulateddepreciation.Thecostoffixed
assetsshallincludecostincurred/moneyspentinacquiringorinstallingorconstructing
fixedassetandotherincidentalandindirectexpensesincurreduptothatdate.
b. AnyFixedAsset,whichhasbeenacquiredfreeofcostorinrespectofwhichno
paymenthasbeenmade,shallberecordedatnominalvalueofRe.1/.
10
InternationalPublicSectorAccountingStandard(IPSAS)17Property,Plant&Equipment;Para43
11
Ibidpara44
12
NationalMunicipalAccountingManual,Chapter3AccountingPolicies(Para3.21)
13
c. AllassetscostinglessthanRs.5,000(RupeesFivethousands)wouldbeexpensed/
chargedtoIncome&ExpenditureAccountintheyearofpurchase
d. Interestonborrowingsdirectlyattributabletoacquisitionorconstructionofqualifying
fixedassetsuptothedateofcommissioningoftheassetsshallbecapitalized.
13
ChoiceofModel
71. Therecommendedvaluationmodelforfixedassetsisthat:
a. Assetsshouldbevaluedatinitial(historical)costpaidtoacquirethem;
b. Depreciationshouldbechargedperiodicallytoreflectthewrittendownvalueofthe
asset;
c. Revaluationwouldbepermitted,withsomerestrictions.
RecognitionofFixedAssets
72. Theprinciplefordeterminingcapitalizationisgivenbelow:
Thecostofanitemshallberecognizedasafixedassetif:
(a)theassetisheldforproducingorprovidinggoodsorservicesandisnotheldforsalein
thenormalcourseofbusiness;
(b)thefutureeconomicbenefitsorservicepotentialassociatedareexpectedtoflowto
theentity;
(c)Theestimatedusefullifeoftheassetisbeyondoneyear;and
(d)Isbeyondtheminimumthresholdlimitforrecognitionasfixedasset.
73. TheNMAMaccountingprinciplesprovideacutoffforrecognizingassetsinthefinancial
statements.Asperthis,assetsbelowRs.5,000shouldbechargedofftotheIncome&
Expenditureaccount.Hence,anyassetbeyondthisvalueshouldberecognizedasaFixedAsset
inthefinancialstatementsaswellasinthesupportingrecords.
74. ThethresholdofRs.5,000isbasedontheprincipleofmaterialityandistobeappliedonthe
historicalcostoftheasset(notthedepreciatedvalue).Hence,anyassetwhoseoriginalcostis
estimatedtobebelowRs.5,000shouldbe
a. ChargedtoIncome&Expenditureaccount,ifitoccursduringtheyear;
b. Omittedwhileconsideringtheassetsbeingcollated/valuedfortheOpeningBalance
Sheet.
13
Ibidpara3.18
14
75. Incaseanassetisbeingconstructedandtheconstructiontakestime,theassetshouldbe
recognizedasspecificfixedasseti.e.buildingetc.onlywhentheconstructioniscomplete.Until
then,theamountspaidshouldbekeptunderCapitalWorkinProgress.
76. Therearemanyinstanceswherethenatureofatransactionmakesitdifficulttodistinguish
whetheritisrevenueexpenditureoracapitalexpenditure.Guidanceinthisregardisprovidedin
ChapterIVfollowing.
HistoricalCost
77. Thisisthebedrockofthevaluationprincipleandisstatedasfollows:
FixedAssetsaretobereportedatHistoricalCost.Thecostofafixedassetincludesnot
onlyitspurchasepriceorconstructioncostbutalsorelatedchargesnecessarytoplacethe
assetinitsintendedlocationandconditionforuse.Sincethehistoricalcostofdonated/
giftedassetsisNIL,theyaretobevaluedatanominalcostofRs.1/
TherationaleofvaluationatRe.1/
ItmayappearthataRe.1/valuationisofnosignificanceintheoverallfixedassetblockoftheULB
whichmayrunintocrores.Hence,itwouldperhapsmakenodifferenceiftheassetwasvaluedat
NIL.Thisiserroneous.ThereasonforvaluingassetsatRe.1/istoensurethattheassetisidentified
andtrackedinthefixedassetsystem.NonrecognitionoftheassetorNILvaluationwouldnotallow
theassettoappearintheFixedAssetRegister.
Hencemunicipalmanagersandauditorsshouldparticularlypayattentiontothetransactionof
assetswhicharevaluedatRe.1/fortechnicalreasons,butmaybeworthmorethanmanyother
assets.
78. Thecostofafixedassetincludes:
a. purchaseprice,lesstradediscountsandrebates,ifany;
b. importduties;
c. othertaxesorlevieswhicharenonrefundableinnature;
d. transportationcost,ifchargedseparatelyfromthepurchaseprice;
e. costofinspection,ifpaidseparately;
f. handlingcosts;
g. costofsitepreparation;
h. installationcost,includingcostofsuchpermanentortemporarystructuresthatare
considerednecessaryforinstallation;
i. professionalfeesforengineersorarchitectsorinspectors,etc.;and
j. anyothercostincurredtoputtheassetatitslocationanduse.
15
79. AnyexpenditurethatismadebytheULBontestrunsorexperimentalproductionistobe
capitalizedandaddedtothecostoftheasset.Forexample,theoilandbitumennecessaryfor
thetestrunofanassaultingplantistobeaddedtothecostoftheplant.
80. Costoftheassetshouldincludeallcostsincurredtobringtheassettoaworkingcondition.For
example,ifalargepumpistobeinstalledatawatertreatmentplant,notonlythecostofpump
butalsothetransportationcost,wherechargedseparately,shouldbeincluded.
Selfconstructedassets
81. IncaseswhereaULBconstructstheassetitself(schoolbuilding,primaryhealthclinic,etc.),the
costofconstructionofthatbuildingandothercostswhicharedirectlyattributableshouldbe
takenintoconsiderationinarrivingatthevalueofthebuilding.Thismeansthatallthematerial
costsofconstruction,paymentsmadetothevariouscontractors,etc.,shouldbeincluded.For
example,iftheULBappointsanAssistantEngineerwhoseonlyworkistolookafterthe
constructionofthebuilding,thenthesalaryoftheAssistantEngineerfortheconstructionperiod
shouldalsobeadded.
82. AsperAS10,administrationandgeneraloverheadareexcludedfromcostoffixedassetasthey
donotrelatetospecificfixedasset.However,ifsuchexpensesarerelatedtoconstructionor
acquisitionofaparticularfixedasset,thenitshouldbecapitalized.
Assetsacquiredunderexchange
83. Sometimes,aULBmayacquiresomefixedassetsinexchangeforsomeotherfixedassets.This
canhappenforinstance,whenoldofficemachineryisexchangedforanewermodel.Wherethe
assetsexchangedaresimilar,thenetbookvalueoftheasset(theofficemachinery)whichis
exchangedshouldbetaken,andtoittheextraamountthatispaid,ifany,isadded.Ifinsteadof
anextrapayment,arefundisinvolved,thenecessaryadjustmentwillhavetobemade.Incase
ofdissimilarassets,theassetsacquiredshouldberecognizedatitsfairvalue.
84. Incertainspecialcases,aULBmayacquireconstructedfloorareainabuildingforthe
constructionofwhichtheULBhasgivendevelopmentrightstoadeveloper.Insuchacase,the
constructedfloorareawillberecordedatthefairmarketvalueoftheproperty.
FairMarketValue
AsperAS10,FairMarketValueisthepricethatwouldbeagreedtoinanopenandunrestricted
marketbetweenknowledgeableandwillingpartiesdealingatarmslengthwhoarefullyinformed
andarenotunderanycompulsiontotransact.
85. ItispertinenttonotethatthisuseofFairMarketValuedoesnotvitiatetheHistoricalCost
Conceptasitmerelydetermineswhatwouldhavebeenthehistoricalcostpaidfortheproperty,
butfortheexchangetransaction.
BorrowingCost
86. Borrowingcoststhataredirectlyattributabletotheacquisition,constructionorproductionofa
qualifyingassetshouldbecapitalizedaspartofthecostofthatasset.
16
87. Aqualifyingassetisanassetthatnecessarilytakesasubstantialperiodoftimetogetreadyfor
itsintendeduseorsale.AsperASforULBSissuedbyICAIonBorrowingCostitisspecifiedthat
atimeperiodof12monthsisasubstantialperiodoftimeunlessshortertimeperiodcanbe
justifiedonthebasisoffactsandcircumstancesofthecase.
88. Incaseanyborrowingcostsi.e.interestonloanetc.canbeidentifiedwiththeasset,theycanbe
capitalized.Thegeneraltestfordeterminingwhetheraloancanbeidentifiedwithanassetisto
askthequestion,Wouldtheseborrowingcostshavebeenavoidediftheoutlaysonthe
qualifyingassethadnotbeenmade?Ifyes,thentheborrowingcostcanbecapitalized,else
not.
89. Thecapitalizationofborrowingcostsshouldcommencewhen:
a. Outlaysfortheassetarebeingincurred;
b. Borrowingcostsarebeingincurred;and
c. Activitiesthatarenecessarytopreparetheassetforitsintendeduseorsalearein
progress
90. Capitalizationofborrowingcostsshouldbesuspendedduringextendedperiodsinwhichactive
developmentisinterrupted,andexpensed.Capitalizationofborrowingcostsshouldceasewhen
substantiallyallactivitiesnecessarytopreparetheassetforitsintendeduseorsaleare
complete.
91. Thecapitalizationofinterestcostisapplicableonlyfornewassetsbeingdeveloped/
constructedbyaULB.Thisprincipleshouldnotbeappliedforvaluationofexistingassetsforthe
purposeofpreparingtheFirstBalanceSheet.
Depreciation
92. Depreciationisthechargeofafairproportionofthedepreciableamountineachaccounting
periodduringtheexpectedusefullifeoftheasset.
14
93. Depreciableamountofanassetisitshistoricalcost,orotheramountsubstitutedforhistorical
costinthefinancialstatements,lesstheestimatedresidualvalue.
15
94. Theresidualvalueofanassetistheestimatedamountthatanentitywouldcurrentlyobtain
fromdisposaloftheasset,afterdeductingtheestimatedcostsofdisposal,iftheassetwere
alreadyoftheageandintheconditionexpectedattheendofitsusefullife.
16
95. Usefullifeis:
a. Theperiodoverwhichanassetisexpectedtobeavailableforusebyanentity;or
14
AccountingStandard6DepreciationAccountingpara3.1
15
Ibidpara3.4
16
InternationalPublicSectorAccountingStandard(IPSAS)17Property,Plant&Equipment;Para13
17
b. Thenumberofproductionorsimilarunitsexpectedtobeobtainedfromtheassetbyan
entity.
96. Thevalueofanassetinfutureyears(afterrecognitioninfinancialstatements)istheBookValue,
whichiscalculatedbydeductingAccumulatedDepreciationfromtheHistoricalCostoftheasset.
ProcessofValuation
97. Theprocessofvaluationofassetsisrequired:
a. Whenthefirst(openingbalancesheet)isbeingprepared;and
b. Atthetimeofpreparingannualfinancialstatements
98. Thisisdiscussed,inthebackgroundoftheseprinciples,inthefollowingchapters.
18
CHAPTERIV:VALUATIONOFASSETSFOROPENINGBALANCE
SHEET
ProcessforPreparationofOpeningBalanceSheet
99. ThefollowingstepsneedtobefollowedforpreparationofOpeningBalanceSheet:
a. IdentificationofAssetsusingvarioussourcesofdata,andcompiledintheforms
providedinChapter34oftheNMAM;
b. VerificationofAssetsThisisprescribedtobecarriedoutascurrentidentification
initiativesmayeithermissoutexistingassetsortakeinassetswhichdonotbelongto
theULB.Hencesometestchecksorverification,withrecordsandphysicalinspectionare
recommended;
c. IdentificationofAssetsthatrequireValuationThisshortliststheassetswhichneedto
bevaluedinaccordancewiththefollowingproceduresandhavenotoutlivedtheir
usefullifeinwhichcaseasummaryvaluationofRe.1/canbemade;
d. ValuationofAssetsThisisthesubjectmatterofthismanual.Althoughaccounting
norms/policiesfortheseareprovided,ULBslackguidanceinpracticalmattersofasset
valuation.ThisrequiresdeterminationofappropriateBookValue(usinghistoricalcost)
forincorporationintheOpeningBalanceSheet;
e. PassingofopeningentriesThisistheprocessforpreparationofFirst(Opening)
BalanceSheet.Takingcognizanceoftheassetsvalueintheaccountingrecordsbringsit
withinthepurviewofthenewaccrualbaseddoubleentryaccountingsystem.
f. MaintenanceandupdatingoffixedassetrecordsThedetailsofassetsarealso
recordedinappropriateFixedAssetRegistersandasystemhastobedevelopedthrough
whichtheseregistersarecontinuallyupdatedwithanyaddition,modificationordisposal
oftheseassets.
100. ThischapterdealswiththebasesforvaluationofassetsintheOpeningBalanceSheetofa
ULB.
BasicPremises
101. Thebasicpremisesproposedforthevaluationmethodologyare:
a. Consideringthecurrentpracticesinassetrecordmaintenance,mostULBsdonothave
readilyavailablerecordsaboutexistingassets;
b. Thepurposeofvaluationisnottodeterminethecorrectvalueofanasset.Itistogeta
reasonableestimateofthebookvalueforthepurposeofincludinginastatementwhich
reflectsthetrueandfairfinancialpositionoftheULB;
c. Unlikeotherentitieswherevaluationofassetsaffectssharepricesand/orprospective
takeoversbasedonvaluationofthecompany,thisconcernisnotrelevanttoULBs;
19
d. Someassetspresentproblemsintermsofidentificationbecauseoftheirnaturefor
example,undergrounddrainscannotbeeasilyverifiedwhilepreparingassetlist;
e. ManyassetsofULBspresentproblemsintermsofresaleorreuse.Forexample,roads
whichhavebeenconstructedcannotgenerallybedisposedoff,sold,norreused.
f. EvenvaluationatanominalpriceRe1/isrecommendedformaintainingtheasseton
thefixedassetregister.Hence,thevalueisnotasimportantastheidentificationand
correctrecordingofthenatureoftheasset.
102. Keepingtheseconcernsinmind,thepremiseforvaluationisasfollows:
a. Encouragethoroughidentificationofassetsthismustbedonetoensurethatnot
evenoneasset,nomatterhowsmall,isleftout;
b. SimplifyvaluationConsideringthepremisesmentioned,itwouldbesufficienttohave
areasonablevaluationratherthanaperfectone;
c. EnsureupdatingEnsurethataftertheonetimeexerciseonidentificationand
valuation,theassetsarerecordedintheassetregisterandtheregisterisregularly
updatedthereafter.
Valuationprinciples
103. TheidentifiedassetsoftheULBmayhavebeengiftedtoitorpurchased/constructedbyit
overtheyears.Thevaluationprocesshastobecarriedoutforassetsasonaparticulardate(for
exampleonthelastdayofthepreviousfinancialyear,say31.3.2008).Allreferencestovaluation
shouldbemadewithrespecttothisdate.Theprocessofvaluationshallbeasfollows:
104. Iftheassetwasreceivedasgift:
a. ValueatRe.1/.Allparticularsoftheassetshouldberecordedintheprescribedforms.
105. Iftheassetwaspurchased/constructed,itwillbevaluedasperthefollowingorderof
preference:
a. Ifboththecostanddateofpurchase/constructionisavailable/ascertainable:
i. Originalcostlessdepreciationprovidedfromthedateofpurchase/construction
tothedateofvaluation.
b. Ifcostisnotavailable/unascertainablebutthedateoryearofconstruction/purchaseis
ascertainable:
i. Incaseoflandwheretheoriginaldocumentsarenotavailable,valuationcanbe
ascertainedfromrelevantrecordsoftheLandRevenueDepartmentor
transactionvalueofasimilarplotinthesimilarareaaroundtheestimatedyear
oftransaction
20
ii. Iftheassethasoutliveditsestimatedusefullife,thenitwillbevaluedatRe.1/.
Estimationofusefullifewillbebasedonthelistusedforestimationof
depreciationforULBs.Thisisgiveninthefollowingchapters.
iii. Iftheassethasnotoutliveditsusefullife,then
1. ValuationwillbedonebasedontheCurrentStandardCost(CSC)rates
prescribed.TheULBwillusethispersq.feetrateorarearateandapply
ittothequantitativeparameteroftheasset.Thiswillgivetheestimated
currentstandardcostoftheasset.
2. Inordertoreflectthecostoftheassetintheyearinwhichitwas
purchases/constructed,theCSCwillneedtobedeflatedbyan
appropriateinflationindex(discussedahead)togivetheDeflated
StandardCost(DSC)oftheasset.
3. Thereafter,thevaluewillhavetobedepreciatedbasedonthe
recommendedrateofdepreciation(discussedahead)inordertoarrive
attheEstimatedBookValueoftheasset,whichwillbecarriedtothe
OpeningBalanceSheetasGrossBlock.
c. Ifneitherthecostnorthedateofpurchase/constructionisavailable:
i. Iftheassetisbeyonditsestimatedusefullife,itwillbevaluedatRe.1/
ii. Iftheassetiswithinitsusefullife,estimationshallbemadeofitsyearof
purchase/constructionandtheproceduresprescribedincaseof(ii)aboveshall
beappliedi.e.itsestimatedCSC,DSCandCurrentBookValueshallbededuced
usingthestandardratesandthedeflationindices.
d. Incaseitisimpossibletoassesstheyearofpurchase/constructionortheassetis
uniqueinnature,notappearinginthestandardlist,itsvaluationwillhavetobedoneon
acasebycasebasisaftertakingintoaccounttheconditionandobsolescencefactor.The
ULBSmayusespecialistvaluerstoassessthevalueofsuchassetsinsuchcases.
Flowchartofvaluation
106. Thisdecisionmakingandvaluationprocessisexplainedinthefollowingflowchart:
21
FlowchartforvaluationofFixedAssetsforOpeningBalanceSheet
Was the asset

received as a
gift?
Is the cost of
the asset
available?
Can we
estimate year?
Does it appear
to be beyond
useful life?
Is the year of
purchase
available?
Use Estimated
CSC method
Is it beyond
useful life?
Value at Re.1
Use Historical
Cost
Value on a
case to case
basis
Value at Re.1
Value at Re.1
Use CSC
Method
START
Yes
Yes
No
Yes
No
No
Yes
No
Yes
No
Yes
No
22
Assetreceivedasagift
107. Ifevidenceexists,oritisknownthatanassetwasreceivedbytheULBasagifti.e.without
anyconsiderationbeingpaid,itshouldberecognizedatRe.1/.Thisisinlinewiththebasic
policyofhistoricalcostreportingi.e.toreportanassetattheconsiderationpaidforit.
108. However,theseassetsmaybeofconsiderablevalueinthemarketandhence,theirnominal
valuationshouldnottakeawaytheimportancetomaintainandmonitorthemappropriately.
109. Itisnotnecessarythatthereshouldbeadocumentestablishingthegiftmereknowledge
wouldsuffice.
HistoricalCostBased
110. Wherethedetailsofpurchaseareavailable(thiswillusuallyhappenincaseofrecentyears
assets),theamountofpurchasecostanddateofpurchasewouldbeavailable.Insuchacase
valuationshouldbedoneasfollows:
a. Step1:DetermineHistoricalcostasonthedateofpurchase(referpreviouschapterfor
details);
b. Step2:Determinedepreciationtillvaluationdate(thisiscoveredsubsequently);
c. Step3:Deductdepreciation(b)fromhistoricalcost(a)toarriveatthebookvalueonthe
dateofvaluation.
111. Thisistheclosestwecangettothehistoricalcostoftheasset.Allothermethodsare
improvisationstoovercomedeficientinformationabouttheexistingassets.
112. Althoughpoliciesforcapitalizingassetsrequireinclusionofancillaryexpensessuchas
borrowingcost,theserequiresignificantanalysisandareelaborate.Unlesstheamountofsuch
expenseislikelytobesignificant,theycanbeignoredforvaluationofexistingassetsinthe
openingBalanceSheet.
IllustrationonuseofHistoricalCostMethod
AULBdeterminesthatanMSSteelTankwasinstalledatacostofRs.1,50,000andstartedoperationon
13.4.2006.TheHistoricalCostbasedValuationon31.3.2008wouldbeasfollows:
HistoricalCost1,50,000
Less:Depreciation*60,000
BookValueon31.3.200890,000
*DepreciationiscalculatedontheOriginalCostfor2years(200607and200708)@20%p.a.ofHistoricalCost.
Note:AsperDepreciationpolicy,useofassetbeyondsixmonthsinayearwouldleadtofullyearsdepreciation.Hencein
thiscase,fullyeardepreciationischargedfor200607.
23
CurrentStandardCostMethod
113. Wherethehistoricalcostisnotavailable,butthedate(oryear)isknown,wecanapply
appropriatestandardizedvaluationtechniquestoestimatetheCurrentbookValueoftheasset.
114. UndertheCurrentStandardCost(CSC)method,weestimatecurrentcost(asonthedateof
valuationforexample31.3.2008)atwhichequivalent(new)assetscanbepurchasedor
constructed.Theyarecalculatedintermsofappropriateunitsofmeasurementsuchasrateper
squaremeter,rateperrunningfeetetc.andthenappliedtothedetailsoftheasset.
115. Ratesarecalculatedforeachassetsunitofmeasurementsuchas:
Group Unit
Land Sqmeters
Buildings Sqmeters
Roadsofstandardwidth Perkm
Pipelines DiameterXlength
Drainsofstandarddimensions Runningmeters
Pumps HorsePower
Basedonthesestandardrates,thevalueoftheassetcanbedetermined.Forinstance,a
Buildingof1500sqmeterscanbevaluedbymultiplyingtherateprescribedforonemeter
cubeby1500.
116. Ideally,everystatewouldhaveitsownvaluationprocessandwithappropriateengineers,
ULBrepresentativesandaccountingspecialists,beabletodeterminetheRateforeachunitof
measurement
17
.AmodellistofCurrentStandardCostforvariousassetsisgiveninAnnex2.
117. Theprocessofvaluationwouldbeasfollows:
a. Step1:Collectappropriatedetailsabouttheasset(includinglocation,quantitative
detailssuchasarea,lengthetc.)
b. Step2:ClassifytoappropriateheadintheCSClist.Ifexactdescriptionisnotavailable,
usetheclosestmatchpossible.
c. Step3:Checkiftheusefullifeisover(referDepreciationratelist).Ifso,valueatRe.1/.
Else,gotoStep4.
d. Step4:CalculateCSCbymultiplyingthequantitywiththerateprovided.ThisistheCSC
oftheasseti.e.thevalueofpurchasing/constructinganewassetasondate.
e. Step5:DeflatethisindextotheyearofpurchasegivingtheDeflatedStandardCost
(DSC).Thisisdonetoestimatethehistoricalcostintheyearofpurchase.Astandardlist
17
ThisprocesshasbeencarriedoutinKarnatakaandthegovernmenthasnotifiedcurrentstandardratesfor
variousassets.Theseareusedinthismanualasrepresentativerates.Statesmaydecidetoamendoraddto
these.
24
ofindicesfrom198182to200708isgiveninAnnex4
18
.Anyassetknowntohavebeen
procuredbefore198182shouldbedeflatedusingthe198182index.
f. Step6:Calculatedepreciationfromtheyearofpurchasetillvaluationdate,assuming
thisvalue(Step5)wastheoriginalhistoricalcost.
g. Step7:Deductthedepreciation(Step6)fromHistoricalCost(Step5)toarriveatthe
CurrentBookValueoftheasset.
IllustrationonuseofCSCMethod
AULBdeterminesthataClass1CivilStructureBuildingwasconstructedin1976withthefollowing
specifications:
Type:RCCframedstructurewithmosaicflooringandteakdoors
Height:Ground+2floors
Area:GroundFloor500sqm,FirstFloor320sqm,SecondFloor240sqm
TheCSCbasedValuationon31.3.2008wouldbeasfollows:
CurrentStandardCost*62,36,000(Valueason31.3.2008)
DeflatedStandardCost(DSC)**11,31,760(EstimatedValuein1976)
Less:Depreciation***7,24,327(Depreciationtill2008)
BookValueon31.3.20084,07,433
*GroundFloor(500X6,200)+First(320X5,600)+Second(240X5600)=Rs.62,36,000.RatesforCSCtaken
asperAnnex2.
**(62,36,000/551)*100=11,31,760.Indexfor200708is551;indexfor19882andearlieris100.Index
takenfromAnnex4.
***DepreciationiscalculatedontheDSCfor32years(19762008)@2%p.a.(sinceusefullifeis50years,
notyetexhausted)
EstimatedCSCMethod
118. Wheretheyearofpurchase/constructioncannotbeestimated,therewillbedifficultyin
deflatingandapplyingdepreciationrates.However,keepinginviewtheobjectiveofhaving
reasonablevaluationprinciples,itissuggestedthatEstimatedCSCmethodmaybeused.Thiswill
bedoneasfollows:
a. Step1:Collectappropriatedetailsabouttheasset(includinglocation,quantitydetails
suchasarea,lengthetc.)
b. Step2:ClassifytoappropriateheadintheCSClist.Ifexactnomenclatureisnotavailable,
usetheclosestspecificationpossible.
18
Therecanbeseveralpriceindiceswhichcanbeusedforthis.However,sincethisrelatedtoCapitalAssets,
werecommendtheCostofInflationIndex(CII)releasedbytheIncomeTaxDepartmenttocalculateCapital
GainsTax.
25
c. Step3:Estimateyearofpurchase.Thisbecomessubjectivebutispossibletobecarried
outbytheULBitself.Thisprocessissimplerandfasterthanavaluationappraisal.The
yearsmaybeestimatedevenwithinrangesfore.g.1015yearsold.Inthiscase,the
maximumlifecanbetakeni.e.15yearsago.
d. Step4:Checkiftheusefullifeisover(referDepreciationratelist).Ifso,valueatRe.1/.
Else,gotoStep5.
e. Step5:CalculateCSCbymultiplyingthequantitativeunitswiththerateprovided.Thisis
theCSCoftheasseti.e.thevalueofpurchasing/constructinganewassetasondate.
f. Step6:DeflatethisindextotheestimatedyearofpurchasegivingtheDeflatedStandard
Cost(DSC).Thisisdonetoestimatethehistoricalcostintheestimatedyearofpurchase.
Usestandardlistofindicesfrom198182to200708giveninAnnex4
19
.Anyasset
knowntohavebeenprocuredbefore198182shouldbedeflatedusingthe198182
index.
g. Step7:Calculatedepreciationfromtheyearofpurchasetillvaluationdate,assuming
thisvalue(Step6)wastheoriginalhistoricalcost.
h. Step8:Deductthedepreciation(Step7)fromHistoricalCost(Step6)toarriveatthe
CurrentBookValueoftheasset.
IllustrationonuseofEstimatedCSCMethod
AULBidentifiesaClass1CivilStructureBuilding.Theyearofconstructioncannotbeestimatedbutitis
expectedtohavebeenmade2530yearsago.Thespecificationsare:
Type:RCCframedstructurewithmosaicflooringandteakdoors
Height:Ground+2floors
Area:GroundFloor500sqm,FirstFloor320sqm,SecondFloor240sqm
TheEstimatedCSCbasedValuationon31.3.2008wouldbeasfollows:
CurrentStandardCost*62,36,000(Valueason31.3.2008)
EstimatedDSC**11,31,760(EstimatedValuein78)
Less:Depreciation***6,79,056(Depreciationtill2008)
BookValueon31.3.20084,52,704
*GroundFloor(500X6,200)+First(320X5,600)+Second(240X5600)=Rs.62,36,000.RatesforCSCtaken
asperAnnex2.
**(62,36,000/551)*100=11,31,760.Indexfor200708is551;indexfor198182andearlieris100.Index
takenfromAnnex4.
***DepreciationiscalculatedontheDSCfor30yearsestimated@2%p.a.(sinceusefullifeis50years,not
yetexhausted)
19
Therecanbeseveralpriceindiceswhichcanbeusedforthis.However,sincethisrelatedtoCapitalAssets,
werecommendtheCostofInflationIndex(CII)releasedbytheIncomeTaxDepartmenttocalculateCapital
GainsTax.
26
CasebyCasedetermination
119. Incasethecostaswellastheyearisnotdeterminable,therewouldhavetobeacaseby
casedeterminationofvalue.Howeveritshouldberememberedthatthepurposeisto
determinetheBookValueratherthantheFairMarketValueasondate.Hence,thefollowing
orderofprocessmaybefollowed:
a. Step1:Istheassetsusefullifeover?(ReferAnnex3forUsefullife).Ifso,valueatRe.1/.
ElsegotoStep2.
b. Step2:Iftheassetiswithinitsusefullife,determinebookvaluebyreferencetoother
assetswithsamecharacteristicsorproperties.Assumptionscanbemadeinthiscase
theobjectiveistohaveareasonedjustificationforthevalue.
c. Step3:Usetherateofsimilarassetforcalculatingthevalueofthisasset.
ImportantCaveatMaintenanceofGrossBlockandAccumulatedDepreciation
TheaboveprocessesarerequiredtoprovideaGrossBlockValue(HistoricalCost)andAccumulated
Depreciationtilldate.Itisimportanttomaintainboththesevalues;merelyusingtheNetBookValue
i.e.GrossBlocklessdepreciationwillcreateproblemsinchargingannualdepreciationusingStraight
LineMethod.Fore.g.Inthelastillustration:
HistoricalCost(GrossBlock)is Rs.11,31,760
AccumulatedDepreciationis Rs.6,79,056(@2%for30years)
AndNetBookValueis Rs.4,52,704
Now,ifonlytheNetBookValueisrecordedi.e.4,52,704,annualdepreciationwillbechargedonthis
i.e.Rs.9,054(2%)p.a.andtheassetsvaluewillbeextinguishedonlyafteranother50years.
However,usingtheoriginalhistoricalcostofRs.11,31,760resultsinanannualdepreciationofRs.
22,635(2%)whichwillensurethattheassetwillhavebeenfullydepreciatedinanother20years.
IssuesinusingCSC
120. TheuseofCSCandDSC,aswellaschoiceofratescanobviouslybedebated.Thepurposeof
proposingtheseratesisinlinewiththelargerobjectiveofreasonablevaluationandalsoto
achieveacertainsenseofuniformityinassetvaluationacrossULBsinastate.
121. Currenteffortsinsomestateshaveresultedinanomaliesinvaluationsuchthat2ULBswith
similarassetsareshowingdrasticallydifferentvalues.Thisisbecausethevaluationprinciplesare
notstandardizedandsometimetechnicalfinesse(suchasnonavailabilityofrecordsinoneULB)
resultsindifferentvaluation(i.e.atnominalvalue,insteadofhistoricalcost).TheCSCcanbe
adaptedbystategovernmentstoachievethisoverallstandardizationinvaluation,depreciation
andbookvaluedetermination.
122. However,someassetsdonothaveprescribedCSC.Thevaluationinthisregardcanbeas
follows:
27
ItemsnothavingCSC
prescribedrates
Suggestedmethod
Land UseGuidanceValueprescribedundertheStampDutyActfor
thelocation,typeoflandanddate.
LaboratoryEquipment Checkiftheusefullifeisovergenerally10years,thenvalue
atRe.1/
Ifwithinusefullife,userecentpurchasecostforsimilarassets
anddeflateusingindex.Depreciatetoarriveatcurrentbook
value.
Vehicles Theyearwillbeavailablebyreferencetoregistration
document.Ifitisbeyondusefullife,valueatRe.1/.
Otherwisedeterminerateofparticularcarinthatyearfrom
dealer/manufacturer.Valueanddepreciateaccordingly.
Furniture,fixture,fittings,
electricalappliances
Checkiftheusefullifeisovergenerally10years,thenvalue
atRe.1/
value.
Office&OtherEquipment
includingComputer,
peripheralsetc.
Checkiftheusefullifeisovergenerally10years,thenvalue
atRe.1/.
value.
ValuingCapitalWorkinProgress
123. TheinformationwithregardtoCapitalWorkinProgress(CWIP)shallhavetobepreparedon
thedateoftheopeningBalanceSheetfromtherecordssuchasBillsRegister,Measurement
Book,GrantsRegisteretc.SinceassetsrepresentedbytheCapitalWorkinProgresswouldbe
underconstructionontheprescribeddate,itshouldbeeasiertoidentifytheseassetsandthen
todetermineitscosts.
124. AmountsaretobebookedbasedonthegrossamountofbillreceivedbytheULBpertaining
toworkdonebeforetheBalanceSheetdate.Acutoffdateof2monthsbeyondtheopening
BalanceSheetmaybetakentoincludeallbillswhichmayhavebeenreceivedafterwardsbut
pertaintoworkdonebeforetheBalanceSheetdate.Thismaybedonebycarryingoutpost
vouching(i.e.checkingofvouchersforatleasttwomonthsaftertheBalanceSheetdate,to
identifypaymentsbeingmadeforCWIP).
125. BorrowingcostforCWIPwillalsobeincludedifitsatisfiestherequirementsasper
AccountingStandards16onBorrowingCosts.
28
CHAPTERVVALUATIONOFASSETSONGOING
126. OncetheassethavebeenvaluedandincludedintheBalanceSheet,theircarryingvalue
needstobeperiodicallyrecomputedtoprovidefordepreciationandothertransactions.
127. Aspectssuchasrevaluationofassets,depreciationofassetsetc.whichariseonaregular
basisintheULBarediscussedinthischapter.
DepreciationofAssets
128. Depreciationhasasignificanteffectonthedeterminationandpresentationofthefinancial
positionofaULB.Depreciationischargedineachaccountingperiodbyreferencetotheextent
ofthedepreciableamount.
129. ULBsneedtoreportdepreciationaccuratelyintheirfinancialstatementsfortwomain
reasons.
a. tomatchexpenseswiththeincomesgeneratedbecauseoforwith,thoseexpensesand;
b. toensurethattheassetvaluesinthebalancesheetarenotoverstated.Anasset
acquiredinYear1isunlikelytobeworththesameamountinYear5.
AccountingPrinciples
130. ThebasicprinciplesunderNMAMwithregardtodepreciationare:
a. Depreciationshallbeprovidedattheratesprescribedbythestate.Depreciationonall
fixedassetsistobeprovidedconsistentlyoneitherWrittendownValueorStraight
LineMethod.TheAccountingStandardaswellasNMAMallowsanyofthesetwo
methodstobeused.Itonlystatesthatwhatevermethodisused,itshouldbeapplied
consistently.
b. Depreciationshallbeprovidedatfullratesforassets,whicharepurchased/
constructedbeforeOctober1ofanAccountingYear.Depreciationshallbeprovidedat
halftheratesforassets,whicharepurchased/constructedonorafterOctober1ofan
AccountingYear.
c. Depreciationshallbeprovidedatfullratesforassets,whicharedisposedonorafter
October1ofanAccountingYear.Depreciationshallbeprovidedathalftheratesfor
assets,whicharedisposedbeforeOctober1ofanAccountingYear.
StraightlineMethod(SLM)
131. Straightlinedepreciationisthesimplestandmostoftenusedtechnique,inwhichtheULB
estimatesthe"salvagevalue"oftheassetafterthelengthoftimeoverwhichitwillbeusedto
generaterevenuesorprovideservice(usefullife),andwillrecognizeaportionofthatoriginal
costinequalincrementsoverthatamountoftime.
29
WrittenDownValueMethod
132. TheWDVmethodisatypeofaccelerateddepreciationbecauseitrecognizesahigher
depreciationcostearlierintheasset'slifetime.Underthismethod,eachyearsdepreciationis
appliedtotheopeningnetbookvalueoftheassetratherthanoriginalcostoftheasset.This
processcontinuesuntilwereachtheresidual/salvagevalueortheendoftheasset'susefullife.
133. ResidualorSalvagevalueistheamountwhichanenterpriseexpectstoobtainforanasset
attheendofitsusefullifeafterdeductingtheexpectedcostsofdisposal.
134. Itshouldalsobenotedthatthebookvalueoftheassetbeingdepreciatedisneverbrought
belowitssalvagevalue,regardlessofthemethodused.
135. WherethesalvagevalueisdeterminedatNIL,theassetvalueshouldalwaysberetainedata
nominalvalueofRe.1/
RateofDepreciation
136. StategovernmentswouldbebestplacedtodetermineapplicabledepreciationratesforULB
assets.Theimportantthingstorememberare:
a. Theclassificationofassetsfordepreciationshouldfollowtheaccountingcodification
structure;
b. Themethodofdepreciationi.e.SLMorWDVshouldbedeterminedupfront;
20
c. Usefullifeandresidualvalueofvariousassetsshouldbedeterminedinconsultation
withengineers,valuersandmunicipalstaff.Itisimportanttorememberthatthereisno
perfectrateandalldepreciationratesareonlyanestimation;
d. DetermineratesforvariousclassesofassetsusingSLMorWDV;
e. ProvidetheseforusebytheULBs.
137. ThismanualprovidesanestimationofusefullifeforvariousassetsandapplicableSLM
depreciationrates.ThisisgiveninAnnex3
21
.
ClosingBookValue
138. Oncetheserateshavebeenappliedtotheassets,theClosingBookValueisdeterminedby
reducingthedepreciationchargefortheyearfromtheOpeningBookValue.Thisisthecarrying
amountoftheassetsattheendoftheperiod.
20
TheCompaniesActprovidesbothSLMandWDVratesfordepreciationofassets.TheIncomeTax
DepartmentonlyallowsuseofWDV.CertainlargeULBslikeKolkataandHyderabadareprovidingdepreciation
onWDV,However,statelevelimplementationsinTamilNaduandKarnatakaareusingSLM.
21
TheseratesareadaptedfromKarnatakawhichfollowedthedueprocessdescribedindeterminingtherates
forULBassets.
30
Amortization
139. Inthecaseofanintangibleasset,thetermamortizationisgenerallyusedinsteadof
depreciation.Bothtermshavethesamemeaning.
140. Theperiodofamortizationwilldependontheasset.AccountingStandard26prescribesfor
arebuttablepresumptionof10yearsforthelifeofintangibleassets.However,incaseofitems
likesoftwarewheretechnologicaladvanceswillresultinaquickerobsolescence,atimeframeof
35yearsisrecommended.
141. IntangibleassetsbelowRs.25,000canbeexpensedandneednotbecapitalized.Thehigher
limit(comparedtotangibleassets)isprescribedtoavoiddetailedrecordingandamortizationof
minoritemslikesoftwarewhichgenerallycostbelowRs.25,000.
ImpairmentofAssets
142. Impairmentisalossinthefutureeconomicbenefitsorservicepotentialofanasset,over
andabovethesystematicrecognitionofthelossoftheassetsfutureeconomicbenefitsor
servicepotentialthroughdepreciation.
22
143. Inotherwords,ifthecarryingamountofanassetismorethantheamountthatistobe
recoveredthroughuseorsaleoftheasset,thentheassetissaidtobeimpaired.Itbasically
meansthatalthoughtheremaybeusefullifeleftofanasset,theproductivityoftheassethas
gonedownsharply. Forexampleifbypolicyofthegovernment,certainitemsaredecidednotto
beproducedbytheULB,thefuturecashflowswouldbeaffectedthattheexistingrecoverable
valueofassetsusedintheproductioncouldgobelowitscarryingamount.
144. ULBsarerequiredtoidentifyimpairedassetsateveryBalanceSheetdateandtodisclosethe
same.However,thatapplicationoftheAccountingStandard
23
isfairlycomplexandwillrequire
thetakingofdecisionsoncasetocasebasisforthecalculationoftherecoverableamounts,
usefullivesandsoforth.ULBsareadvisedtotakethehelpofprofessionalaccountantsforthe
identificationofimpairedassetsanddeterminationoftheextentofimpairment.
Creation/purchaseofnewassets
145. Theongoingconstruction/purchaseoffixedassetswouldbevaluedathistoricalcostandas
andwhenthetransactionisundertaken.Nospecificspecialtreatment/processisprescribedin
thisregard.TheprocessprescribedinNMAMwouldsufficetorecordassetsasandwhenthey
arepurchased/constructed.
AccountingPrinciples
146. Somesignificantaccountingtreatmentforcreation/purchaseofassetsare:
a. AllFixedAssetsshallbecarriedatcostlessaccumulateddepreciation.Thecostoffixed
assetsshallincludecostincurred/moneyspentinacquiringorinstallingorconstructing
22
InternationalPublicSectorAccountingStandard(IPSAS)21Impairmentofnoncashgeneratingassets;
Para14
23
TherelevantIndianAccountingStandardisAS28
31
fixedasset,interestonborrowingsdirectlyattributabletoacquisitionorconstructionof
qualifyingfixedassetsuptothedateofcommissioningoftheassetsandotherincidental
andindirectexpensesincurreduptothatdate.
24
:
b. Assetsundererection/installationonexistingprojectsandcapitalexpendituresonnew
projects(includingadvancesforcapitalworksandprojectstores)shallbeshownas
"CapitalWorkinProgress"
25
c. AnyFixedAsset,whichhasbeenacquiredfreeofcostorinrespectofwhichnopayment
hasbeenmade,shallberecordedatnominalvalueofRe.1/.
d. AllassetscostinglessthanRs.5,000(RupeesFivethousands)wouldbeexpensed/
chargedtoIncome&ExpenditureAccountintheyearofpurchase
a. Interestonborrowingsdirectlyattributabletoacquisitionorconstructionofqualifying
fixedassetsuptothedateofcommissioningoftheassetsshallbecapitalized.
26
OngoingLifetimecosts
147. Aftertheassethasbeenacquired,certaincostsareincurredduringitslifetimefor
maintenance,repairandimprovement.Thetreatmentoftheseexpensesoftencauseconfusion
assomeofthemmaymeritcapitalizationi.e.additiontothevalueoffixedassets.Thissection
providesguidanceontheissuesofclassificationofexpensesasrevenueorcapital.
Maintenanceandrepairs
148. Thetermsmaintenanceandrepairsgenerallyareusedinterchangeably.However,they
areslightlydifferent.
149. Maintenanceisdefinedas
thekeepingofpropertyinoperablecondition
150. Repairisdefinedas
therestorationofacapitalassettoitsfullproductivecapacity,oracontribution
thereto,afterdamage,accident,orprolongeduse,withoutincreaseintheassets
previouslyestimatedservicelifeorproductivecapacity.
27
151. Sinceordinarymaintenanceandrepairsexpendituresareregardedasoperatingcosts,they
aretobechargeddirectlytoexpensewhenincurred.
ExtraordinaryRepairs
152. Extraordinaryrepairsarerepairsthat:
24
NationalMunicipalAccountingManual,Chapter3Para3.21
25
NationalMunicipalAccountingManualChapter3,para3.12
26
Ibidpara3.18
27
EricLouisKohler,KohlersDictionaryforAccountants
32
...occurinfrequently,involverelativelylargeamountsofmoney,andtendto
increasetheeconomicusefulnessoftheassetinthefuturebecauseofeithergreater
efficiencyorlongerlife,orboth.Theyarerepresentedbymajoroverhauls,complete
reconditioning,andmajorreplacementsandbetterments.
28
153. Becauseexpendituresforextraordinaryrepairsincreasethefutureeconomicusefulnessof
anasset,theybenefitfutureperiodsandarethereforecapitalexpenditures.
Replacements,ImprovementsandAdditions
154. Replacements,improvements,andadditionsarerelatedconcepts.
155. Replacementisdefinedas
thesubstitutionofonefixedassetforanother,particularlyofanewassetforanold,
orofanewpartforanoldpart.
29
156. Animprovement(orbetterment)is
anexpenditurehavingtheeffectofextendingtheusefullifeofanexistingfixedasset,
increasingitsnormalrateofoutput,loweringitsoperatingcost,increasingratherthan
merelymaintainingefficiencyorotherwiseaddingtotheworthofbenefitsitcan
yield.
157. Improvementsordinarilydonotincreasethephysicalsizeoftheproductivefacility.Suchan
increaseiscalledanaddition.
158. Theaccountingforreplacement,improvementandadditionallthreeissubstantiallythe
same.AspertheNMAM,anyadditiontoorimprovementtothefixedassetthatresultsin
increasingtheutilityorusefullifeoftheassetshallbecapitalizedandincludedinthecostof
fixedasset.
159. Thecostofexistingassetsthatarereplaced,togetherwiththeirrelatedaccumulated
depreciationaccounts,arerequiredtobeeliminatedfromtheaccounts.
IllustrationUpgradationofa10mroadto30meters
Thisisanimprovementandwouldneedtobecapitalizedintheaccounts.However,whenthe30m
roadiscapitalizedtheexistingbookvalueofthe10mroadwouldneedtobeeliminatedi.e.de
capitalizedfromthebooks.
Rehabilitation
160. Expenditurestorehabilitatebuildingsorequipmentpurchasedinarundownconditionwith
theintentionofusingthemshouldbecapitalized.Normallytheacquisitionpriceofarundown
28
GlennA.Welsch,RobertN.Anthony,andDanielG.Short,FundamentalsofFinancialAccounting
29
EricLouisKohler,KohlersDictionaryforAccountants
33
assetislessthanthatofacomparablenewasset,andtherehabilitationexpendituresbenefit
futureperiods.Suchexpenditurescanthereforebecapitalized.
DisposalofAssets
161. Whenanassetisretiredfromservice,itshouldbetreatedinaccordancewiththe
proceduresprovidedintheNMAM.Inparticular:
a. Nodepreciationshouldbechargedafterdisposal/retirementoftheasset;
b. IncasethedisposalhappensbeforeOctober1,50%ofthedepreciationshouldbe
charged.IfitisonorafterOctober1,fulldepreciationshouldbecharged;
c. Theassetswhichareoutofserviceshouldberecordedinaseparateregister;
d. Onceanassetisdisposed,itsmovementshouldbeupdatedintheFixedAssetRegister
RevaluationofAssets
162. HereagainthetreatmentisspecifiedindetailunderNMAM.Therecommendedpoliciesare:
a. AnincreaseinnetbookvaluearisingonrevaluationshallbecreditedtoaRevaluation
ReserveAccountundertheMunicipalFund.Adecreaseinnetbookvaluearisingon
revaluationoffixedassetsshouldbechargedtoIncomeandExpenditureaccountexcept
totheextentthatsuchadecreaseisrelatedtoapreviousincreaseinrevaluationin
whichcaseitshouldbesetofffromtheRevaluationReserveAccount.
b. Ifanassetisrevalued,theentireclasstowhichthatassetbelongsshallberevalued.A
classisgenerallyacategoryofsimilarassetswhichdifferssubstantivelyfromother
similargroupsofassets.Forexample,thecategoryLandwouldsignifyaclassofasset,
differentfromsayBuildingsorVehicles.
c. Revaluationofaclassofassetsshallnotresultinthenetbookvalueofthatclassbeing
greaterthantherecoverableamountoftheassetsofthatclass.
d. Revaluationreserveshallbereducedbytransferofequivalentamountofdepreciation
chargedontherevaluedportionofthecostofthefixedassets.
34
CHAPTERVI:ASSETMANAGEMENT
163. Althoughthismanualisprimarilyintendedtohelpinthevaluationoffixedassets,a
necessarycorollarywouldbethemaintenanceofproperfixedassetsrecordsandgoodasset
managementpractices.ThisisencompassedinthetermAssetLifeCycleManagementandis
brieflycoveredinthischapter.
AssetLifecycle
164. Anassetproceedsthroughanumberofsequentialphasesduringitslifecycleacquisition,
operationandmaintenance,refurbishmentorenhancement,and,finally,disposal.Thelifecycle
ofanassetbeginswithaplanningprocessthatidentifiestheneedforthatassetanddetermines
howandwhenitistobeprocured.Theassetisthenacquiredeitheranexistingassetis
purchasedoranewoneiscreated.Theassetthenentersitsoperationalphase.
Astheassetages,itmaydeteriorateorbecomeobsolete,atwhichstageadecisionismadeto
eitherrefurbish,enhanceordisposeofit.Iftheneedstillexistsfortheserviceprovidedbythe
asset,thecyclerecommences.
165. Thereareessentiallythreebroadstagesinthelifecycleofanasset:
a. Acquisition;
b. OperationandMaintenance;and
c. Disposal.
166. Thesevariousstagesareillustratedbelow
30
:

MAINTENANCE
MANAGEMENT
SYSTEM

OPERATION ACQUISITION
Strategy
Development
andReview
ASSET
DISPOSAL
Asset
Improvement
Maintenance
Planning
Maintenance
Evaluation
Maintenance
Execution
30
AdaptedfromMaintenanceEngineeringSocietyofAustralia(www.mesa.org.au)
35
RecordKeepingFixedAssetRegister
167. Oncetheassetshavebeenidentified,listedandvaluedbytheULB,theirrecordneedstobe
maintainedandcontinuallyupdated.ThisisachievedthroughtheFixedAssetRegister(FAR).If
theFARisnotcontinuallyupdated,theefficacyoftheentireassetidentification,valuationand
managementwillbegreatlyreduced.
168. TheFARwillformthebasisforfurtherplanningandmaintenanceundertheALCMstrategy
fortheULB.Hence,thisdocumentwillhavearecordkeepingandplanningfunction.
169. TheprocessofrecordingandupdatingoffixedassetsdataisshownintheFlowchartat
Annex5.TheformatofvariousfixedassetregistersisgiveninAnnex6.
AssetLifecyclemanagementstrategy
170. AssetLifeCycleManagement(ALCM)isastrategic,integratedapproachtomaintenancethat
considersalltheelementsthataffecttheproductivelifeofanassetfromdesigntodisposal.It
isaproactiveprocessthatcomplimentsexistingpoliciesbyprovidingstrategicfocusand
perspective.
171. AssetintensiveorganizationsincludingULBswhichsuccessfullyadoptassetlifecycle
managementwillreducemaintenancecostsandimproveproductivitythroughsuperior
planning.Fromdesigntodisposal,anassetslifecycleincludesthefollowingstages:
a. Clarifytheneedorrequirementtobesatisfiedbytheasset;
b. Identifythetypeofassetsuitablefortherequirementandfulfilltheneed;
c. Determinethemaintenancestrategy,cycleandplanforthelifeoftheasset;
d. Purchasetheasset;
e. Commission,operateandmaintaintheasset;and
f. Disposeoftheassetattheendofitseconomicallife.
172. ToachieveALCM,organizationsneedvisibilityintothreemainareasofmaintenance
planning;shortterm,outageandlongtermplanning.Theseplannedmaintenancestrategies
improvereliability,overallproductivity,thelengthofanassetslife,andultimatelyreducethe
totalcostofassetownership.
AssetManagementUnit(AMU)
173. ItwouldbeclearfromtheforegoingdiscussionsthatALCMwouldgreatlyenhancethe
productivityandperformanceofULBs.However,currentlythereisnounifieddepartmentin
ULBswhichlooksatallaspectsofassetmanagement.InmostULBs,theacquisitionoffixed
assetsistheresponsibilityoftheStoresandPurchaseDepartment.Similarly,theaccounts
departmentnormallyrecordsonlythefinancialtransactionandisnotconcernedwiththe
maintenanceandmanagementoftheasset.
36
174. Forthesereasons,itmaybeusefulfortheULBstosetupanAssetManagementUnit(AMU)
sothatvariousaspectsofassetlifecycleareproperlymanaged.ThisAMUmaybecentrally
locatedandunderthechargeoftheheadofFinanceortheCommissioner.Thejustificationfor
thecelltoreportdirectlytotheCommissionerarisesfromthefactthattheuseofmanyofthe
fixedassetssuchaslandandbuildinghaspolicyovertones,andthealternativesintheserespects
mayhavetobeexaminedfromalargerperspective.
175. Inthisconnectionitisalsotobenotedthatplanningforassets(capitalbudgeting)isa
specializedandtimeconsumingexercisebyitself,andmostdepartmentsoffinanceand
accountsinULBsdonothavethewherewithalintermsofeithertimeorhumanresourcesto
spareforit.Hence,theAMUcanhavespecializedanddedicatedstaffforexclusivelyfocusingon
theseissues.
StructureofAMU
176. TheAMUcouldconsistofthefollowingstaffandofficers:
a. Head,AMUpreferablyapersonwithAssetManagementexperience,includingMIS
andcomputersystems;
b. ProcurementplanOfficerresponsibleforpurchaseplanning,schedulingand
design;
c. RecordingOfficerforreview/maintenanceofFixedAssetregisters.Alsotokeep
trackofdisposedassets,salesandpreparationofvariousreportsincluding
depreciationschedules;
d. MaintenanceplanOfficerTooverseeallscheduled,plannedmaintenance,toco
ordinatewithrelevantdepartmentstoensureallassetsareinworkingconditionand
servicedintime;
e. Otherstaffasmaybeneeded
177. TheAMUstaffandofficersmustallbecomputerliterateandreasonablyproficientin
workingwithelectronicspreadsheets.Ifcapacitybuildingmeasuresarenecessaryinthese
regards,theULBmustspeedilyplanforthesameandimplementnecessaryprograms.
178. Attentionistobepaidtothequalificationsandexperienceoftheofficersdeputedtothe
AMU.Attheminimum,officersshouldhaveformalaccountingqualifications,withinservice
trainingorexternaldiplomasorotherqualificationsininformationtechnology.HeadofAMU
shouldhaveatleasttenyearsofworkexperienceofwhichatleastfiveyearsshouldhavebeen
intheareaofevaluationofproposals,procurement,MIS,andassetaccounting.Officerincharge
ofassetplanningmusthaveprocurementaswellasmaterialsplanningandcapitalbudgeting
experience.Staffshouldbeappropriatelychosenwithregardtoexperienceinaccounting,
procurement,andMIS.
FunctionsofAMU
179. ThefunctionsoftheAMUshallbe,withoutanylossofgenerality,asfollow:
37
ProcurementPlanning
a. Toprepareshortandmediumtermassetacquisitionplansinconsultationwiththe
proposer/userdepartmentsandtopresentthesamewithduefinancialimpact
exercisesandalternativesforconsiderationofCompetentAuthority;
b. TopreparegeneralProcurementPlanforfixedassetsbeforethebeginningofthe
fiscalyearintermsoftheapprovedassetacquisitionplansandtolayoutnecessary
timelines,parametersandbenchmarks;
AssetAcquisition
c. ToassistandfacilitatethePurchasedepartmentintheprocessofacquisitionof
assetsasperAssetProcurementPlan;
d. Toassistandfacilitatetheotherexecutiondepartmentstocarryoutthe
ProcurementPlan;
RecordingandReporting
e. Todevelop,updateandmaintainanassettrackingdatabasewithrespecttothe
location,condition,andotherparameterswithrespecttofixedassets;
f. Todevelop,updateandmaintainaCapitalWorksinProgressdatabaseandto
generatenecessaryMIStherefrom;
g. Todevelop,updateandmaintaintheFixedAssetsRegisterandtorecordallfixed
assetrelatedtransactionswhichaddtoorsubtractfromthebookvalueoftheasset;
h. Toseparatelymaintaintheregisterofimpairedassetsandassetsscheduledfor
disposalwithdueattentiontocomputationofvalueinuseandrecovery/salvage
values.Toalsoassurethatdueprocessisfollowedindeterminationoffairvalues
andmarketprices;
i. toprepareevaluativeandanalyticalreportsforthemanagementfromtimetotime;
and
j. topreparedepreciationschedules
Maintenance
k. Toprepare,inconsultationwithotherdepartments,plannedmaintenance
schedulesandtooverseetheirimplementation;
l. toprepare,inconsultationwithconcerneddepartments,schedulesforconditional
assessmentandplansformajorrenovations,repairs,andmodifications;
DisposalofAssets
m. toprepareandfollowthroughontheannualdisposalplanforfixedassets;
n. ToprepareAssetrenewalplanwhichwillfeedintothecapitalprocurementplan;
38
180. AseparatelistofreportstobepreparedbytheAMUandsubmittedtotheManagement,
shouldbedrawnup.Suchreportsmayincludethefollowing:
AnnualProcurementPlan;
Shorttermandmediumtermcapitalbudgetsshowingconstructionandacquisition
offixedassets;
ReviewofAnnualProcurementPlanswithrespecttotargetsandachievements
quarterlyandhalfyearly;
AnnualDisposalandSalvagePlansandreviewofprogressquarterlyandhalfyearly;
FixedAssetsRegister;
PlannedMaintenanceSchedule
ConditionalAssessmentScheduleandReports;
Reportonmajorrepairsandrenovationscarriedoutonfixedassetsandtheeffect
thereofonremainingusefullives;
DepreciationSchedules;and
Suchothersasmaydeemednecessaryfromtimetotime
UsingITforassetmanagement
181. SincemostULBswillhavealargenumberofassets,itwouldbemostefficienttouse
appropriateITtoolsfortheirmanagement.AssettrackingcanbedonethroughFARswhichcan
bemaintainedondatabases.Maintenanceplansandschedulescanbebestmanagedthrough
projectmanagementandresourceschedulingsoftware.Preparationofvariousreportsshouldbe
automatedandschedules(suchasfordepreciation)generatedthroughsoftware.
182. Mostofthesefunctionscanbeachievedthroughbasiccomputerapplicationsandminimal
programming.ItisstronglyemphasizedthatULBsshouldnot,attheinitialstagesatleast,lookto
usecomplexERPsystemswhicharedifficulttoimplement.
39
CHAPTERVII:ISSUESINVALUATION
FreeholdLand
183. AlllandownershipofwhichvestswiththeULBshouldbeincludedintheopeningbalance
sheet.
Landacquiredthroughpurchase
184. Thelandwillberecordedatthepurchasepricepaid/payableandotherincidentalcostssuch
asregistrationchargesincurredtobringtheassettoitspresentlocationandcondition
Landsacquiredthroughcompulsoryacquisition
185. Thelandwillberecordedatthetotalcompensationpaid/payablefortheacquisitionofthe
land.
Compensationpaid:Itshallbevaluedatcompensationactuallypaid.
NoCompensationPaid:Iftheassetwasacquiredwithoutpayinganycompensationthenit
shallbevaluedatRe.1/.However,anydevelopmentalworkdoneshouldbecapitalizedat
cost.
Compensationindispute:Theamountpaidwillberecordedastheassetvalue.Anyextra
amountthatmaybepayable,ifdeterminable,shouldbeshownascontingentliabilities.
Whenanyfurtheramountispaidtothepreviousowner,itwillbeaddedtotheassetinthe
yearofpayment.
Vestedgovernmentlands
186. VestedgovernmentlandsarethoselandswhicharenotownedbytheULBsnordoesany
economicbenefitaccruetotheULB.TheownershipoftheselandsvestwiththeState/Central
governmentandtheULBmerelyactsasatrusteefortheselands.AsperTechnicalGuideissued
byICAIforULBs,vestedgovernmentlandshallnotberecordedasassetasneitherownership
noreconomicbenefitsiswithULBs.Thedescriptionofsuchlandsshallformapartofthenotes
tothebalancesheet.
Landimprovement
187. Originalcostofanyimprovementtolandsuchaslanddevelopmentandlandfillingshould
becapitalizedasanimprovementtotheland.
Landacquiredthroughgovernmentgrants
188. IftheULBhaspurchasedlandfromgovernmentgrants,thenthecostofthelandwillbe
shownatgrossvaluei.e.costpaid/payableorasdetermined.Thegrantreceivedshouldbe
shownasCapitalReserveintheBalanceSheet.
Buildings
189. Thevaluationofbuildingsshallbecarriedoutasfollows:
40
Buildingspurchased
190. Thepurchasecostofthebuildingshallincludethepurchasepricecostandincidentalcosts
suchasregistrationchargesandothercostsincurredtobringtheassettoitspresentlocation
andcondition.
Buildingconstructed
191. Ifthebuildinghasbeenconstructed,thenthecostofconstructionwillbetakenasthecost.
Grantsreceivedinrespectofbuildings
192. AsperTechnicalGuideonAccountingforULBsandAS12AccountingforGrantsissuedby
ICAI,governmentgrantsrelatedtospecificfixedassetsshouldbepresentedinthebalancesheet
byshowingthegrantasadeductionfromthegrossvalueoftheassetsconcernedinarrivingat
theirbookvalue.
193. Alternativelythebuildingcanbeshownatgrossvalueandthegrantrecognizedasdeferred
income.Further,theincomeshouldberecognizedintheincomeandexpenditureaccountoutof
thedeferredincomeaccountintheproportionofdepreciationchargedonthebuildingsinview
oftherequirementsofAS12.
HeritageBuildings
194. Heritagebuildingsaregenerallytobevaluedinthesamemannerasotherbuildings.
However,theyaretobedisclosedseparatelyundertheHeadHeritageAssetsunderOther
Assets.Thepurposeistodistinguishtheassetsfortheirhistorical,culturaland/orreligious
significanceandtorecognizetherestrictionsontheiruseorsale.
ArtandHistoricalitems
195. ULBsshouldcapitalizeworksofart,historicaltreasures,andsimilarassetsattheirhistorical
cost.TheseitemscanbeclassifiedunderHeritageAssetsunderOtherAssets.
196. Governmentsshoulddiscloseinformationabouttheirworksofartandhistoricalcollections.
Capitalizedcollectionsorindividualitemsthatareexhaustible,suchasexhibitswhoseuseful
livesarediminishedbydisplayoreducationalorresearchapplications,shouldbedepreciated
overtheirestimatedusefullives.Depreciationisnotrequiredforcollectionsorindividualitems
thatareinexhaustible.
ValueoflandunderRoads
197. RoadsaregenerallybuiltonpropertythatisownedbytheULB.Hence,apartfromtheroad,
thelandundertheroadalsoneedstobevaluedandaccounted.
198. SuchlandistobekeptunderLandandnotincludedinRoads&Bridges.Thevalueofsuch
landshouldbetakenatthehistoricalcosti.e.ifanyamountispaidtoacquireitthenatthe
compensationpaidetc.Iftheamountcannotbeascertained,anominalvalueofRe.1/should
beconsideredforthelandundereachroad.
41
Pipenetworks
199. Networkswillnormallyhavetrunks,mains,andsubmains.Thisisequallyvalidforwater
supplyaswellasseweragenetwork.
200. Thosepartsofnetworkwhicharerelativelystandaloneshouldbeconsideredseparate
assetsontheirown.Thecriteriontobealsousedisthatfailureofthesmallernetworkisnot
criticaltothecontinuedoperationofthelargerone.
201. Whilecomputinghistoricalcosts,originalcostsofdigginganearthworkshouldbeincluded.
202. Anymajorcostforimprovementofnetworkfunctioning(forinstance,removalofsediments
andcoatingfrommainsortrunks)shouldbeaddedtothebookvalue.
AssetsunderHirePurchase/FinanceLease
203. HirePurchase/FinanceLeaseshallbetreatedasfollows
31
:
a. Thepurchasepriceshallbecapitalizedasthecostoffixedassets
b. HirePurchase(HP)installmentsshallbeapportionedbetweenthefinancechargeand
thereductionoftheprincipaloutstanding.Thefinancechargeshallbeallocatedsoasto
produceaconstantperiodicrateofinterestontheremainingbalanceoftheliability;
c. ThetotalamountofinterestportionoutoftheHPPayableshallbeaccountedby
debitingtoacontrolaccountundercurrentassets.Thisamountwillbeadjustedon
accountingoffinancecharges
d. ThedepreciationpolicyforassetspurchasedunderHPshouldbeconsistentwiththatfor
ownedassets.
IntangibleAssets
204. IntangibleassetsinULBswillgenerallybeinthenatureofexpenditureonsoftware.TheULB
willassesstheexpendituremadeindevelopmentorpurchaseoftheintangibleassetinthelast2
yearsandcapitalizeitasfixedasset.Incasetheintangibleassethasbeenprovidedfreeofcost,
onasharingbasis,itshouldnotbeshowninthebalancesheet.ExpenditurebelowRs.25,000/
shouldbechargedtorevenueandnotcapitalized.
205. Theprocessofvaluationofintangibleassetwouldbeasfollows:
a. IfPurchased:Thecostofanintangibleassetcomprisesitspurchaseprice,includingany
importdutiesandothertaxes(excludingrecoverableamountfromthetaxing
authorities),andanydirectlyattributableexpenditurelikeprofessionalfeesforlegal
servicesetconmakingtheassetreadyforitsintendeduse.Anytradediscountsand
rebatesaredeductedinarrivingatthecost.
31
NationalMunicipalAccountingManualpara3.22(c)
42
b. If Internally Generated: The cost of internally generated assets
32
such as software
shouldbedeterminedinlinewithAS26IntangibleAssets.Wheretheassetmeetsthe
criteria for recognition, its cost will comprises all expenditure that can be directly
attributed or allocated on a reasonable and consistent basis to create the asset /
software for its intended use. Costs include (i) expenditure on materials and services
usedindevelopingtheasset,(ii)salaries,wagesandotheremploymentrelatedcostsof
personnel directly engaged in developing the asset, (iii) any expenditure that is directly
attributable to generating the asset. However, it excludes (i) selling, administrative and
othergeneraloverheadexpenditureunlessthisexpenditurecanbedirectlyattributedto
making the asset ready for use; (ii) clearly identified inefficiencies and initial operating
lossesand(iii)expenditureontrainingthestafftooperatetheasset.
c. IfGifted/Donated:IftheassetwasacquiredwithoutpayinganypriceandgiftedtoULB
(orifitisdonated):thenitshallbevaluedatRe.1/..
d. IfAcquiredthoughexchange:Anintangibleassetmaybeacquiredinexchangeorpart
exchangeforoldintangibleasset.Wheretheassetsexchangedaresimilar,thenetbook
valueoftheassetwhichisexchangedshouldbetaken,andtoittheextraamountthatis
paid,ifany,isadded.Ifinsteadofanextrapayment,arefundisinvolved,thenecessary
adjustmentwillhavetobemade.Incaseofdissimilarassets,theassetsacquiredshould
berecognizedatitsfairvalue.
206. TheresidualvalueofanintangibleassetinULBsshouldbeassumedtobezero.Hence,the
fullcostshouldbeamortizedovertheestimatedusefullifeoftheasset.
207. Subsequentexpenditureonintangibleassetsshouldbegenerallyrecognizedasanexpense
unlessitincreasesthecapacityorthelifeofasset.
32
AsperAS26,aninternalintangibleassetshouldberecognisedonlyifthereisreasonableevidenceoffuture
economicbenefit.Forinstance,noresearchexpenditureisallowedtobecapitalized.Further,internally
generatedbrands,mastheads,publishingtitlesetc.arenotpermittedtoberecognisedasintangibleassets
sincetheycannotbedistinguishedfromthecostofdevelopingthebusinessasawhole.
43
ANNEX1CLASSIFICATIONANDCODIFICATIONOFASSETS
FORFIXEDASSETREGISTER
PrimaryGroup SecondaryGroup Primary
GroupCode
Secondary
GroupCode
Land VacantLandwithoutstructures,right,titleand
interestwithULB
10 01
Vacantlandwithboundarywallorfencing,no
internalstructures,right,titleandinterestwith
ULB
10 02
Landwithminorstructure,temporaryor
permanent,right,titleandinterestwithULB
10 03
Vacantlandwithoutstructuresundercontrolof
ULB,titletransferred,rightandinterestnot
physicallyestablished
10 04
Landfill 10 05

Buildings Buildingwithappurtenantlandlessthan50%of
groundcoveredarea
20 01
Buildingwithappurtenantlandmorethan50%of
groundcoveredarea
20 02
Structureswithappurtenantlandwithlessthan
50%groundcoveredarea
20 03
Structureswithappurtenantland,morethan50%
groundcoveredarea
20 04
Structurespublicutility 20 05
SolidWasteTransferStation 20 06

Roads&
Bridges
Roads 30 01
Bridges 30 02
RoadOverBridge 30 03
44
GroupCode
Secondary
GroupCode
Underpass 30 04
Subway 30 05
Culvert 30 06

Sewerage&
Drainage
Drain 31 07
SewerageNetwork 31 08
SewerageTreatmentPlant 31 09

WaterWorks WaterSupplyNetwork 32 09
WaterTreatmentPlant 32 10
WaterPumpingStation 32 11
BoreWell 32 12
OverheadTankandPumpingStation 32 13

PublicLighting StreetLightingSystem 33 10

Plantand
Machinery
CompostingPlant 40 01
Incinerator 40 02
SlaughterhouseMachinery 40 03
EngineeringEquipment 40 04

Vehicles SolidWasterelatedvehicles 50 01
WaterWorksrelatedvehicles 50 02
45
GroupCode
Secondary
GroupCode

Office&Other
Equipment
OfficeEquipment 60 01
Otherequipment 60 02
Computerinstallation 60 03

Furniture,
fixtures,
fittingsand
electrical
appliances
OfficeFurniture 70 01
ElectricalInstallation(inoffice) 70 02
OtherFixed
Assets
LargePumps 80 01
Insurancespares 80 02
HeritageAssets 80 03
MajorGroup ThirdlevelSubGroup Code

1. Land Parks 01
Playground 02
AgriculturalLand 03
VehicleParkingAreas 04
BusStands 05
CycleStands 06
LakesandPonds 07

46
2. BuildingandStructure OfficeBuilding 01
SchoolBuilding 02
Market 03
ShoppingMall 04
PublicConvenience 05
CommunityCentre 06
ChildWelfareCentre 07
Polyclinics 08
MilkBooth 09
Workshop 10
FireStation 11
StoresBuildings 12
StaffQuarters 13
CoveredParkingAreas 14
GarbageVats 15
TransferStation 16
Fountains 17

3. Roads&Bridges Road30mwide 01
Road20m.wide 02
Road15mwide 03
Road10m.wide 04
Road5m.wide 05
Road3m.wide 06
Bridgemorethan100m. 07
47
Bridgelessthan100m. 08
Pavementsconcreteinterlocking
slabs
09
Pavementwithnominal
reinforcementforlanes
10
BTroadswithwearingsurface,
ChipCarpet
11
BTroadswithwearingsurface,
BMSDBC
12
RoadsandPavementsSubgrade 13
FlyoversandGradeSeparators 14
Causeways 15
Culverts 16

4. Sewerage&Drainage StormWaterDrains 01
SewerageSystem(UGD) 02
RoadsideDrains 03
5. WaterWorks WaterSupplySourceand
TransmissionSystem
04
WaterDistributionSystem 05
WaterDistributionSystem(Mini
WaterSupplyScheme)
06

6. PublicLighting Electricalinstallation 01
Lampposts 02
Mercuryvaporlamps 03
ElectricalfittingsforPublicLighting 04

48
7. PlantandMachinery RoadRoller 01
MedicalEquipment 02
SchoolEquipment 03
PublicHealthEquipment 04
ElectricalEquipment 05
OtherEquipments 06

8. Vehicles HeavyVehicles 01
LightVehicles 02
EarthmovingVehicles 03
OtherVehicles 04

9 Furniture,Fixture,
Fittings&Electrical
appliances
Woodenchairs 01
Cupboards 02
WaterCoolers 03
Refrigerators 04
Fans 05
TV 06
Lightfittings 07
Powerpoints 08

10 Office&Other
Equipment
Typewriters 01
PhotocopyMachines 02
CommunicationandTelecom
Equipment
03
49
Equipment
OfficeEquipment 4
OtherEquipment 5
Computers 6
ComputerNetwork 7
Printers 8
NetworkServer 9
Othercomputerequipments 10
InsurancesparesforGenerators 11

11 OtherAssets InsurancesparesforHeavy
Machinery
01
InsurancesparesforHeavyPumps 02
HeritageBuildings 03
Historicalassets 04
WorksofArt 05
50
ANNEX2CURRENTSTANDARDCOST(CSC)FORVALUING
ASSETS
33
SL.NO. ITEM UNIT RATE(Rs.)

II BUILDINGS
ClassICivilStructuresincludingBuilding
RCCframedstructurewithgraniteflooringandteakwooddoorsand
windows
GroundFloor
AboveGroundFloor
Sqm
Sqm
7,300
6,500
RCCframedstructurewithmarbleflooringandteakwooddoorsand
windows
GroundFloor
AboveGroundFloor
Sqm
Sqm
6,900
5,800
RCCframedstructurewithmosaicflooringandteakwooddoorsand
windows
GroundFloor
AboveGroundFloor
Sqm
Sqm
6,200
5,600
RCCframedstructurewithmosaicflooringandhone/nandi/mathi
wooddoorsandwindows
GroundFloor
AboveGroundFloor
Sqm
Sqm
6,000
5,400
RCCframedstructurewithmosaicflooringandhone/nandi/mathi
wooddoorsandsteelwindows
GroundFloor
AboveGroundFloor
Sqm
Sqm
5,700
5,100
RCCframedstructurewithredoxideflooringandhone/nandi/mathi
wooddoorsandwindows
33
TheseratesarebasedoncalculationsmadebyKarnatakaforitsULBsvideLetterNO:UDD:19/AS/200607
dated1.2.2007.Otherstatesmayreview/revisetheseratesfortheirspecificuse.
51
GroundFloor
AboveGroundFloor
Sqm
Sqm
5,100
4,600
RCCframedstructurewithredoxideflooringandJunglewooddoors
andwindows
GroundFloor
AboveGroundFloor
Sqm
Sqm
5,000
4,400
Madrasterrace/Mangaloretiles/ACsheetroofbrick/stonemasonry
wallsandredwithoxideflooringandJunglewooddoorsandwindows
Sqm 3,200
ClassIICivilStructuresincludingBuilding
Madrasterrace/Mangaloretiles/ACsheetroofwithmudwallsand
Junglewooddoorsandwindows
Sqm 2,400
52

III ROADS&BRIDGES
Roads&Pavements
RoadsandPavementsConcrete

Cementconcreteroad/pavementofwidth3.75mwithout
reinforcementforlanesandsublanes
onekm 36,00,000

Cementconcreteroad/pavementofcarriagewidth3.75mwith
nominalreinforcementforlanes
onekm 45,00,000
RoadsandPavementsBTRoadsSubgrade

Subsurfaceof150mmthicknessgravelwithgranularsubbase(WBM)
of225mmthickness,carriagewidth3.75m
onekm 22,00,000
RoadsandPavementsBTRoadsWearingSurface

Wearingsurface,chipcorpetof20mmthicknessandtype"B"seal
coat,carriagewidth3.75m
onekm 8,00,000

Wearingsurfaceofbituminousmacadam(BM)of50mmthickness
andwearingcourseofsemidensebituminousconcreteof25mm
thicknesswithcarriagewidth3.75m
onekm 13,50,000
Footpaths

BSSlabfootpathof1mwidthwithkerbstoneof10cmthickand30
cmheight
onekm 5,90,000

Cementconcretefootpathof1mwidthwithkerbstone10cmthick
and30cmheight
onekm 7,65,000

Footpathof1mwidthwithinterlockingcementconcreteblocks
pavement(cobblestone)
onekm 9,00,000
Bridges
MajorBridge persqm 19,500
MinorBridge persqm 23,000
SmallBridge persqm 28,000
Flyovers
53
Flyovers,GradeSeparatorsofalltypesandspans persqm 19,000
Culverts
Culvertwithhumepipeof1mdiaforaroadwithparapetwalls Each 22,000
Culvertofsize1msq.ofmasonrywallswithRCCdeckslab&parapet
wall
Each 30,000
Subways
RCCPedestrianSubway persqm 22,500
Note:
1.Cementconcreteroadsandpavements:
Urbanroadwidthisthewidthbetweenbuildinglineswhichincludesroadsidedrains,footpaths,
shoulders,carriagewayandmedian.
TheCementconcreteroadsareconsideredasrigidpavementsforroadwaysasperIRC582002.The
Cementconcreteroadsmaybewithoutreinforcementforsimplelanesandsublanesforlowtraffic
intensityormaybewithreinforcementformultiplelanesofhighwayshavinghightrafficintensity.In
municipalitiesofKarnatakamostofthelanesandsublaneshavingnarrowwidthareconstructed
withoutreinforcementinviewofeconomyalso.Theunitconstructioncostofcementconcreteroad
/pavementiscalculatedforanominalthicknessof0.25monapreparedsubsurfaceeitherwith
reinforcementorwithoutreinforcement,foraunitwidthof3.75mcarriagewayandalengthofthe
kilometer.
2.Roadswithmetalsubgradeandbituminouswearingsurface:
Urbanroadwidthisthewidthbetweenbuildinglineswhichincludesroadsidedrains,footpaths,
shoulders,carriagewayandmedian
Theroadswithsubbasecourseofgravel,laterite,kankar,brickmetal,crushedstone,crushedslag,
crushedconcreteorcombinationofthesebasecourseofconventionalwaterboundmacadam
(WBM),wetmixmacadam(WMM)orotherequivalentgranularconstructionconfirmingtoIRCis
termedasflexiblepavementsasperIRC372001.
Theunitconstructioncostofsubgradeforanominalminimumthicknessof225mmisworkedout
foraunitwidthof3.75mcarriagewayandlengthofonekilometer.Thecostofconstructionisfora
roadhavingminimumCBR2%andtrafficintensityof1to10msa(millionstandardaxles)asperIRC
372001.HoweverforwearingsurfacecostsareworkedoutforroadsurfacesofPremixedchip
carpet(PC)withsealcoatorbituminousmacadamwithmixseal,semibituminousconcrete,dense
bituminousconcreteforaunitwidthof3.75mcarriagewayandlengthofonekilometer.
3.Bridges
54
Abridgeisastructurehavingatotallengthabove6mbetweentheinnerfacesofthedirtwalls
(abutments).
Thebridgesareclassifiedasunder:
a) MajorBridge:isastructurehavingtotallengthabove60mbetweentheinnerfacesofthe
dirtwalls(abutments).
b) MinorBridge:isastructurehavingtotallengthofupto60m(morethan30m)betweenthe
innerfacesofthedirtwalls.
c) SmallBridge:isastructurehavingtotallengthof30mbetweentheinnerfacesifthedirt
wallsandindividualspanisnotmorethan10m.
4.Culverts
Aculvertisacrossdrainagestructurehavingatotallengthof6morlessbetweentheinnerfacesof
thedirtwalls.
55

IV SEWERAGE&DRAINAGE
SewerageWorks
SWGPipes
RCCPipes
Diameter
(mm)X
Length(m)
4.20
3.47
Pipelines
GIpipes
CI/DIpipes
PVCpipes
RCCpipes
PSCpipes
MSpipes
HDPEpipes
ACpipes
Diameter
(mm)X
Length(m)
6.81
9.95
2.94
2.57
4.58
7.14
6.48
6.77
Plant&MachinerySewerage
Pumpsincludingallmechanicalandelectricalequipment
5to10HP
Above10to25HP
Above25to50HP
Above50HP
PerHP
PerHP
PerHP
PerHP
17,000
13,000
11,000
10,000
StormWaterDrains
SizeStoneMasonryDrains(SSM)
Ofsizerangeupto1cum Rm 2,300
Ofsizerangeof1to3cum Rm 3,200
56
Ofsizerangeabove10cum Rm 11,000
ReinforcedCementConcreteDrains(RCC)
Ofsizerangeupto1cum Rm 5,300
Ofsizerangeabove10cum Rm 18,300
RoadsideDrains

BSSlabdrainofsize0.6x0.6m onekm 4,30,000

Sizestonemasonryboxdrainofsize0.6x0.6m onekm 9,70,000

RCCdrainofsize0.6x0.6m onekm 20,00,000

RCCmedianprecastedconcreteblocksasperIRCStandard onekm 3,00,000
Notes:
1.StormWaterDrains:
Thestormwaterdrainsarenormallydesignedformaximumflooddischargedoveraperiodoftime.
Sincethedrainswillnotbehavingstandardcrosssection,thecostofconstructionofstormwater
drainperrunningmetercanbefixedoncrosssectionalareaofvents.
2.RoadsideDrains:
Forestimateofcost,standardroadsidedrainsizeof0.6mx0.6marefurnishedandlinearvariation
shallbeadoptedforcalculatingvaluesforthedifferentsizeofdrains.Theactualcostsaretobe
workedoutonthesidedimensiononproratabasis
2.Pipelines:
Thecostfordifferentpipesarecalculatedbyreferencetothepipematerialfactor(giveninthe
table)anditslengthanddiameterasbelow:
Costofpipes=FactorXdiameter(mm)Xlength(m).
Thisincludesallcostssuchassupplyofpipes,excavation,layingofpipesandrefillingoftrenches
57

V WATERTREATMENTANDTRANSMISSIONSYSTEMS
WaterSourceSystem
OverheadTanks/GLR
Asper
valuationfor
Buildings
WaterTransmissionSystem
Channels
Sameas
StormWater
Drains
Conduits(mainlines)
Sameas
WaterMains
/Distribution
System
Pipelines
GIpipes
CI/DIpipes
PVCpipes
RCCpipes
PSCpipes
MSpipes
HDPEpipes
ACpipes
Diameter
(mm)X
Length(m)
6.81
9.95
2.94
2.57
4.58
7.14
6.48
6.77
Plant&MachineryWaterWorks
Pumpsincludingallmechanicalandelectricalequipment
5to10HP
Above10to25HP
Above25to50HP
PerHP
PerHP
PerHP
17,000
13,000
11,000
58
Above50HP PerHP 10,000
DeepBoreWellDrillingincludinginstallationofpumpsetetc. PerRft 300
WaterDistributionSystem(MiniWaterSupply)
MSSteelTanks Pertonne 15000
HandPumps each 9000
Notes:
1.Pipelines:
Thecostsfordifferentpipesarecalculatedbyreferencetothepipematerial(giveninthetable)and
itslengthanddiameterasbelow:
Costofpipes=FactorXdiameter(mm)Xlength(m).
Thisincludesallcostssuchassupplyofpipes,excavation,layingofpipesandrefillingoftrenches
59

VI PUBLICLIGHTING
Electricalinstallations
HTTransformers
StructureincludingCrossarm/braceetc.
For25to63KVA
For100to250KVA
Unit
Unit
15,000
18,000
TransformerCost
25KVA
63KVA
100KVA
250KVA
Unit
45,000
60,000
75,000
153,000
OthercostslikeLineMaterials,Distributionsystem,Earthing,Oil,
paintingetc.
Unit
56,500
LTTransformers
LTTransformers
10%less
thanHT
transformer
costs
TransformerDistributionBox
Upto100KVA Unit 48,000
Above100KVA Unit 76,000
LampPosts
RCCPoles(9m) Unit 5,500
TubularSteelPoles(9m) Unit 7,500
CIPoles Unit 9,000
ElectricalFittings
60
SodiumVaporLamp&Fittings
125W
250W
400W
Unit
Unit
Unit
3,500
6,800
7,100
MercuryVaporLamp&Fittings
125W
250W
400W
Unit
Unit
Unit
3,100
6,200
6,300
TubeLight&Fittings
SingleFitting
DoubleFitting
Unit
Unit
1,700
2,000
HighMastFittings
12mHeight,5fittingswith5X2lamps
Unit
Unit
Unit
3,00,000
3,75,000
4,00,000
Cables
AllHTCables
AllLTCables
m
m
1,400
500
61
ANNEX3ESTIMATEDUSEFULLIFEANDDEPRECIATION
RATES
TherecommendedratesinthisAnnex
34
havebeencalculatedunderStraightLineMethod(SLM)
usingtheestimatedusefullifeestimatedthereagainst.
Sl.
No.
Descriptionof
Assets
Detailsofassetstobeincluded Estimated
Life
SLMRate
p.a.
1 Land Parks,burialgrounds,playgrounds,any
vacantsiteonwhichnoconstruction
hasbeendone,anyotherlandowned
byULBonwhichconstructionhasbeen
made.Thisincludesopenspacesofall
kindssurrenderedbythelayout
promoterstotheULB,landsgivento
theULBbytransfer,acquisitionetc.
Infinite NIL
2a Buildings
ClassICivil
Structures
TheyincludeRCCframedconcrete
structuresandallPuccaconstructions
doneusingbricks/stoneswithcement
asbindingmaterialandhavingRCCas
roof.
75years 1.33%
2b BuildingsClass
IICivil
Structures
Theyincludebuildingsthatarewithout
RCCroof,buildingsthatdonothave
cementasbindingmaterialforbuilding
blocks,orcivilstructuresthatare
constructedwithcountrybricks,stones
orlocallyavailablebuildingmaterials
likemudblocks,smallwatertanks,
earthenbunds,etc.
50years 2.00%
2c MinorCivil
Structures
IncludingBusShelters,Fountains,Seats
inparks,Swings,fencingtoparks,etc
10years 10.00%p.a.
a)Concrete 15years 6.67%
3a
Roadsand
pavements
b)BTRoads
i)WearingSurface
ii)Subgrade
5years
15years
20.00%
6.67%
34
TheseratesarebasedoncalculationsmadebyKarnatakaforitsULBsvideLetterNO:UDD:19/AS/200607
dated1.2.2007.Otherstatesmayreview/revisetheseratesfortheirspecificuse.
62
Sl.
No.
Descriptionof
Assets
Life
SLMRate
p.a.
a)Concrete 15years 6.67%
3b Footpaths
b)Others((Stoneslab,cobblestones
etc)
8years 12.50%
3c Bridges,
Flyovers,
subwaysetc.
Bridges,flyover,subways 75years 1.33%
3d Causeways Causeways 15years 6.67%
3e Culverts Culverts 30years 3.33%
4a Sewerage
collection&
transmission
system
SewerageLines 30years 3.33%
4b StormWater
drainsopen
drains
StormWaterdrainsopendrains 25years 4.00%
4c Roadside
Drains
RoadsideDrains 15years 6.67%
4d Laboratory
equipments
Sewerage
works
Allequipmentsinthelaboratories
maintainedforthewatersupplysystem
10years 10.00%
4e Plant&
Machineryfor
sewerage
works
AllPlantandmachineryusedfor
collection,transmissionandtreatment
ofsewerage.
15years 6.67%
Reservoirs
Groundwaterwells/deepborewells
Channels
100years
15years
25years
1.00%
6.67%
4.00%
MetallicConduits(mainlines)
NonMetallicConduits(mainlines)
50years
30years
2.00%
3.33%
5a
Watersupply
source&
transmission
system
Pumps 15years 6.67%
63
Sl.
No.
Descriptionof
Assets
Life
SLMRate
p.a.
PipeLines:
PVCpipesofalldiameters
MDP,HDPEPipesofalldiameters
Metallicpipesofalldiameters
20years
30years
50years
5.00%
3.33%
2.00%
5b
Water
Pipelinesand
Systems
OHT/GLR 100years 1.00%
5c Water
Distribution
system(mini
watersupply)
M.S.Steeltanks
HandPumps
10years
5years
10.00%
20.00%
5d Laboratory
equipments
WaterWorks
Allequipmentsinthelaboratories
maintainedforthewatersupplysystem
10years 10.00%
5e Plant&
Machineryfor
Waterworks
AllPlantandmachineryusedfor
sourcing,treatment,transmissionand
distribution
15years 6.67%
6a Electrical
installation
cables
HT&LTInstallationsincluding
transformers&cables
20years 5.00%
6b Electrical
installation
lampposts
RCC/PAC/CI
Alllength(sizes)
30years 3.33%
6c Electrical
installation
lampfittings
MercuryVapourLampFittings
HighMastLampFittings
SodiumVapourlampfittings
10years
20years
10years
10.00%
5.00%
10.00%
6d Electrical
installation
lampfittings
Tubelightfittings 3years 33.33%
7
Plant/
Machinery&
Equipment
(excluding
office
Roadrollers,mixingmortars,othercivil
engineeringequipments,medical
equipmentsinhospitals,dispensaries&
maternitycenters,schoolequipments,
publichealthequipments,towerclocks,
15years 6.67%
64
Sl.
No.
Descriptionof
Assets
Life
SLMRate
p.a.
equipment) electricalequipments,motorpumps,
otherplant&machinery,etc.
8a Heavyvehicles Lorry,tractor,bulldozer,mechanical
sweeper,tipper,loader,bus,road
roller,watertankeretc
15years 6.67%
8b Lightvehicles Jeeps,cars,powertillers,motorcycles,
minilorry,autotipperetc
10years 10.00%
8c Othervehicles Single/doublepersondrivenPushCart,
Bicycle/Tricycle,cartetc
5years 20.00%
Steelchairs,steeltables,wooden
chairs,woodentables,steelracks,
woodenracks,steelcupboards
10years 10.00%
9
Furniture,
Fixtures,
Fittings,
Electrical
Appliancesetc
Airconditioners,watercoolers,
refrigerators,fans,electricalfittings,
otherofficeequipmentsradios,TVs,
stools
5years 20.00%
10a Office
Equipment
GeneralOfficeequipmentlike
photocopymachinesetc.
10years 10.00%
10b Communicatio
nequipments
Publicaddresssystems,wireless
equipmentscopiers
5years 20.00%
10c Computers Computermachinery,peripherals,
printers,typewriters,duplicators,
Photocopymachines,
5years. 20.00%
21 Plant&
machinery
WaterSupply
Sewerage
15years
15years
6.67%
6.67%
(i) Wheretherateofdepreciationisnotprescribed,statesmaydeterminetheratebydividing
thedepreciableamountbytheestimatedusefullifeoftheasset.
(ii) TheSLMdepreciationratesarepresuminganominalsalvagevaluehence100%ofthecost
isdepreciatedoverthelifeoftheasset.IncaseULBsintendtomaintainapercentageofcost
assalvagevalue,theSLMdepreciationratecanbecalculatedasfollows:
(100%Percentageestimatedtobesalvagevalue)/Estimatedusefullife
Example.ForaClass1CivilStructure,ifresidualvalueis10%oforiginalcost,SLMratewillbe
(100%10%)/50=1.8%p.a.
65
ANNEX4INFLATIONINDEX
InflationIndextobeusedforarrivingatDeflatedStandardCost(DSC)
TheprocessofvaluationrequiresULBstodeterminethestandardcurrentcostofassetsand,usinga
deflator,representitscostintheyearofpurchase.Forthepurposeofarrivingatitscostintheyear
ofpurchase,thefollowinginflationindexshouldbeused:
FinancialYear InflationIndex
198182andearlier 100
198283 109
198384 116
198485 125
198586 133
198687 140
198788 150
198889 161
198990 172
199091 182
199192 199
199293 223
199394 244
199495 259
199596 281
199697 305
199798 331
199899 351
199900 389
200001 406
200102 426
200203 447
200304 463
200405 480
200506 497
200607 519
200708 551
66
Illustration
AbuildingbelongingtotheULBisidentified.UsingtheCurrentStandardCost(CSC)Rate,itsvalueis
determinedin200708asRs.5,21,000.Thebuildingisknowntohavebeencompletedin199697.
Hence,itsDeflatedStandardCost(DSC)in199697willbe:
5,21,000X(305/551)=Rs.3,31,889
Thisrepresentstheestimatedcostofthebuildingifitwasconstructedin199697,derivedfromits
CurrentStandardCost.Inordertoarriveatitscurrentestimatedvaluei.e.on1.4.2008,depreciation
shouldbeprovidedonthis,fortheperiod199697
35
to200708i.e.12years.Hencethecostofthe
buildingtobeincludedinthebalancesheetason1.4.2006willbeasfollows:
CurrentStandardCost(CSC)ofBuilding: Rs.5,21,000
DeflatedStandardCost(DSC)in199697: Rs.3,31,889
Less:Depreciationtill200708(12years@2%p.a) Rs.79,653
EstimatedCurrentValue(forOpeningBalanceSheet) (Rs.3,31,88979,653)=2,52,236
35
Incaseinformationisnotavailable,itcanbeassumedthattheassetwasputtouseformorethan6months
inthefirstyearandhencefullyearsdepreciationcanbechargedforthatyear.
67
ANNEX5FLOWCHARTFORMAINTENANCEOFFIXEDASSETREGISTER

PrepareCapital
ProcurementPlan
IssueProcurement/
WorksOrder
ProcurementofWorks
(contract)
ProcurementofGoods
(supply)
RunningBillsbasedon
workdone
ApprovalofBills
CWIP
REGISTER
AssetPut
intoUse
FIXEDASSET
REGISTER
MaterialReceivedand
Stored
Issuedforuse
Depreciation
Schedule
Asset
Retired
fromUse/
disposed
Periodic
Evaluationof
Condition
TillFinalBill
Annual
Removefrom
Register
Record
Record
Remove
68
ANNEX6FORMATOFFIXEDASSETREGISTER
Registershavebeenprescribedfor11categoryofassetsviz.
1. RegisterofLand 2. RegisterofBuildings
3. RegisterofRoads&Bridges 4. RegisterofSewerageanddrainageAssets
5. RegisterofWaterWorkAssets 6. RegisterofPublicLightingAssets
7. RegisterofPlantandMachinery 8. RegisterofVehicles
9. RegisterofOffice&otherequipments 10. RegisterofFurniture,fixtures,fittingsandElectricalappliances
11. RegisterofOtherFixedAssets
GeneralInstructionsforuseoftheFixedAssetsRegister:
i. Alltheassetsshouldbecategorizedintorelevantassetclass.Uniqueassetidentificationnumbersaretobeprovidedforallassets.Separate
RegistersshallbemaintainedforeachclassofstructuresownedbytheULB.
ii. Eachassetshallberecordedonaseparatepageintheregister.
iii. Attheendoftheaccountingyear,theClosing/depreciatedvalueinrespectonthecurrentyearshallbeenteredasOpeningValueofthenext
year(nextrow).
iv. Intheyearinwhichthereisanyacquisition/improvementtotheasset,showsuchcostinthecurrentyear'sOpening/acquisitioncolumn.
v. Foreachentrymade,recordtheName,DesignationandSignatureofthepersonmakingentryintheregisterandthepersoncheckingtheentry.
vi. Totalsshouldbetakenattheendofeachyearinrespectoftotalcostincurredonacquisition/construction/improvement(fromthedateof
acquisition/construction)foreachoftheassetsownedbytheULB.
vii. InRemarkscolumn,indicatewhethertheULBhastheownershiprighttothepropertyorhaveonlyutilizationrights.
69
RegisterofLand
NAMEOFULB
REGISTEROFLAND
AssetNo.: SketchtheboundariesoftheLand:
DescriptionoftheLand:
LocationoftheLand:
SurveyNo.oftheLand:
Area(sq.mtr.):
Titledocumentsavailable:
Modeofacquisition:
Dateof
Acquisition/
Improvement
Descriptionof
Expense
OpeningValue
/Amountof
Acquisition
(Rs.)
EntryRef.in
CashBook
UseofLand Dateof
Disposal
Towhom
disposed
Amountof
Disposal
(Rs.)
EntryRef.in
CashBook
Remarks

Totalfortheyear20**20**


70
RegisterofBuildings
NAMEOFULB
REGISTEROFBUILDINGS
AssetNo.: DescriptionoftheStructure:
LocationoftheStructure: Titledocumentsavailable:
SurveyNo.ofthelandonwhichStructureislocated: Modeofacquisition:
Areaoflandonwhichconstructed(sq.mtr.): DimensionsoftheStructure:
ReferencetoLandRegister: RateofDepreciation
Dateof
Acquisition/
construction/
Improvement
Description
ofExpense
OpeningValue
/Amountof
acquisition
(Rs.)
EntryRef.
inCash
Book
Useof
Building
Annual
Depreci
ation
(Rs.)
Closing/
Depreciated
Value(Rs.)
Dateof
Disposal
Towhom
disposed
Amount
of
Disposal
(Rs.)
EntryRef.
inCash
Book
Remarks




71
RegisterofRoads&Bridges
NAMEOFULB
REGISTEROFROADS&BRIDGES
AssetNo.: Description:(TypeofRoad/Bridge):
LocationoftheRoad/Bridge: TotalareaofRoad/Bridge(sqm):
Footpath/Flanks:Length:Width: Carriageway:Length:Width:
Areaoflandonwhichconstructed(sq.mtr.): ReferencetoLandRegister:
RateofDepreciation:
Dateof
construction/
Improvement
Description
ofExpense
OpeningValue
/Amountof
construction
(Rs.)
EntryRef.
inCash
Book
Typeof
Road/
Bridge
Annual
Depreciat
ion(Rs.)
Closing/
Depreciate
dValue
(Rs.)
Dateof
Disposal/
conversion
Detailsof
disposal/
conversion
Amount
on
Disposal
(Rs.)
Entry
Ref.in
Cash
Book
Remarks




72
RegisterofSewerage&DrainageAssets
NAMEOFULB
REGISTEROFSEWERAGE&DRAINAGEASSETS
AssetNo.: TypeofAsset:
LocationoftheAsset: DescriptionofAsset:
MeasureofAsset(Lengthetc.) RateofDepreciation:

Dateof
construction/
acquisition
Description
ofExpense
OpeningValue
/Amountof
acquisition
(Rs.)
EntryRef.
inCash
Book
Useof
Asset
Annual
Depreciat
ion(Rs.)
Closing/
Depreciated
Value(Rs.)
Dateof
Disposal
Detailsof
disposal
Amount
on
Disposal
(Rs.)
Entry
Ref.in
Cash
Book
Remarks




73
RegisterofWaterworkAssets
NAMEOFULB
REGISTEROFWATERWORKASSETS
MeasureofAsset(Lengthetc.) RateofDepreciation:

Dateof
construction/
acquisition
Description
ofExpense
OpeningValue
/Amountof
acquisition
(Rs.)
EntryRef.
inCash
Book
Useof
Asset
Annual
Depreciat
ion(Rs.)
Closing/
Depreciated
Value(Rs.)
Dateof
Disposal
Detailsof
disposal
Amount
on
Disposal
(Rs.)
Entry
Ref.in
Cash
Book
Remarks




74
RegisterofPublicLighting
NAMEOFULB
REGISTEROFPUBLICLIGHTING
LocationoftheAsset: DescriptionofStreetlight:
DetailsofStreetlight: RateofDepreciation:

Dateof
construction/
acquisition
Description
ofExpense
OpeningValue
/Amountof
acquisition
(Rs.)
EntryRef.
inCash
Book
Useof
Asset
Annual
Depreciat
ion(Rs.)
Closing/
Depreciated
Value(Rs.)
Dateof
Disposal
Detailsof
disposal
Amount
on
Disposal
(Rs.)
Entry
Ref.in
Cash
Book
Remarks




75
RegisterofPlant&Machinery
NAMEOFULB
REGISTEROFPLANT&MACHINERY
TechnicalSpecifications: RateofDepreciation:

Dateof
construction/
acquisition
Description
ofExpense
OpeningValue
/Amountof
acquisition
(Rs.)
EntryRef.
inCash
Book
Useof
Asset
Annual
Depreciat
ion(Rs.)
Closing/
Depreciated
Value(Rs.)
Dateof
Disposal
Detailsof
disposal
Amount
on
Disposal
(Rs.)
Entry
Ref.in
Cash
Book
Remarks




76
RegisterofVehicles
NAMEOFULB
REGISTEROFVEHICLES
AssetNo.: TypeofVehicle:
LocationBase: DescriptionofVehicle
SpecificationofVehicle(RegnNo.): RateofDepreciation:

Dateof
purchase/
acquisition
Description
ofExpense
OpeningValue
/Amountof
acquisition
(Rs.)
EntryRef.
inCash
Book
Useof
Asset
Annual
Depreciat
ion(Rs.)
Closing/
Depreciated
Value(Rs.)
Dateof
Disposal
Detailsof
disposal
Amount
on
Disposal
(Rs.)
Entry
Ref.in
Cash
Book
Remarks




77
RegisterofOffice&OtherEquipment
NAMEOFULB
REGISTEROFOFFICE&OTHEREQUIPMENT
DetailsofAsset(ModelNo.Serialno.etc.): RateofDepreciation:

Dateof
purchase/
acquisition
Description
ofExpense
OpeningValue
/Amountof
acquisition
(Rs.)
EntryRef.
inCash
Book
Useof
Asset
Annual
Depreciat
ion(Rs.)
Closing/
Depreciated
Value(Rs.)
Dateof
Disposal
Detailsof
disposal
Amount
on
Disposal
(Rs.)
Entry
Ref.in
Cash
Book
Remarks




78
RegisterofFurniture,fixtures,fittingsandElectricalappliances
NAMEOFULB
REGISTEROFFURNITURE,FIXTURES,FITTINGSANDELECTRICALAPPLIANCES
LocationoftheAsset: DescriptionofAsset
No.ofunits: RateofDepreciation:

Dateof
purchase/
acquisition
Description
ofExpense
OpeningValue
/Amountof
acquisition
(Rs.)
EntryRef.
inCash
Book
Useof
Asset
Annual
Depreciat
ion(Rs.)
Closing/
Depreciated
Value(Rs.)
Dateof
Disposal
Detailsof
disposal
Amount
on
Disposal
(Rs.)
Entry
Ref.in
Cash
Book
Remarks




79
RegisterofOtherAssets
NAMEOFULB
REGISTEROFOTHERASSETS
No.ofunits: RateofDepreciation:

Dateof
purchase/
acquisition
Description
ofExpense
OpeningValue
/Amountof
acquisition
(Rs.)
EntryRef.
inCash
Book
Useof
Asset
Annual
Depreciat
ion(Rs.)
Closing/
Depreciated
Value(Rs.)
Dateof
Disposal
Detailsof
disposal
Amount
on
Disposal
(Rs.)
Entry
Ref.in
Cash
Book
Remarks




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MODEL NATIONAL MUNICIPAL ASSET

VALUATION METHODOLOGY MANUAL

Was the asset

MajorGroup ThirdlevelSubGroup Code

SL.NO. ITEM UNIT RATE(Rs.)

SL.NO. ITEM UNIT RATE(Rs.)

SL.NO. ITEM UNIT RATE(Rs.)

SL.NO. ITEM UNIT RATE(Rs.)

SL.NO. ITEM UNIT RATE(Rs.)

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