Understanding Personal Investment Accounting Standards (AS-13)
Introduction to Accounting Standard -13 (AS-13) for personal investment accounting, covering types of investments, factors to consider while holding investments, formats for investment accounting, handling face value and interest columns, as well as cum-interest and ex-interest calculations.
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Chapter- PERSONAL INVESTMENT ACCOUNTING (AS-13)
PERSONAL INVESTMENT ACCOUNTING Introduction :- 1.Accounting Standard -13 (AS-13) is issued by the Institute of Chartered Accounts of India for personal Investment Accounting 2.Investment are held for earning income by way of Dividend, Interest, Rent or Capital appreciation. 3.While holding investment there are three factors to be considered. A) Liquidity B) Security C) Profitability 4.Types of Investment 1. Investment in Fixed rate of return Investment 2. Investment in variable Rate of Return Investment 5.Investment in Fixed rate of return Investment 1.Investment in Government Securities 2.Investment in Debenture, Bonds
PERSONAL INVESTMENT ACCOUNTING Dr Investment Account ( Format) Cr Date Particulars Interest Cos t Particulars Interest Cos t F.V Date F.V Debit Side = Purchase of Investment Credit Side= Sale of Investment
PERSONAL INVESTMENT ACCOUNTING 1.Face Value Column A. Dr. Side = Face value of Investment Purchased. B. Cr. Side= Face Value of Investment Sold. Note:- Number of Debenture or Bond is given then assume face value per Debenture or Bond is Rs.100 Total Face Value = Number of Debenture or Bonds x Rs. 100 per Debenture.
PERSONAL INVESTMENT ACCOUNTING 2.Interest Column 2.01. Interest is calculated on face value or nominal value 2.02. Due Date :- Interest is always payable at the fixed rate and on the fixed date which is known as due date. Interest will be received from the last Due Date to Current Due Date to the person holding Investment irresponsible of period of holding. 2.03. As per the practise in market, Government or Company pay the amount of Interest to a person who hold the Investment and whose name is appeared in a registered maintained by the company on Due Date. 2.04. A person who Purchase Investment between two Due Date then Purchaser have to Pay Cost of Investment Plus Accrued Interest (Interest From Last Due Date to Date of Purchase of Investment) Accrued interest on investment. Period = Last Due Date to Date of Purchase
PERSONAL INVESTMENT ACCOUNTING 3. Cum Interest Purchase or Sale When purchase price or sale price include cost of Investment plus Accrued interest it is known as Cum Interest Price. Calculation of cost of Investment Cum Interest Purchase Price (Sales price ) Less :- Accrued Interest (O/S Interest) Face Value x % x Last due date to DOP/ DOS XXX 100 XXX Interest Column 12M Cost of Investment XXX Cost Column
PERSONAL INVESTMENT ACCOUNTING 4. Ex- Interest When purchase price include only cost of investment is known as Ex- Interest price. Calculation of cost of Investment a. Ex- Interest Purchase Price / Sales price (given) XXX b. Accrued Interest (O/S Interest) Face Value x % x Last due date to DOP/ DOS XXX 100 Cost Column Interest Column 12M
PERSONAL INVESTMENT ACCOUNTING 5. When there is difference between Opening Date and due date Accrued interest on Opening Balance Face Value x % x Last due date to DOP/ DOS XXX 12M Interest Column 100
PERSONAL INVESTMENT ACCOUNTING 6. When there is difference between Closing date and due date Accrued interest on closing Balance Face Value x % x Last due date to DOP/ DOS XXX 12M Interest Column 100
PERSONAL INVESTMENT ACCOUNTING 7. Calculation of Profit and loss on sale of Investment Selling Price Less :- Weightage Average Cost (AS- 13) Cost Column (Dr Cr) . x Face value of Face Value Column ( Dr- Cr) Investment sold Profit / Loss---------------- XXX (XXX) XXX Valuation of Investment as per 31st March Value of Investment (Given) As on 31st March = Cost Price (Dr Cr) or Market Value which ever is less Note :- If Cost price is less Value of Investment = Cost price If Market value is less Value of Investment = Market Vale Then their will loss on valuation = Investment A/c is credited by Profit / Los A/c (Cost Price Market Value)
THANK YOU!! Assistant Prof. Pradeep H. Tawade DEPARTMENT OF ACCOUNTANCY, NSS College of Commerce & Eco. Tardeo, Mumbai-34 Email ID pradeeptawade26@yahoo.com Mobile No. 9619491859
