Valuation of investments

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Priti Jain (Querist)
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12 May 2015 Hi.. There is an asset management company (private) which values its investments in equity & mutual fund at cost. Whether accounting treatment is correct. AS-13 (Accounting for investments) is not applicable to the company.

Please suggest.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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12 May 2015 how u can say its not applicable to co?

Priti Jain

Priti Jain (Querist)
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13 May 2015 The standard says that "This Standard does not deal with -
(a) the bases for recognition of interest, dividends and rentals earned
on investments which are covered by Accounting Standard 9 on
Revenue Recognition;
(b) operating or finance leases;
(c) investments of retirement benefit plans and life insurance enterprises;
and
(d) mutual funds and venture capital funds and/or the related asset
management companies, banks and public financial institutions
formed under a Central or State Government Act or so declared
under the Companies Act, 1956.

relevant link - http://www.mca.gov.in/Ministry/notification/pdf/AS_13.pdf

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
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02 August 2025 Great question! Here’s a clear explanation regarding **valuation of investments by a private Asset Management Company (AMC)** and applicability of **AS-13 (Accounting for Investments)**:

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### Applicability of AS-13 to AMCs and Mutual Funds:

* **AS-13** applies to accounting for investments in general.
* However, **the Accounting Standard itself excludes certain entities and investment types** from its scope.

According to the MCA notification on AS-13 (you referenced), the standard **does NOT apply to:**

* Mutual funds, venture capital funds, and/or the related asset management companies,
* Banks and public financial institutions formed under Central/State Government Acts or declared so under Companies Act.

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### What this means for a **Private AMC**:

* Since the AMC is a **private company** and directly involved in managing mutual funds, **AS-13 is not applicable** to it.
* Therefore, **valuation of investments at cost** by the AMC can be considered acceptable **under accounting regulations**, as AS-13 guidance is not mandatory.
* However, the AMC should **disclose its accounting policy for investment valuation** clearly in the financial statements.

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### Other points to consider:

* Even though AS-13 is not applicable, generally accepted accounting principles (GAAP) or guidance issued by regulators like SEBI may require fair valuation of mutual funds and equity investments.
* For **mutual fund schemes managed by AMC**, NAV-based valuation is standard.
* For investments held by AMC on its own books (not managed funds), cost valuation is permissible if consistent and clearly disclosed.

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### Summary:

| Aspect | Applicability/Guidance |
| ------------------------------ | --------------------------------------------- |
| AS-13 on investments | **Not applicable** to mutual funds/AMCs |
| Valuation by private AMC | Cost valuation acceptable if policy disclosed |
| Regulatory requirements (SEBI) | May require fair valuation for funds managed |

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If you want, I can help draft a note on disclosure or guide you on typical valuation practices followed by AMCs.

Would that be helpful?

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