Section 6 in The Cost Accounting Records (Petroleum Industry) Rules, 2002
6. Fixed Assets and Depreciation. - (1) The proper and adequate records shall be maintained for assets used for exploration for and production, processing and manufacturing of the products or activities referred under rule 2 in respect of which depreciation has to be provided for. These records shall inter alia, indicate grouping of assets under each product or activity referred under rule 2, the cost of each item of assets including installation charges, date of acquisition and rate of depreciation.
(2)Also such records as will enable to identify and/or allocate gross fixed assets, accumulated depreciation up to the year and net fixed assets under the heads; land and buildings, plant and machinery, furniture and fixtures etc. employed for products or activities referred under rule 2 along with the method and rate of depreciation shall be maintained. The basis of apportionment of common assets to the products or activities under reference shall also be indicated. In case of revaluation of assets, the same shall be indicated separately and shall not be included In the cost statement. The basis of allocation of depreciation on indirect assets to the products or activities under reference shall be on equitable and reasonable basis and applied consistently.(3)The basis on which depreciation is calculated and allocated or apportioned to various cost centers or departments and absorbed on all products shall be clearly indicated in the cost records. If depreciation charged or chargeable to the cost centers or departments is in excess or lower than the depreciation calculated by applying the rates of depreciation prescribed under the provisions of sub-section (3) of Section 205 of the Companies Act, 1956 (1 of 1956), such amount of excess or lower depreciation, shall be indicated clearly in the cost records. The cost records shall also show the effect of such excess or lower depreciation as the case may be, on the per unit cost of each respective product or activity. The cumulative depreciation charged in the cost records, against any individual item of asset shall not, however, exceed the original cost of the respective asset.(4)The cost incurred on exploration and development of new all fields shall be treated and amortised in accordance with the method of costing followed, namely, "Full Cost Method" or "Successful Efforts Method" etc. The method of costing followed shall be disclosed and followed consistently.
