A company is engaged in the business of refining, transportation and marketing of petroleum products. During the financial year ended 31 st March,…

A company is engaged in the business of refining, transportation and marketing of petroleum products. During the financial year ended 31 st March, 2024, the company acquired controlling interest from Government of India in another public sector undertaking @1,551 per share as against the book value of 192.58 per share and market value of 876 per share as on 18 th February, 2024. Thus, the strategic premium of 675 per share has been paid considering various tangible and intangible factors. The above investment in the shares of the acquired company has been considered as long term strategic investment and, therefore, has been accounted for at cost, i.e. at 1,551 per share in the financial statements. No provision for diminution in value has been made in the books of account. As per the requirement of Schedule III to the Companies Act, 2013, the aggregate market value of the quoted shares has been properly reflected in the financial statements. On 28 th March, 2024, the acquired shares were quoted at 880 per share on BSE and the current market price as on 18 th July was around - 300. Considering the tangible and intangible benefits the Management is of the view that there is no permanent diminution in the value of the strategic investment in the acquired company, as the same has been considered as a long-term investment. Therefore, there is no need for provision for diminution in the value of the shares of the acquired company. Required: (i) Whether the accounting treatment 'at cost' under the head 'Long Term Investments' without providing for any diminution in value is correct and in accordance with the provisions of AS 13. (ii) If any provision for diminution in the value is to be made, whether such provision should be charged to the profit and loss account or whether same can be considered as deferred expenditure and amortised over a period of 5 years. Whether it is open for the company to charge off such diminution in the value in the books of account instead of creating provision. (iii) Whether the premium paid for strategic benefits for investment described in facts of the case, can be accounted for separately in the books of account keeping in view that AS 13 specifies that long term investments should be recorded at cost and there is no specific provision in the standard in respect of accounting for premium paid for strategic benefits.