17.—(1) The amount to be included in respect of any fixed asset must be its purchase price or production cost.
(2) This is subject to any provision for depreciation or diminution in value made in accordance with paragraphs 18 to 20.
18. In the case of any fixed asset which has a limited useful economic life, the amount of—
(a)its purchase price or production cost, or
(b)where it is estimated that any such asset will have a residual value at the end of the period of its useful economic life, its purchase price or production cost less that estimated residual value,
must be reduced by provisions for depreciation calculated to write off that amount systematically over the period of the asset’s useful economic life.
19.—(1) Where a fixed asset investment falling to be included under item B.III of either of the balance sheet formats set out in Part 1 of this Schedule has diminished in value, provisions for diminution in value may be made in respect of it and the amount to be included in respect of it may be reduced accordingly.
(2) Provisions for diminution in value must be made in respect of any fixed asset which has diminished in value if the reduction in its value is expected to be permanent (whether its useful economic life is limited or not), and the amount to be included in respect of it must be reduced accordingly.
(3) Any provisions made under sub-paragraph (1) or (2) which are not shown in the profit and loss account must be disclosed (either separately or in aggregate) in a note to the accounts.
20.—(1) Where the reasons for which any provision was made in accordance with paragraph 19 have ceased to apply to any extent, that provision must be written back to the extent that it is no longer necessary.
(2) Any amounts written back in accordance with sub-paragraph (1) which are not shown in the profit and loss account must be disclosed (either separately or in aggregate) in a note to the accounts.
21.—(1) Notwithstanding that an item in respect of “development costs” is included under “fixed assets” in the balance sheet formats set out in Part 1 of this Schedule, an amount may only be included in a company’s balance sheet in respect of development costs in special circumstances.
(2) If any amount is included in a company’s balance sheet in respect of development costs the following information must be given in a note to the accounts—
(a)the period over which the amount of those costs originally capitalised is being or is to be written off, and
(b)the reasons for capitalising the development costs in question.
22.—(1) The application of paragraphs 17 to 20 in relation to goodwill (in any case where goodwill is treated as an asset) is subject to the following.
(2) Subject to sub-paragraph (3), the amount of the consideration for any goodwill acquired by a company must be reduced by provisions for depreciation calculated to write off that amount systematically over a period chosen by the directors of the company.
(3) The period chosen must not exceed the useful economic life of the goodwill in question.
(4) In any case where any goodwill acquired by a company is shown or included as an asset in the company’s balance sheet there must be disclosed in a note to the accounts—
(a)the period chosen for writing off the consideration for that goodwill, and
(b)the reasons for choosing that period.
23. Subject to paragraph 24, the amount to be included in respect of any current asset must be its purchase price or production cost.
24.—(1) If the net realisable value of any current asset is lower than its purchase price or production cost, the amount to be included in respect of that asset must be the net realisable value.
(2) Where the reasons for which any provision for diminution in value was made in accordance with sub-paragraph (1) have ceased to apply to any extent, that provision must be written back to the extent that it is no longer necessary.