2. STATEMENT OF MATERIAL ACCOUNTING POLICIES 2.1 BASIS FOR PREPARATION
a. Statement of Compliance
The financial statements of Everest Organics Limited have been prepared and presented in accordance with Indian Accounting Standards (“Ind As”) notified under section 133 of accounting standards notified by the Central Government of India under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015, other pronouncements of the Institute of Chartered Accountants of India, the relevant provisions of Companies Act, 2013 and guidelines issued by Securities and Exchange Board of India (SEBI).
The company's Internal Financial Control (IFC) over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, which is being implemented by the company as a continuous process exercise required for providing reasonable assurance regarding the reliability of the financial reporting.
Accounting policies not referred to herein otherwise are consistent with Generally Accepted Accounting Principles in India. The financial statements are drawn up in Indian Rupees, the functional currency of the Company, and in accordance with Ind AS presentation.
The financial statements comprise the Balance Sheet as at 31st March, 2024 and 31st March, 2023, the Statement of Profit and Loss, Statement of Changes in Equity and Statement of Cash Flow for the year ended 31st March, 2024 and 31st March, 2023 and a summary of material accounting policies and other explanatory information (together hereinafter referred as ” Financial Statements”).
b. Basis of measurement
The company follows the mercantile system of accounting and recognizes incomes and expenses on accrual basis. The accounts are prepared as a going concern and on historical cost basis except for the following:
• Certain financial assets and liabilities are measured at fair value or amortised cost.
• Employee defined benefit asset/liability recognized as the total of the fair value of plan assets and actuarial losses/gains, and the present value of defined benefit obligation.
c. Functional & presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The financial statements are presented in Indian rupee (Rs.), which is the company's functional and presentation currency.
d. Use of estimates
The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Actual results could differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognized prospectively in the current and future periods and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and reported amounts of revenues and expenses for the year.
e. Current and non-current classification
All the assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013, read with Indian Accounting Standards.
f. Assets
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realized in, or is intended for sale or consumption in, the Company's normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realized within twelve (12) months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve (12) months after the reporting date.
g. Liabilities
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company's normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within twelve (12) months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability for at least twelve (12) months after the reporting date. Terms of a liability that could, at the option of the counter party, result in its settlement by the issue of equity instruments do not affect its classification.
All other assets/liabilities are classified as non-current. Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Normal operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has identified twelve (12) months as its operating cycle.
2.2 MATERIAL ACCOUNTING POLICIES:
A. Revenue Recognition:
Revenue is measured at the transaction price determined under IND AS 115-Revenue from contracts with customers. Amounts disclosed as revenue are net of returns, trade allowances, rebates, Goods & Service Tax (GST) collections and amounts collected on behalf of third parties.
Revenue from Sale of Goods:
Revenue from sale of goods is recognized when the customer obtains control of the Company's product, which occurs at a point in time, usually upon dispatch/shipment, with payment terms typically in the range of 60 to 90 days after invoicing depending on product and geographic region. Taxes collected from customers relating to product sales and remitted to government authorities are excluded from revenues. The Company does not expect to have any contracts where the period between the transfer of the promised goods to the customers and payment by the customer exceeds one year. Consequently, the company does not adjust any of the transaction prices for the time value of money.
For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation based on the relative standalone selling price. The Standalone selling price of each performance obligation is estimated using the expected costs of satisfying such performance obligation and then an appropriate margin is added for such goods. The amount of revenue to be recognised is based on the consideration expected to be received in exchange for goods, excluding trade discounts, volume discounts, sales returns and any taxes or duties collected on behalf of the government which are levied on sales such as sales tax, value added tax, goods and services tax, etc., where applicable. Any additional amounts based on terms of agreement entered into with customers, is recognised in the period when the collectability becomes probable and a reliable measure of the same is available.
Revenue from Sale of Services:
Revenue from Sale of services is recognised as per the terms of the contracts with customers when the related services are performed, or the agreed milestones are achieved. Upfront nonrefundable payments received are deferred and recognised as revenue over the expected period over which the related services are expected to be performed.
B. Interest Income:
Interest income from financial assets at fair value through profit or loss is disclosed as interest income within other income. Interest income on financial assets at amortised cost is calculated using the effective interest method (EIR) is recognised in the statement of profit and loss as part of other income. Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit impaired. For credit-impaired financial assets the effective interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss allowance).
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