2.1 Basis of Preparation of Financial Statements
These financial statements have been prepared to comply with Generally
Accepted Accounting Principles in India (Indian GAAP) including the
Accounting Standards notified under the relevant provisions of the
Companies Act 2013.
These Financial Statements are prepared on accrual basis under
historical cost convention. These Financial Statements are presented in
Indian Rupees rounded off to the nearest Rupees.
2.2 Use of Estimates
The preparation of financial statements in conformity with Indian GAAP
requires judgements, estimates and assumptions to be made that affect
the reported amounts of assets and liabilities, disclosure of
contingent liabilities on the date of financial statements and reported
amount of revenue and expenses during the reporting period. Difference
between actual results and estimates are recognised in the period in
which the results are known.
2.3 Fixed Assets
a. Tangible Assets
Tangible Assets are stated at cost of acquisition along with related
taxes, duties and incidental expenses related to these assets, net of
accumulated depreciation and accumulated impairment, if any.
b. Intangible Assets
Intangible Assets are stated at their cost of acquisition, net of
accumulated amortisation and accumulated impairment, if any. Projects
whose technical & commercial feasibility is demonstrated, future
economic benefits are probable, the company has an intention and
ability to complete and use or sell the asset, and cost can be measured
reliably, are shown as Intangible Assets under Development.
c. Subsequent expenditures related to an item of fixed asset are added
to its book value only if they increase the future benefits from the
existing asset beyond its previously assessed standard of performance.
d. Gain/losses arising from disposal of fixed assets are recognised in
the Statement of Profit and Loss.
2.4 Depreciation & Amortization
Tangible Assets - Depreciation on tangible assets is provided on the
straight-line method over the useful life of the assets as prescribed
in the Schedule II to the Companies Act 2013 except in respect of the
following assets:
Client Computer - 5 years*
Intangible assets are amortised over their respective individual
estimated useful lives on straight line basis, commencing from the date
asset is available for use to the company.
Computer Software - 6 Years*
Web Properties - 10 Years*
(*Note: for this based on internal assessment and independent technical
evaluation carried out by external valuer, the management believes that
the useful life as given above best represents the period over which
management expects to use the assets.)
2.5 Impairment
An asset is treated as impaired when the carrying cost of the asset
exceeds its recoverable value. An impairment loss is charged to Profit
& Loss Statement in the year in which asset is identified as impaired.
The impairment loss recognised in prior accounting period is reversed
if there has been a change in the estimated recoverable amount.
2.6 Foreign Currency Transactions
a. Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing on the date of the transaction or that
approximates the actual rate as at the date of transaction.
b. Any income or expenses on account of exchange differences either on
settlement or translation/restatement is recognised in the Profit and
Loss statement .
2.7 Income Taxes
Tax expense comprises of current tax & deferred tax. Income taxes are
accrued in the same period that the related revenue and expenses arise.
A provision is made for income tax, based on the tax liability
computed, after considering tax allowances and exemptions. Minimum
Alternate Tax (MAT) paid in accordance with the tax laws, which gives
rise to future economic benefits in the form of tax credit against
future income tax liability, is recognized as an asset in the Balance
Sheet if there is convincing evidence that the Company will pay normal
tax after the tax holiday period and the resultant asset can be
measured reliably.
The differences that result between the profit considered for income
taxes and the profit as per the financial statements are identified,and
thereafter a deferred tax asset or liability is recorded for timing
differences, namely the differences that originate in one accounting
period and reverse in another, based on the tax effect of the aggregate
amount of timing difference. Deferred tax assets are recognized only if
there is virtual certainty supported by convincing evidence that
sufficient future taxable income will be available against which such
deferred tax asset can be realized. Deferred tax assets, other than in
situation of unabsorbed depreciation and carried forward business
losses, are recognized only if there is reasonable certainty that they
will be realized. Deferred tax assets are reviewed for the
appropriateness of their respective carrying values at each reporting
date. Deferred tax assets and liabilities have been offset wherever the
Company has a legally enforceable right to set off current tax assets
against current tax liabilities and where the deferred tax assets and
liabilities relate to income taxes levied by the same taxation
authority.
2.8 Investments
Current Investments, if any, are stated at cost or fair market value,
whichever is lower. Non current investments are stated at cost.
Provision for diminution in the value of N on current investments is
made, only if a decline is other than temporary.
2.9 Provisions & Contingent Liabilities
A provision is recognized if, as a result of a past event, the Company
has a present legal obligation that is reasonably estimable, and it is
probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are determined by the best estimate
of the outflow of economic benefits required to settle the obligation
at the reporting date. Where no reliable estimate can be made, a
disclosure is made as contingent liability.
A disclosure for a contingent liability is also made when there is a
possible obligation or a present obligation that may, but probably will
not, require an outflow of resources. Where there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
2.10 Revenue Recognition
The company's revenue is recognized to the extent that it is probable
that the economic benefits will flow to the company and the revenue and
costs, if applicable, can be measured reliably. Revenue is recognized
in the Statement of Profit & Loss as follows:
* Revenue from services rendered is recognized as the service is
performed.
* Revenue from the sale of Software products is recognized when the
sale is completed with the passing of title.
* Incomes from domain registration, web hosting, set-up and
configuration charges are recognized on activation of customer account.
* Revenue from software and web development contracts are recognized
on the completion of development work.
* Interest income is recognised on accrual basis.
2.11 Earning Per Share
Basic earnings per share is computed by dividing the net profit after
tax by the weighted average number of equity shares outstanding during
the period.
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