3 SIGNIFICANT ACCOUNTING POLICIES
3-1 Th^prel^rn^iffmnncial Yemeni. In conformity with InJ AS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the uppl.cat.on 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 repotted amounts of revenues and expenses durtng the penod. Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements. Account,ng estunates could change from period to period. Actual results could differ from those estimates. Appropriate changes estimates arc made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements u. Hie penod in which changes aie made and, ,1 material, there effects are disclosed in the notes to the financial statements.
3.2 PROPERTY PLANT & EQUIPMENT
a) Property, plant and equipment are stated at cost net ot taxes less accumulated depreciation and/or impairment loss; if any. All costs such as freight, non recoverable duties & taxes and other incidental expenses until (lie property, plant and equipment are ready for use, as intended by the management and borrowing cost attributable to the qualifing property, plant and equipments arc capitalized. Assets costing less than Rs.5,000/- are fully depreciated in the year of purchase in merging unit.
b) Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably.
c) Capital work in progress represents expenditure incurred iti respect of capital projects which arc carried at cost. Cost includes land, related acquisition expenses, development and construction costs, borrowing costs and other direct expenditure.
d) The cost and related accumulated depreciation arc eliminated from the financial statements upon sale or retirement of the asset and the resultant gains or losses arc recognized in the Statement of Profit and Loss. Assets to be disposed ofl are reported at the lower of the carrying value or the fair value less cost to sell.
c) Depreciation on property, plant and equipment is charged in accordance with estimate of useful life of the assets on written down value method, at rates specified in Schedule II to the Companies Act, 201.5.
0 In respect ol assets added/disposed off during the year, depreciation is charged on pro-rata basis with reference ' to the month of addition/disposal.
g) Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial year end.
3.3 FINANCIAL INSTRUMENTS Initial recognition
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions ot the instrument All financial assets and liabilities arc recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, that are not at fair value through prolit or loss, arc added to the fair value on initial recognition. Regular way purchase and sale of financial assets arc accounted for at trade date.
Su bscq uent measure men t
Financial assets carried at amortised cost
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dales to cash flows that are solely payments of principal and interest on the principal • amount outstanding.
Derecognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers flic financial asset and the transfer qualifies for derecognition in accordance with Ind AS 109 "Financial Instruments" issued by the Ministry ol Corporate Affairs. Government of India. A financial liability (or a part ol a financial liability) is derecognized from the Company's Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
3.4 impairment
Financial assets
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets
which arc not fair valued through profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime F.CL For all other financial assets, expected credit losses arc measured at an amount equal to the 12-month ECL, unless there has been a significant increase * in credit risk from initial recognition in which case those arc measured at lifetime ECL.Tlic amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised is recognized as an impairment gain or loss in profit or loss.
Non-flmmclal assets
Property, plant and equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.c. the higher of the fair value less cost to sell and the valuc-in-usc) is determined on an individual asset basts unless the asset does not generate cash flows that arc largely independent of those from other assets. In such cases, the recoverable amount is determined tor the cash generating unit (C'GU) to which the asset belongs.
If such assets are considered to be unpaired, the impairment to be recognized in the Statement of Profit and l-oss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the Statement of Profit and Loss, if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount docs not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been • recognized for the asset in prior years.
|