2.2 MATERIAL ACCOUNTING POLICY INFORMATION
2.2.1 CURRENT VERSUS NON-CURRENT CLASSIFICATION
The Company presents assets and liabilities in the balance
sheet based on current /non-current classification.
An asset is treated as current when it is:
• Expected to be realized or intended to be sold or
consumed in normal operating cycle.
• Held primarily for the purpose of trading
• Expected to be realized within twelve months after
the reporting date, or
• Cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least
twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
• It is expected to be settled in normal operating cycle
• It is due to be settled within twelve months after the
reporting period, or
• There is no unconditional right to defer the
settlement of the liability for at least twelve months
after the reporting period
All other liabilities are classified as non -current.
Deferred tax assets and liabilities are classified as non¬
current assets and liabilities.
The operating cycle is the time between the acquisition
of assets for processing and their realization in cash and
cash equivalents,
2.2.2 FOREIGN CURRENCIES
The company's financial statements are presented in
Indian Rupees ("'”) (rounded off to Lakhs), which is also
the company's functional currency.
a. Initial recognition
Foreign currency transactions are recorded in the
functional currency (Indian Rupee) by applying to the
foreign currency amount, the exchange rate between
the functional currency and the foreign currency
on the date of the Transaction first qualifies for
recognition.
b. Conversion and Balances
Monetary assets and liabilities denominated in
foreign currencies are translated at the functional
currency spot rates of exchange at the reporting
period. Exchange differences arising on the
settlement of monetary items or on translating
monetary items are recognized in the statement of
profit or loss except:
• exchange differences on foreign currency
borrowings relating to assets under
construction for future productive use, which
are included in the cost of those assets when
they are regarded as an adjustment to interest
costs on those foreign currency borrowings;
• exchange differences on transactions entered in
order to hedge certain foreign currency risks
• exchange differences on monetary items
receivable from or payable to a foreign operation
for which settlement is neither planned nor
likely to occur (therefore forming part of the
net investment in foreign operation), which
are recognized initially in other comprehensive
income and reclassified from equity to profit or
loss on repayment of the monetary items.
Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated
using the exchange rates as at the dates of the initial
transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the
exchange rates at the date when the fair value was
determined. The gain or loss arising on translation
of non-monetary items measured at fair value is
treated in line with the recognition of the gain or loss
on the change in fair value of the item (i.e. translation
differences on items whose fair value gain or loss is
recognized in OCI or profit or loss are also recognized
in OCI or profit or loss, respectively).
2.2.3 REVENUE RECOGNITION
Revenue is recognised to the extent that it is probable that
the economic benefits will flow to the Company and the
revenue can be reliably measured, regardless of when the
payment is being made. Revenue is measured at the fair
value of the consideration received or receivable, taking
into account contractually defined terms of payment
and excluding taxes or duties collected on behalf of the
government.
The Company derives revenues primarily from
E-Governance Services and B2B trading.
Ind AS 115 "Revenue from Contracts with Customers”
provides a control- based revenue recognition model and
provides a five-step application approach to be followed
for revenue recognition.
• Identify the contract(s) with a customer;
• Identify the performance obligations;
• Determine the transaction price;
• Allocate the transaction price to the performance
obligations;
• Recognize revenue when or as an entity satisfies
performance obligations
a. Revenue from sale of goods
Revenue from sale of goods is recognised when
control of the products being sold is transferred
to the customer and when there are no longer any
unfulfilled obligations. The Performance Obligations
in the contracts are fulfilled at the time of dispatch,
delivery or upon formal customer acceptance
depending on terms with customers for an amount
that reflects the consideration which the Company
expects to receive in exchange for those products.
b. Revenue from Service
Revenue from contracts with customers is
recognized when performance of the services as
agreed with the customer has been completed, at
an amount that reflects the consideration to which
the Company expects to be entitled in exchange
for those services. The method of recognizing the
revenues and costs depends on the nature of the
services rendered. Revenue is recognized when no
significant uncertainty exists as to its realization or
collection.
The Company recognizes the income for proving
E-Governance Services and B2B trading and last
mile delivery upon providing services or delivery of
shipment to end customers.
The amount recognized as revenue in its Statement
of Profit and Loss are measured on the basis of
the contracted price, after deduction of any trade
discounts, such as price concessions, volume
discounts, or any other price concessions as may
be agreed with the customers at the time of sale.
Revenues also excludes Goods and Services
Tax (GST) or any other taxes collected from the
Customers and net of returns and discounts.
c. Other Operating revenue
The Company recognises income on recoveries of
financial assets previously written off on realisation
or when the right to receive the same without any
uncertainties of recovery is established.
d. Trade receivables
A receivable represents the Company's right to an
amount of consideration that is unconditional (i.e.,
only the passage of time is required before payment
of the consideration is due). Refer to accounting
policies of financial assets in section Financial
Instruments.
e. Contract liabilities
A contract liability is the obligation to perform the
services as agreed with the customer for which
the Company has received consideration (or an
amount of consideration is due) from the customer.
A contract liability is recognised when the payment
is made or the payment is due (whichever is earlier).
Contract liabilities are recognized as revenue when
the Company performs under the contract.
f. Other Income
Other income is comprised primarily of interest
income, dividend income, exchange gain/loss.
Interest income is accrued on a time basis, by
reference to the principal outstanding and at the
effective interest rate applicable, which is the
rate that exactly discounts estimated future cash
receipts through the expected life of the financial
assets to that asset's net carrying amount on initial
recognition. Dividend income is recognized when the
right to receive payment is established.
2.2.4 BORROWING COST
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets that
necessarily takes a substantial period to get ready for
their intended use or sale are added to the cost of those
assets, until such time as the assets are substantially
ready for their intended use or sale. Borrowing costs
consist of interest and other costs that an entity incurs in
connection with the borrowing of funds. Borrowing cost
also includes exchange differences to the extent regarded
as an adjustment to the borrowing costs. Interest
income earned on the temporary investment of specific
borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible for
capitalisation. All other borrowing costs are recognised in
the statement of profit and loss in the period in which they
are incurred.
2.2.5 EMPLOYEE BENEFITS
a. Short-term obligations
Liabilities for wages and salaries, including non¬
monetary benefits that are expected to be settled
wholly within 12 months after the end of the period
in which the employees render the related service are
recognized in respect of employee's services up to
the end of the reporting period and are measured at
the undiscounted amounts of the benefits expected
to be paid when the liabilities are settled. The
liabilities are presented as current employee benefit
obligations in the balance sheet.
b. Other Long-term employee benefit obligations
The liabilities for compensated absences (annual
leave) which are not expected to be settled wholly
within 12 months after the end of the period in
which the employee render the service are treated
and presented as non-current employee benefits
obligations. They are therefore measured as the
present value of expected future payments to be
made in respect of services provided by employees
up to the end of the reporting period using the
Projected Unit Credit method. The benefits are
discounted using the market yields at the end of
the reporting period on government bonds that
have terms approximating to the terms of the
related obligations. Remeasurements as a result of
experience adjustments and changes in actuarial
assumptions (i.e. actuarial losses/ gains) are
recognized in the Statement of Profit and Loss.
The obligations are presented as current in the
balance sheet if the Company does not have an
unconditional right to defer settlement for at least
twelve months after the reporting period, regardless
of when the actual settlement is expected to occur.
c. Post- employment obligations
Defined benefit plan - Gratuity Obligations
The Company provides for gratuity in accordance
with the Payment of Gratuity Act, 1972. It is a defined
benefit plan that offers lump sum payments to
eligible employees based on salary and tenure upon
retirement, death, or termination.
The gratuity liability is the present value of the
defined benefit obligation, determined using the
Projected Unit Credit Method, net of the fair value
of plan assets. The obligation is discounted using
market yields on government bonds with terms
matching the liability. Net interest cost is recognised
in profit or loss as part of employee benefit
expenses.
Re-measurements gains and losses arising
from experience adjustments and changes in
actuarial assumptions are recognised in the other
comprehensive income in the year in which they
arise and are not subsequently reclassified to
Statement of Profit and Loss.
Changes in the present value of the defined benefit
obligation resulting from plan amendments or
curtailments are recognised immediately in profit or
loss as past service cost.
2.2.6 PROPERTY, PLANT AND EQUIPMENT
All items of property, plant and equipment are initially
recorded at cost. Such cost includes the cost of replaced
part of the property, plant and equipment and borrowing
costs that are directly attributable to the acquisition,
construction or production of a qualifying property, plant
and equipment. The cost of an item of property, plant and
equipment is recognized as an asset if, and only if, it is
probable that future economic benefits associated with
the item will flow to the company and the cost of the item
can be measured reliably.
Properties in the course of construction for production,
supply or administrative purposes are carried at cost,
less any recognized impairment loss. Cost includes
professional fees and, for qualifying assets, borrowing
costs capitalized in accordance with the company's
accounting policy. Such properties are classified to the
appropriate categories of property, plant and equipment
when completed and ready for intended use. Depreciation
of these assets, on the same basis as other property
assets, commences when the assets are ready for their
intended use.
Subsequent to recognition, property, plant and equipment
(excluding freehold land) are measured at cost less
accumulated depreciation and accumulated impairment
losses. When significant parts of property, plant and
equipment are required to be replaced in intervals, the
company recognizes such parts as individual assets
with specific useful lives and depreciation respectively.
Likewise, when a major inspection is performed, its cost
is recognized in the carrying amount of the plant and
equipment as a replacement cost only if the recognition
criteria are satisfied. All other repair and maintenance
costs are recognized in the Statement of Profit and Loss
as incurred.
Depreciation is recognized so as to write off the cost
of assets (other than freehold land and properties
under construction) less their residual values over the
useful lives, using the straight- line method ("SLM”).
Management believes based on a technical evaluation
that the useful lives of the assets reflect the periods over
which these assets are expected to be used, which are as
follows:
The carrying values of property, plant and equipment
are reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not be
recoverable.
The residual values, useful life and depreciation method
are reviewed at each financial year-end to ensure that the
amount, method and period of depreciation are consistent
with previous estimates and the expected pattern of
consumption of the future economic benefits embodied in
the items of property, plant and equipment.
An item of property, plant and equipment is derecognized
upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset.
Any gain or loss arising on disposal or retirement of an
item of property, plant and equipment is determined as
the difference between sale proceeds and the carrying
amount of the asset and is recognized in profit or loss.
2.2.7 INTANGIBLE ASSETS
Intangible assets are stated at acquisition cost, net of
accumulated amortisation and accumulated impairment
losses, if any. Gains or losses arising from the retirement
or disposal of an intangible asset are determined as
the difference between the disposal proceeds and the
carrying amount of the asset and are recognised as
income or expense in the Statement of Profit and Loss.
The assets' residual values and useful lives are reviewed,
and adjusted if appropriate, at the end of each reporting
period
2.2.8 FINANCIAL INSTRUMENTS
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity.
A. Financial Assets
a. Initial recognition and measurement
Financial assets and financial liabilities are
recognised when the Company becomes
a party to the contractual provisions of the
instrument.
Financial assets are initially measured at
fair value. Trade receivables that do not
contain a significant financing component are
initially measured at transaction cost/value.
Transaction costs that are directly attributable
to the acquisition or issue of financial assets
(other than financial assets at fair value through
profit or loss) are added to or deducted from
the fair value measured on initial recognition of
financial asset.
Purchases or sales of financial assets that
require delivery of assets within a time frame
established by regulation or convention in
the market place (regular way trades) are
recognized on the trade date, i.e., the date that
the Company commits to purchase or sell the
asset.
b. Subsequent measurement
All recognised financial assets are subsequently
measured in their entirety at either amortised
cost or fair value, depending on the
classification of the financial assets.
The subsequent measurement of a financial
asset depends on the classification of the
asset on the basis of business model for
managing such assets and the contractual
cash flow characteristics of such asset. These
classifications are:
i. at amortized cost:
A financial asset is subsequently
measured at amortized 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 dates to cash flows that are
solely payments of principal and interest
on the principal amount outstanding.
Interest income from these financial
assets is included in finance income using
the effective interest rate method. The
losses arising from the impairment are
recognized in the Statement of Profit and
Loss.
ii. at Fair Value through Other
Comprehensive Income (OCI)
A financial asset is subsequently
measured at fair value through other
comprehensive income if it is held within
a business model whose objective is
achieved by both collecting contractual
cash flows and selling financial assets
and the contractual terms of the financial
asset give rise on specified dates to
cash flows that are solely payments of
principal and interest on the principal
amount outstanding. Interest income
from these financial assets is included in
finance income using the effective interest
rate method. Fair value movements are
recognized in the other comprehensive
income (OCI). However, the Company
recognizes interest income, impairment
gains or losses and foreign exchange
gains and losses in the statement of profit
and loss. On derecognition of the asset,
the cumulative gain or loss previously
recognized in OCI is reclassified from
equity to statement of profit and loss.
iii. at Fair Value through Profit or Loss
(FVTPL)
A financial asset not classified as either
amortised cost or FVOCI, is classified
as FVTPL. Such financial assets are
measured at fair value with all changes in
fair value, including interest income if any,
recognised in the statement of profit and
loss
iv. Equity instruments
All equity investments in scope of Ind AS
109 are measured at fair value. Equity
instruments which are held for trading
are classified as at FVTPL. For all other
equity instruments, the Company may
make an irrevocable election to present
subsequent changes in the fair value in
OCI. The Company makes such election
on an instrument-by-instrument basis. The
classification is made on initial recognition
and is irrevocable.
Dividends from such investments are
recognized in profit or loss as other
income. There is no recycling of the
amounts from OCI to Profit and Loss,
even on sale of investment. However, the
Company may transfer the cumulative
gain or loss within equity.
Equity instruments subsequently
measured at fair value through profit or
loss are measured at fair value with all
changes recognized in the statement of
profit and loss.
Investment in subsidiaries is carried at
cost in the financial statements.
c. De-recognition
The Company de-recognizes a financial asset
(or, where applicable, a part of a financial asset
or part of a group of similar financial assets)
when the contractual rights to the cash flows
from the financial asset expire or it transfers
the financial asset and the transfer qualifies for
de-recognition.
When the Company has transferred its
rights to receive cash flows from the asset
or has assumed an obligation to pay the
received cash flows in full without material
delay to a third party under a 'pass-through'
arrangement and either (a) the company
has transferred substantially all the risks and
rewards of the asset, or (b) the company has
neither transferred nor retained substantially
all the risks and rewards of the asset, but has
transferred control of the asset.
When the Company has transferred its rights to
receive cash flows from an asset or has entered
into a pass-through arrangement, it evaluates
if and to what extent it has retained the risks
and rewards of ownership. When it has neither
transferred nor retained substantially all of the
risks and rewards of the asset, nor transferred
control of the asset, the company continues to
recognize the transferred asset to the extent
of the company's continuing involvement. In
that case, the company also recognises an
associated liability. The transferred asset and
the associated liability are measured on a basis
that reflects the rights and obligations that the
company has retained.
Continuing involvement that takes the form
of a guarantee over the transferred asset is
measured at the lower of the original carrying
amount of the asset and the maximum amount
of consideration that the company could be
required to repay.
d. Impairment of financial assets
The Company recognises impairment loss
applying the expected credit loss (ECL) model
on the financial assets measured at amortized
cost, debt instruments at FVTOCI, lease
receivables, trade receivables, other contractual
right to receive cash or other financial asset and
financial guarantee not designated as at FVTPL.
Expected credit losses are the weighted average
of credit losses with the respective risks of
default occurring as the weights.
The Company measures the loss allowance for
a financial instrument at an amount equal to
the lifetime expected credit losses if the credit
risk on that financial instrument has increased
significantly since initial recognition. If the
credit risk on a financial instrument has not
increased significantly since initial recognition,
the Company measures the loss allowance for
that financial instrument at an amount equal to
12 months expected credit losses.
For trade receivables or any contractual right to
receive cash or other financial assets that result
from transactions that are within the scope of
Ind AS 11 and Ind AS 18, the Company always
measures the loss allowance at an amount
equal to lifetime expected credit losses.
Lifetime ECL are the expected credit losses
resulting from all possible default events over
the expected life of a financial instrument.
The 12-month ECL is a portion of the lifetime
ECL which results from default events that are
possible within 12 months after the reporting
date. Further, for the purpose of measuring
lifetime expected credit loss allowance for
trade receivables, the Company applies
'simplified approach' permitted by Ind AS 109
Financial Instruments. This expected credit loss
allowance is computed based on a provision
matrix which considers historical credit loss
experience and adjusted for forward-looking
information.
B. Financial liabilities and equity instruments
a. Classification as debt or equity
Debt and equity instruments issued by the
Company are classified as either financial
liabilities or as equity in accordance with the
substance of the contractual arrangements
and the definitions of a financial liability and an
equity instrument.
b. Financial Liabilities
The Company classifies all financial liabilities
as subsequently measured at amortised
cost, except for financial liabilities at fair
value through profit and loss. Such liabilities,
including derivatives that are liabilities, shall be
subsequently measured at fair value.
i. Initial recognition and measurement
All financial liabilities are recognized
initially at fair value and, in the case of
loans and borrowings and payables, net
of directly attributable transaction costs.
Financial liabilities include trade and other
payables, loans and borrowings including
bank overdrafts and derivative financial
instruments.
ii. Subsequent measurement
The measurement of financial liabilities
depends on their classification, as
described below:
1. Financial liabilities at fair value through profit
or loss
Financial liabilities at fair value through profit
or loss include financial liabilities held for
trading and financial liabilities designated
upon initial recognition as at fair value through
profit or loss. Financial liabilities are classified
as held for trading if they are incurred for the
purpose of repurchasing in the near term. This
category also includes derivative financial
instruments entered into by the company that
are not designated as hedging instruments
in hedge relationships as defined by Ind-AS
109. Separated embedded derivatives are also
classified as held for trading unless they are
designated as effective hedging instruments.
Gains or losses on liabilities held for trading are
recognized in the profit or loss.
Financial liabilities designated upon initial
recognition at fair value through profit or loss
are designated at the initial date of recognition,
and only if the criteria in Ind AS 109 are
satisfied. For liabilities designated as FVTPL,
fair value gains/ losses attributable to changes
in own credit risk is recognized in OCI. These
gains/ losses are not subsequently transferred
to P&L. However, the company may transfer
the cumulative gain or loss within equity. All
other changes in fair value of such liability are
recognized in the statement of profit or loss.
The Company has not designated any financial
liability as at fair value through profit and loss.
Financial liabilities are subsequently carried
at amortized cost using the effective interest
method, except for contingent consideration
recognized in a business combination which is
subsequently measured at fair value through
profit and loss. For trade and other payables
maturing within one year from the Balance
Sheet date, the carrying amounts approximate
fair value due to the short maturity of these
instruments.
2. Loans and borrowings
After initial recognition, interest-bearing loans
and borrowings are subsequently measured
at amortized cost using the effective interest
rate method. Gains and losses are recognized
in profit or loss when the liabilities are
derecognized as well as through the effective
interest rate amortization process.
Amortized cost is calculated by taking
into account any discount or premium on
acquisition and fees or costs that are an
integral part of the effective interest rate. Such
amortization is included as finance costs in the
statement of profit and loss.
3. Financial guarantee contracts
Financial guarantee contracts issued by the
Company are those contracts that require a
payment to be made to reimburse the holder
for a loss it incurs because the specified
debtor fails to make a payment when due
in accordance with the terms of a debt
instrument. Financial guarantee contracts are
recognized initially as a liability at fair value,
adjusted for transaction costs that are directly
attributable to the issuance of the guarantee.
Subsequently, the liability is measured at
the higher of the amount of loss allowance
determined as per impairment requirements
of Ind AS 109 and the amount recognized less
cumulative amortization.
c. Derecognition
A financial liability is derecognized when the
obligation under the liability is discharged or
cancelled or expires. When an existing financial
liability is replaced by another from the same
lender on substantially different terms, or the terms
of an existing liability are substantially modified,
such an exchange or modification is treated as
the derecognition of the original liability and the
recognition of a new liability. The difference in the
respective carrying amounts is recognized in the
statement of profit or loss
2.2.9 Offsetting of financial instruments
Financial assets and financial liabilities are offset,
and the net amount is reported in the balance sheet if
there is a currently enforceable legal right to offset the
recognized amounts and there is an intention to settle on
a net basis, to realize the assets and settle the liabilities
simultaneously.
2.2.10 Fair Value measurement
The Company measures financial instruments at fair
value at each balance sheet date.
Fair value is the price that would be received to sell an
asset or paid to settle a liability in an orderly transaction
between market participants at the measurement date,
regardless of whether that price is directly observable or
estimated using another valuation technique
In estimating the fair value of an asset or liability, the
Company takes into account the characteristics of
the asset or liability if market participants would use
when pricing the asset or liability, assuming that market
participants act in their economic best interest.
All assets and liabilities for which fair value is measured
or disclosed in the financial statements are categorized
within the fair value hierarchy, described as follows, based
on the lowest level input that is significant to the fair value
measurement as a whole:
• Level 1 —Quoted (unadjusted) market prices in active
markets for identical assets or liabilities.
• Level 2 —Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is directly or indirectly observable.
• Level 3 —Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is unobservable.
For assets and liabilities that are recognized in the
financial statements on a recurring basis, the Company
determines whether transfers have occurred between
levels in the hierarchy by re-assessing categorization
(based on the lowest level input that is significant to the
fair value measurement as a whole) at the end of each
reporting period.
This note summaries accounting policy for fair value.
Other fair value related disclosures are given in the
relevant notes.
2.2.11 Impairment of Non-Financial Assets
At the end of each reporting period, the company reviews
the carrying amounts of its tangible and intangible assets
to determine whether there is any indication that those
assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of impairment
loss (if any). When it is not possible to estimate the
recoverable amount of an individual asset, the company
estimates the recoverable amount of the cash-generating
unit to which the asset belongs. When a reasonable and
consistent basis of allocation can be identified, corporate
assets are also allocated to individual cash-generating
units, or otherwise they are allocated to the smallest
group of cash-generating units for which a reasonable
and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible
assets not yet available for use are tested for impairment
at least annually, and whenever there is an indication that
the asset may be impaired.
Recoverable amount is the higher of fair value less costs
of disposal and value in use. In assessing value in use,
the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects
current market assessments of the time value of money
and the risks specific to the asset for which the estimates
of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating
unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash-generating unit) is
reduced to its recoverable amount. An impairment loss is
recognized in the profit or loss.
When an impairment loss subsequently reverses, the
carrying amount of the asset ( or a cash-generating unit)
is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been
determined had no impairment loss been recognized
for the asset ( or cash-generating unit) in prior years. A
reversal of an impairment loss is recognized immediately
in profit or loss.
2.2.12 Inventories
Inventories are valued at lower of cost on First-In¬
First-Out (FIFO) or net realizable value after providing
for obsolescence and other losses, where considered
necessary. Cost of inventories comprises all costs
of purchase and other costs incurred in bringing the
inventories to their present location and condition. Cost
of purchased inventory is determined after deducting
rebates and discounts. Net realizable value is the
estimated selling price in the ordinary course of business,
less estimated costs of completion and estimated costs
necessary to make the sale.
2.2.13 Cash and Cash Equivalents
Cash comprises cash on hand and demand deposits with
banks. Cash equivalents are short-term balances (with
an original maturity of three months or less from the date
of acquisition), and highly liquid time deposits that are
readily convertible into known amounts of cash and which
are subject to insignificant risk of changes in value.
1.2.14 Taxation
A. Current taxes
Income tax expense is recognized in net profit in
the statement of profit and loss except to the extent
that it relates to items recognized directly in other
comprehensive income or equity, in which case it is
recognized in other comprehensive income or equity
respectively. Current income tax is recognized at the
amount expected to be paid to or recovered from the
tax authorities, using the tax rates and tax laws that
have been enacted or substantively enacted by the
balance sheet date. The Company offsets, on a year
to year basis, the current tax assets and liabilities,
where it is has legally enforceable right to do so and
where it intends to settle such assets and liabilities
on a net basis.
B. Deferred taxes
Deferred tax is recognized on differences between
the carrying amounts of assets and liabilities in
the financial statements and the corresponding
tax bases used in the computation of taxable profit
and are accounted for using the balance sheet
liability method. Deferred tax liabilities are generally
recognized for all taxable temporary differences,
and deferred tax assets are generally recognized
for all deductible temporary differences to the
extent that it is probable that taxable profits will be
available against which those deductible temporary
differences can be utilized. Such assets and liabilities
are not recognized if the temporary difference arises
from goodwill or from the initial recognition (other
than in a business combination) of other assets and
liabilities in a transaction that affects neither the
taxable profit nor the accounting profit.
Deferred tax relating to items recognised outside the
profit and loss is recognised outside profit and loss
(either in other comprehensive income or in equity)
The carrying amount of deferred tax assets is
reviewed at each balance sheet date and reduced to
the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of
the asset to be recovered.
Deferred tax assets and liabilities are offset when
there is a legally enforceable right to set off current
tax assets against current tax liabilities and when
they relate to income taxes levied by the same
taxation authority and the Company intends to settle
its current tax assets and liabilities on a net basis.
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