Atul Ltd 2010-11

4. Impairment of Assets: The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal | external factors. An impairment loss will be recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is greater of the asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to the present value by using weighted average cost of capital. A previously recognised impairment loss is further provided or reversed depending on changes in circumstances. 5. Borrowing Costs: Borrowing costs in relation to acquisition and construction of qualifying assets are capitalised as part of cost of such assets up to the date when such assets are ready for intended use. Other borrowing costs are charged as expense in the year in which these are incurred. 6. Investments: Investments that are intended to be held for more than a year, from the date of acquisition, are classified as long-term investments and are carried at cost. However, provision for diminution in value of investments is made to recognise a decline, other than temporary, in the value of the investments. 7. Inventories: i. Raw materials, packing materials and fuel are valued at cost or net realisable value whichever is lower. Cost is arrived at on moving weighted average basis. ii. Stores and spares other than specific spares for machinery are valued at cost or net realisable value whichever is lower. Cost is arrived at on moving weighted average basis. iii. Materials-in-Process and finished goods are valued at cost or net realisable value whichever is lower. Finished goods stocks are valued at full absorption cost (Including Excise Duty). iv Purchased finished goods are valued at cost or net realisable value whichever is lower. Cost is arrived at on moving weighted average basis. v. Materials in transit and in bonded warehouse are stated at the cost to the date of Balance Sheet. 8 Foreign Currency Transactions: a. Initial recognition: Transactions denominated in foreign currencies are recorded at the rate prevailing on the date of the transaction. b. Conversion: At the year-end, monetary items denominated in foreign currencies remaining unsettled are converted into rupee equivalents at the year-end exchange rates. Non monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. c. Exchange differences: All exchange differences arising on settlement and conversion of foreign currency transactions are included in the Profit and Loss Account, except in cases where they relate to the acquision of fixed assets, acquired out of India in which case they are adjusted in the cost of the corresponding asset. d. Forward exchange contracts not intended for trading or speculation purposes: The premium or discount arising at the inception of forward exchange contract is amortised as expenses or income over the life of the contract. Exchange differences on such contract is being recognised in the 90 | 91