Atul Ltd 2011-12

105 Notes to Consolidated financial statements Accounting Standards notified under Section 211 (3C) and the relevant provisions of the Companies Act, 1956. The Significant Accounting Policies adopted by the Company are detailed below. All the assets and liabilities have been classified as current or non current as per the normal operating cycle of the Company and other criteria set out in Schedule VI to the Companies Act 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities. 3.2 Use of Estimates: The preparation of financial statements in conformity with generally accepted Accounting Principles requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based on best knowledge of current events and actions of the Management, actual results may differ from these estimates. Differences between actual results and estimates are recognised in the period in which the results are known | materialised. 3.3 Fixed Assets: a) Tangible Assets: i) Fixed assets are carried at cost of acquisition including incidental expenses, less accumulated depreciation, amortisation and impairment. Freehold land, lease hold land at Panoli and certain business premises and assets received free of cost on premature cancellation of a Lease Agreement are valued at fair value. ii) Spares for specific machinery are carried at cost less amortisation. b) Intangible Assets: Computer software includes Enterprise Resource Planning project and other cost relating to software which provides significant future economic benefit. Cost comprise license fees and cost of system integration services. 3.4 Depreciation and Amortisation: Depreciation: Depreciation on building and plant and equipment is being provided on ‘Straight Line Method’ basis and on all other assets on ‘Written Down Value’ basis in accordance with the provisions of Section 205(2) (b) and 205(2)(a) of the Companies Act, 1956 respectively, in the manner and at the rates specified in Schedule XIV to the said Act. Depreciation on additions to the assets during the year is being provided on pro-rata basis at their respective rate with reference to the month of acquisition | installation. Depreciation on assets sold, scrapped or discarded during the year is being provided at their respective rates up to the month in which such assets are sold, scrapped or discarded. Depreciation is adjusted in subsequent periods to allocate the revised carrying amount of assets after the recognition of an impairment loss on a systematic basis over its remaining useful life of assets. Amortisation: a) Premium on lease hold land is amortised over the period of lease. b) Cost of spares for specific machinery is amortised over remaining useful life of related machinery. c) Cost of Computer software is amortised over a period of three years. NOTE 1 SIGNIFICANT ACCOUNTING POLICIES (contd)