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Atul Ltd | Annual Report 2013-14
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES
(contd)
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. An amount in respect of assets revalued in the past, the depreciation charge over the
enhancement to cost is withdrawn from the revaluation reserves and adjusted against the depreciation
charge each year. In respect of assets received free of cost (see 4a ii), from this year, an amount equivalent
to the depreciation is withdrawn from capital reserve and transferred to general reserve.
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 Expenses:
a) Premium on leasehold land is amortised over the period of lease.
b) Computer software is amortised over a period of three years.
4.6 Impairment of Assets:
The carrying amounts of assets are reviewed at each Balance Sheet date to assess if there is any indication
of impairment based on internal | external factors. An impairment loss on such assessment will be
recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable
amount of the assets is net selling price or value in use whichever is higher. While 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
the circumstances.
4.7 Finance 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.
4.8 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.
Current investments not intended to be held for a period more than one year, are stated at lower of cost
or fair value.
4.9 Inventories:
a) Raw materials, packing materials, purchased finished goods, work-in-progress, finished goods
manufactured, fuel, 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. However,
materials and other supplies held for use in the production of inventories are not written down below
cost if the finished products in which they will be incorporated are expected to be sold at or above
cost.
b) Goods-in-transit and in bonded warehouse are stated at the cost to the date of Balance Sheet.
c) ‘Cost’ comprises all costs of purchase, costs of conversion and other costs incurred in bringing the
inventory to the present location and condition.
d) Due allowances are made for slow moving and obsolete inventories based on estimates made by the
Company.
Notes
to the Consolidated Financial Statements