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65
Notes
to financial statements
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES
(contd)
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) Computer software is amortised over a period of three years.
5 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
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impairment loss is further provided or reversed depending on changes in the circumstances.
6 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.
7 Investments:
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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.
8 Inventories:
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lower. Cost is arrived at on moving weighted average basis.
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 obsolete inventory based on technical estimates made by the Company.
9 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
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dated December 29, 2011 issued by the Ministry of Corporate Affairs. Consequently, foreign exchange
difference on account of long-term foreign currency borrowings utilised to acquire a depreciable asset, is
adjusted in the cost of the depreciable asset, which will be depreciated over the balance life of the asset.
d) Forward exchange contracts not intended for trading or speculation purposes:
The premium or discount arising at the inception of forward exchange contracts intended to hedge existing
exposures is amortised as expenses or income over the life of the contract. Exchange differences on such
contract are beLQJ UHFRJQLVHG LQ WKH 6WDWHPHQW RI 3URÀW DQG /RVV IRU WKH \HDU $Q\ SURÀW RU ORVV DULVLQJ RQ
cancellation or renewal of forward exchange contract is recognised as income or expense for the year.