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Atul Ltd | Annual Report 2015-16
Note 1 Significant Accounting Policies
(continued)
b) Intangible assets:
Computer software includes enterprise resource planning project and other cost relating to software
which provides significant future economic benefits. Costs comprise license fees and cost of system
integration services.
4.4 Depreciation and amortisation expenses:
Depreciation:
a) Depreciation on tangible assets is provided on the straight-line method over the useful lives of
assets.
b) Depreciation is calculated on a pro-rata basis from the date of acquisition| installation till the date
the assets are sold or disposed of.
c) Machinery spares which are capitalised, are depreciated over the useful life of the related fixed
asset. The written down value of such spares is charged in the Statement of Profit and Loss, on issue
for consumption.
d) Depreciation and amortisation methods, useful lives and residual values are reviewed periodically,
including at each financial year end.
e) Useful lives as prescribed under Part C of Schedule II to the Companies Act, 2013 are applied except
following categories where the Management has estimated shorter useful lives for asset categories:
Asset category
Useful life
Plant and machinery
*
7 to 15 years
Vehicles
*
6 to 10 years
*
For the above class of assets, based on internal assessment and independent technical evaluation carried out
by external valuers the Management believes that the useful lives as given above best represent the period
over which the Management expects to use these assets. Hence the useful lives for these assets are different
from the useful lives as prescribed under Part C of Schedule II to the Companies Act, 2013.
Amortisation
a) Leasehold land is amortised on a straight-line basis over the period of lease.
b) Computer Software cost is amortised over a period of 3 years using straight-line method.
4.5 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 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 and to the extent that the assets carrying amount does not exceeds the carrying
amount that would have been determined if no impairment loss had previously been recognised.
4.6 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. Borrowing costs include interest, other
costs incurred in connection with borrowing and exchange differences arising from foreign currency
borrowings to the extent that they are regarded as an adjustment to the interest cost.
4.7 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
and fair value.
Notes
to the Consolidated Financial Statements