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Atul Ltd | Annual Report 2015-16
c) Short-term leave encashment:
Short-term leave encashment is provided at undiscounted amount during the accounting period based on
service rendered by employees.
d) Voluntary Retirement Scheme:
Compensation payable under the Voluntary Retirement Scheme is being charged to the Statement of
Profit and Loss in the year of settlement.
14. Taxation:
a) Income tax expense comprises current tax and deferred tax charge or credit. Provision for current tax is
made on the basis of the assessable income at the tax rate applicable to the relevant assessment year.
b) MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the
Company will pay normal income tax within the specified period.
c) Deferred tax asset and deferred tax liability are calculated by applying tax rate and tax laws that have been
enacted or substantively enacted by the Balance Sheet date. Deferred tax assets on account of timing
differences are recognised, only to the extent there is a reasonable certainty of its realisation. Deferred tax
assets are reviewed at each Balance Sheet date to reassure realisation.
d) Deferred tax assets, representing unabsorbed depreciation or carried forward losses are recognised, if and
only if there is virtual certainty supported by convincing evidence that there will be adequate future taxable
income against which such deferred tax assets can be realised.
15. Government grants:
a) Grants are recognised when there is reasonable assurance that the same will be received.
b) Revenue grants for expenses incurred are reduced from the respective expenses.
c) Capital grants relating to specific fixed assets are reduced from the cost of the respective fixed assets.
d) Grants in the nature of promoters’ contribution are credited to Capital reserve and treated as a part of
Shareholders’ funds.
16. Cash and cash equivalents:
In the Cash Flow Statement, cash and cash equivalents include cash in hand, demand deposits with banks,
other short-term highly liquid investments with original maturities of 3 months or less.
17. Earning per share:
Earnings per share (EPS) is calculated by dividing the net profit or loss for the period attributable to Equity
Shareholders by the weighted average number of Equity shares outstanding during the period. Earnings
considered in ascertaining the EPS is the net profit for the period and any attributable tax thereto for the
period.
18. Leases:
As lessor:
The Company has leased certain tangible assets and such leases where the Company has substantially retained
all the risks and rewards of ownership are classified as operating leases. Lease income on such operating
leases are recognised in the Statement of Profit and Loss on a straight-line basis over the lease term which
is representative of the time pattern in which benefit derived from the use of the leased asset is diminished.
Initial direct costs are recognised as an expense in the Statement of Profit and Loss in the period in which they
are incurred.
As lessee:
Assets taken on lease under which all risks and rewards of ownership are effectively retained by the lessor are
classified as operating lease. Lease rentals under operating leases are recognised in the Statement of Profit and
Loss on a straight-line basis over the lease term in accordance with the respective Lease Agreement terms.
Note 1 Significant Accounting Policies
(continued)
Notes
to the Financial Statements