108 / 220
Atul Ltd | Annual Report 2017-18
Note 1 Significant Accounting Policies
(continued)
attributable to the acquisition of the items. Acquisition cost may also include transfers from equity of any gains or losses
on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.
Subsequent costs are included in the carrying amount of asset or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the
item can be measured reliably. All other repairs and maintenance expenses are charged to the Statement of Profit and Loss
during the period in which they are incurred. Gains or losses arising on retirement or disposal of assets are recognised in
the Statement of Profit and Loss.
Fruit bearing plants qualify as bearer plants under Ind AS 16. Expenditure incurred on cultivation of plantations up to the
date they become capable of bearing fruit are accumulated under Bearer plant under development (Immature) and then
capitalised as a Bearer plant (Mature) to be amortised | depreciated over their estimated useful life.
The plantation destroyed due to calamity, disease or any other reasons whether capitalised as Bearer plant (Mature) or
being carried under Bearer plant under development (Immature) are charged off to the Statement of Profit and Loss.
Spare parts, stand-by equipment and servicing equipment are recognised as property, plant and equipment if they are
held for use in the production or supply of goods or services, for rental to others, or for administrative purposes and are
expected to be used during more than one period.
Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as
‘Capital work-in-progress’.
Depreciation methods, estimated useful lives and residual value:
Depreciation is provided on the straight-line method to allocate the cost of assets, net of their residual values, over their
estimated useful lives.
Depreciation is calculated on a pro-rata basis from the date of acquisition | installation till the date the assets are sold or
disposed of:
Asset category
Estimated useful life
Buildings
30 to 60 years
Plant and equipment
1
6 to 20 years
Vehicles
1
6 to 10 years
Office equipment and furniture
5 to 10 years
Roads
5 years
Bearer plants
1
40 years
1
The useful lives have been determined based on technical evaluation done by the Management experts which are different from the useful
life prescribed in Part C of Schedule II to the Act, in order to reflect the actual usage of the assets. The residual values are not more than
5% of the original cost of the asset. The residual values, useful lives and method of depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted prospectively, if appropriate.
Land accounted under finance lease is amortised on a straight-line basis over the period of lease.
The carrying amount of an asset is written down immediately to its recoverable amount if the carrying amount of the asset
is greater than its estimated recoverable amount.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets.
However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are
depreciated over the shorter of the lease term and their useful lives.
h) Intangible assets:
Computer software includes enterprise resource planning project and other cost relating to such software which provides
significant future economic benefits. These costs comprise license fees and cost of system integration services.
Development expenditure qualifying as an intangible asset, if any, is capitalised, to be amortised over the economic life of
the product | patent.
Computer software cost is amortised over a period of 3 years using the straight-line method.
i) Investment properties:
Property that is held for long-term rental yields or for capital appreciation or both, and that is not in use by the Company,
is classified as investment property. Land held for a currently undetermined future use is also classified as an investment
Notes
to the Financial Statements