Atul Annual report 2017-18

Atul Ltd | Annual Report 2017-18

Note 1 Significant Accounting Policies

(continued)

Property, plant and equipment which are not ready for intended use as on the date of Consolidated Balance Sheet are

disclosed as 'Capital work-in-progress'.

Depreciation methods, estimated useful lives and residual value:

Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated

useful lives or, in the case of certain leased furniture, fittings and equipment, the shorter lease term of useful lives are as follows:

Asset category

Estimated useful life

Buildings

30 to 60 years

Roads

5 years

Plant and equipment

6 to 20 years

Office equipment and furniture

5 to 10 years

Vehicles

6 to 10 years

Bearer plants

40 years

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.

The property, plant and equipment including land acquired under finance leases are depreciated over the useful life of the

asset or over the shorter of the useful life of the asset and the lease term if there is no reasonable certainty that the Group

will obtain ownership at the end of the lease term.

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.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the

Consolidated Statement of Profit and Loss within other income.

j) Intangible assets:

Goodwill

Goodwill on acquisitions of subsidiary companies is included in intangible assets. Goodwill is not amortised, but it

is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be

impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity

include the carrying amount of Goodwill of the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those

cash-generating units or groups of cash-generating units that are expected to benefit from the business combination

in which the Goodwill arose. The units or Groups of units are identified at the lowest level at which Goodwill is

monitored for internal management purposes, which in our case are the operating segments.

ii) Computer software

Computer software includes enterprise resource planning project and other software related cost which provides

significant future economic benefits. These costs comprise license fees and cost of system integration services.

Computer software cost is amortised over a period of 3 years using the straight-line method.

k) 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 Group,

is classified as investment property. Land held for a currently undetermined future use is also classified as an investment

property. Investment property is measured at its acquisition cost, including related transaction costs and where applicable,

borrowing costs.

l) Impairment of assets:

The carrying amount 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 carrying amount of the asset does not exceed the carrying

amount that will have been determined if no impairment loss had previously been recognised.

Notes

to the Consolidated Financial Statements